Congressional Democrats launch attack on insurers' anti-trust exemption

Democrats in Congress have launched a two-pronged attack on health insurance companies' 64-year-old exemption from anti-trust laws, with senior Democratic senators announcing their opposition to the exemption even as the House Judiciary Committee voted to end it as part of the health care reform effort.

In what the Associated Press described as "an increasingly bare-knuckled struggle over landmark health care legislation," a group of Senate Democrats announced Wednesday their intention to strip health insurers of their exemption -- in a 1945 law -- to laws that prevent corporations from creating monopolies or near-monopolies.

Sen. Patrick Leahy, Democrat of Vermont, said ending the anti-trust exemption would bring a halt to "price-fixing, bid-rigging and market allocation" in the health insurance industry, the Associated Press reported. The group led by Leahy intends to make the measure ending the exemption a part of the health care reform package being debated in the Senate.

"There is no reason why insurance companies should have exemption from antitrust laws," Sen. Harry Reid (D-NV) said Wednesday. "It's time to level the playing field for American health-care consumers and make the insurance industry play by the same rules that other industries live by."

The 1945 McCarran-Ferguson Act exempts certain types of businesses, including health care, railroads and Major League Baseball, from anti-trust laws passed in the late 19th and early 20th centuries that were designed to prevent the creation of monopolies. On Wednesday, the House Judiciary Committee voted to remove health care from that list of exempted businesses.

"Joined by three of my Republican colleagues, the House Judiciary Committee agreed to bring antitrust enforcement to the two most abusive practices of the health insurance industry -- price fixing and market allocation," MarketWatch quoted Judiciary Commitee Chairman John Conyers (D-MI) as saying.

The measure will be voted on by the full House in several weeks' time.

Ironically, it may have been the health insurance industry's own actions that gave new momentum to long-running efforts by some Democrats to end the exemption. Last week, a study commissioned by America's Health Insurance Plans, a lobby group currently running ads against health reform, warned that insurance rates for Americans would go up by 40 percent over four years if the health care reform package being debated in Congress were to be enacted.

That brought strong criticism from supporters of health care reform, who argued that the health insurance industry had effectively proven they could not be trusted to keep costs down, and was using its dominant position in the market to scuttle attempts to reform the health care system.

"They unwittingly did this, but they made the single best argument I've seen in a while for why you need a vigorous competitor for the health insurance industry, namely a public plan," Rep. Anthony Weiner (D-NY) said.

In his weekly radio address on Saturday, President Barack Obama slammed the report as "bogus."

Many critics of the US's current health care model point to the anti-trust exemption as one of the primary reasons consumers don't have real choice among health care providers. BlueCross BlueShield, for example, controls 83 percent of Alabama's health insurance market, and WellPoint has no less than 78 percent of the market in Maine.