Between the flawed PricewaterhouseCoopers study and the scare-seniors attack ads to the secret talking points they’re sending to local insurance offices attacking the public option and Medicare (!), the insurance lobby has clearly shown themselves to be an enemy of reform. Whether trying to torpedo any bill or to give space to the Baucus bill (allowing ConservaDems to say, “Hey, if the insurance industry doesn’t like it…”), they are clearly not the partner the White House made them out to be throughout the process. And it’s interesting that yesterday, Americans United For Change (one of the pro-reform groups) went after the industry on a very particular point – their anti-trust exemption.

As part of the McCarran-Ferguson Act, the insurance industry has an anti-trust exemption that has allowed it to basically enact regional monopolies. Over 94% of all insurance markets in the United States are “highly concentrated.” A few weeks ago, Patrick Leahy and John Conyers introduced a bill to repeal the exemption.

“This legislation would specifically prohibit price fixing, bid rigging, and market allocation in the health insurance industry,” said Conyers. “These pernicious practices are detrimental to competition and result in higher prices for consumers. Conduct that is unlawful throughout the country should not be allowed for insurance companies under antitrust exemption. The House Judiciary Committee held extensive hearings on the effects of the insurance industry’s antitrust exemption throughout the 1980s and early 1990s. It became clear then that policyholders and the economy in general would benefit from eliminating this exemption.

A House Judiciary Subcommittee held a hearing last week on the legislation, and the bills continues to add co-sponsors – Joe Sestak recently signed on. The Senate bill has 8 cosponsors, including the entire Senate leadership. Chuck Schumer will reportedly call for the repeal today at a Senate Judiciary hearing:

This morning, Senator Schumer is going to say, in light of the insurance industry report warning premiums will rise under reform, Dems should push to revoke the health insurance industry’s antitrust exemption as a floor amendment. This will be at a Senate Judiciary Committee hearing, where Majority Leader Reid is also testifying.” 10 a.m., Dirksen 226, “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.”

At that hearing today, Harry Reid endorsed repeal, and given that he’ll be in the room when the bills get merged, that’s a positive sign.

“Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act,” Mr. Reid said. “Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we’re both Nevadans, I’m not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn’t be happy with the state of the insurance industry.”

“Providing an exemption for insurance companies to antitrust laws has been anticompetitive and damaging to the American economy,” Mr. Reid continued. “Health insurance premiums have continued to rise at a rapid rate, forcing businesses to cut back on health insurance coverage and forcing many families to choose between health insurance and basic necessities.”

Schumer, Reid and others may want to use the threat of the repeal to keep the industry in line. But that’s obviously not working, so they might as well go ahead and do it. There is little justification for allowing insurers to divide up the country into mini-fiefdoms.

UPDATE: On Dylan Ratigan’s show this morning, Schumer reiterated his call for repealing the anti-trust exemption and said it would be added to the final bill! “The Justice Department should be allowed to go into Alabama and say that one company shouldn’t be 81% of your market,” he said. Ratigan pushed Schumer on the firewall on the exchanges, which disallows people who get insurance from their employer to sign up, and Schumer endorsed Ron Wyden’s efforts on that, and believed that over time, the exchanges would open up. “I think we will get (repealing) the anti-trust exemption through.”


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