Viewing entries tagged with 'McCarran-Ferguson'
ICYMI: Politico digs into the unintended consequences of repealing McCarran-Ferguson
Posted by Campaign on February 16, 2010 at 8:50 AM
Politico reports that some policymakers are beginning to understand some of the unintended consequences that repealing McCarran-Ferguson will have. A few excerpts are below:
· “But Democrats look like they’ll scale back the legislation to protect insurance companies that offer malpractice coverage to doctors and other health care providers.”
· “‘Certainly, [the bill’s provision] should be narrowed,’ said Ben McKay, a senior vice president of federal government relations for the Property Casualty Insurers Association of America. ‘It’s overly broad. There are consequences that reach far beyond just the health care industry into the property-casualty industry. This will have an impact on auto and home insurance.’”
· “‘Health insurance is one of the most regulated industries in America at both the federal and the state level,’ said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans. ‘The McCarran-Ferguson Act is extremely limited in scope and has nothing to do with competition within the health insurance industry. The focus should be on addressing the underlying cost of medical care, which is the key driver of rising health care costs.’”
· “Last October, the Congressional Budget Office said, ‘State laws already prohibit issuers of health insurance and medical malpractice insurance from engaging in practices such as price fixing, bid rigging and market allocations.’”
· “And earlier this year, the Congressional Research Service predicted that a repeal of McCarran-Ferguson would result in more lawsuits and might force smaller companies that rely on pooled data ‘to leave the market.’”
“In the CRS report, researchers noted that ‘further consolidation in the insurance industry as small insurers merge in order to gain the competitive advantage of additional information is a likely, albeit an ironic, possibility.’”
For the full story, click here.
What They Are Saying About McCarran-Ferguson
Posted by The Campaign on February 09, 2010 at 7:10 AM
Los Angeles Times:
• “Lawmakers are expected to pass a bill this week that would repeal the federal antitrust exemption that insurance companies have enjoyed since 1945 -- a move that makes for little more than a good sound bite.” (Los Angeles Times, Back to the drawing board, 02/08/2010)
• “Removing the exemption won't do much to boost competition or spark a price war among insurers, however. (The Congressional Budget Office said that a similar proposal in the House's comprehensive healthcare bill would have no significant effect on premiums because state regulators already require insurers to price their coverage competitively.)” (Los Angeles Times, Back to the drawing board, 02/08/2010)
McClatchy:
• However, the effort to remove the 65-year-old exemption is a small step that's unlikely to have much direct impact on consumers, according to independent analysts. ‘I don't think this will have much effect. This is strictly political posturing,’ said Paul Ginsburg, the president of the Center for Studying Health System Change, a Washington research group.” (McClatchy, Analysts: Stripping health insurers' antitrust protection won't affect consumers much, 02/07/2010)
• “But rising costs, he said, stem from money passing through insurance companies to health care providers such as doctors and hospitals, and therefore ‘passing something focused on insurers like this is not going to do a lot. It's not the reform that's really needed.’” (McClatchy, Analysts: Stripping health insurers' antitrust protection won't affect consumers much, 02/07/2010)
• “In fact, Ginsburg said, insurers already are prohibited from colluding to raise prices and from merging at will. They can, however, pool information about risks, and it can be argued that that helps them manage ways of controlling costs and even rates.” (McClatchy, Analysts: Stripping health insurers' antitrust protection won't affect consumers much, 02/07/2010)
Kaiser Health News:
• “…many antitrust experts say that ending the exemption -- by repealing the 1945 McCarran-Ferguson Act -- wouldn't significantly increase competition or reduce premiums.” (Kaiser Health News, The Antitrust Exemption For Health Insurers: Meaningful Or Not?, 02/08/2010)
• “‘This is just barking up the wrong tree for health insurance,’ said Scott Harrington, a professor of health care management at the Wharton School at the University of Pennsylvania. While many lawmakers are eager to pass some kind of health care bill, they ‘don't have a clue how the antitrust exemption works. It might sound good, but I can think of very few things in the bill that would be less consequential for consumers of health insurance.’” (Kaiser Health News, The Antitrust Exemption For Health Insurers: Meaningful Or Not?, 02/08/2010)
• “An analysis by the Congressional Budget Office estimated that repealing the antitrust exemption for health insurers ‘would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance.’” (Kaiser Health News, The Antitrust Exemption For Health Insurers: Meaningful Or Not?, 02/08/2010)
National Public Radio:
• “…other analysts, including both the Congressional Budget Office and the Congressional Research Service, say they doubt that eliminating the antitrust exemption will have much of an impact on competition or premiums.” (National Public Radio, Bill Would Apply Antitrust Laws To Insurance, 02/08/2010)
• “In fact, says Kevin Bingham of the American Academy of Actuaries, ‘quite honestly, it would lead to what I believe and what the academy believes would be reduced competition, and potentially higher rates.’ Bingham says that's because what the exemption was meant for in the first place was to allow insurance companies to share data about insurance risk. That's important, because without that data, insurance companies could end up setting premiums too low. Then the insurance companies could become insolvent, and unable to pay claims. Large insurers — the ones Democrats say are taking over the health insurance markets — probably wouldn't even be affected by the repeal, says Bingham, because they collect data themselves. But the effect could actually be negative on smaller or start-up companies, he says, ‘and without that ability to look at that industry data and kind of looking at cost estimates, it might push them away from getting involved at all.’ And if small companies stay on the sidelines, competition could actually be reduced.” (National Public Radio, Bill Would Apply Antitrust Laws To Insurance, 02/08/2010)
Congressional Quarterly:
• “…bill supporters have little evidence to support claims that the antitrust exemption leads to higher costs. In fact, their statements in support of the bill sometimes suggest the opposite.” (CQ, House Democrats Push Bill to Eliminate Insurance Antitrust Exemption, 02/05/2010)
• “Yet there are indications that requiring insurers to comply with federal antitrust law in addition to state regulations could actually decrease competition in the industry.” (CQ, House Democrats Push Bill to Eliminate Insurance Antitrust Exemption, 02/05/2010)
• The Congressional Research Service (CRS) noted in a Jan. 14 report that smaller insurance companies rely on data collected from their larger competitors and shared industrywide — something that would be forbidden under the Democratic bill — in order to accurately set their rates. ‘Should additional data be unavailable to small insurers in some way, further consolidation in the insurance industry as small insurers merge in order to gain the competitive advantage of additional information is a likely, albeit, ironic, possibility,’ CRS said.” (CQ, House Democrats Push Bill to Eliminate Insurance Antitrust Exemption, 02/05/2010)
• “State insurance commissioners say that they already sufficiently regulate health insurers and are opposed to the Perriello-Markey legislation and to similar proposals.” (CQ, House Democrats Push Bill to Eliminate Insurance Antitrust Exemption, 02/05/2010)
Ezra Klein:
• “The policy takeaway is that the CBO estimates that repeal will have no measurable impact on premiums or coverage…” (The Washington Post, Ezra Klein, A primer on the antitrust exemption for insurers, 02/08/2010)
• “On the other hand, since it doesn't matter much, and it's good politics either way, Democrats may as well go after it. They just shouldn't fool themselves into thinking they've actually done anything useful when they've finished.” (The Washington Post, Ezra Klein, A primer on the antitrust exemption for insurers, 02/08/2010)
What You Need to Know: McCarran-Ferguson Act
Posted by The Campaign on February 03, 2010 at 9:15 AM
National Association of Insurance Commissioners letter (10/21/2009):
“The potential for bid rigging, price fixing and market allocation is of great concern to state insurance regulators and we share your view that such practices are harmful to consumers and cannot be tolerated. However, we want to assure you that these activities are not permitted under the McCarran-Ferguson Act and are not tolerated under state law. Indeed, state insurance regulators actively enforce prohibitions in these areas.”
To read the full letter, click here.
Congressional Budget Office analysis (10/29/09):
“The analysis also takes into account the provisions of section 262 of Division A regarding the application of federal antitrust laws to health insurers. CBO estimates that implementing those provisions would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance. For an analysis of a similar proposal, see CBO’s cost estimate for H.R. 3596, the Health Insurance Industry Antitrust Enforcement Act of 2009 (October 23, 2009).”
To read the full analysis, click here.
Congressional Research Service analysis (8/31/2009):
“Given the courts’ narrowing definition of the ‘business of insurance,’ they would not be likely, in any event, to find such activities as market allocation, tying, or monopolization protected by McCarran-Ferguson from the application of the antitrust laws.”
American Academy of Actuaries letter (1/21/10):
“These analyses of aggregated data serve several purposes; those purposes align with the original intent of the McCarran-Ferguson Act and assist state regulators charged with overseeing the pricing of insurance coverage and solvency of insurers. A few of these purposes are:
1. To provide credible data upon which to base loss estimates and premium rates.
2. To enhance competition by providing access to industry information to enable existing companies to offer products in new markets or for different types of exposure by reducing the uncertainty associated with determining loss estimates and premium rates.
3. To further support competition by providing data to newly-formed companies or self-insurers looking to begin covering medical professional liability exposure.
4. To guide companies, self-insurers, and regulators in reducing the likelihood of insolvencies, a long-term and recent concern. Through the review of industry data, companies, self-insurers, and regulators are better able to evaluate whether too little is being charged or not enough is being set aside in reserves for a given exposure situation.”
To read the full letter, click here.
AHIP letter to Senator Leahy and Representative Conyers (10/8/09):
“In our view, the two bills under consideration may be based on a misperception of the scope and impact of the McCarran-Ferguson Act on health insurers. The Act does not preclude regulation of insurers, but, instead, recognizes that the states play a central role in conducting oversight of health and other insurers.”
To read the full letter, click here.
AHIP letter to Representative Conyers (10/21/09):
“The narrow nature of the Act, as interpreted by courts, means that the types of anticompetitive activity contemplated by the bills already are subject to federal and state antitrust laws. We believe that health insurers have not been engaging in anticompetitive conduct and that McCarran-Ferguson does not provide a shield for such conduct. Thus, the bills attempt to remedy a problem that does not exist.”
“We ask you to consider our strong concerns that such legal uncertainty could chill or limit newly developing activities that will benefit consumers and doctors (e.g., physician portals now developing to streamline administrative processes and data aggregation efforts that are designed to respond to physician concerns that they not be evaluated only through the lens of an individual health plan’s patient population) and add to the already substantial cost that litigation imposes on the health care system.”
To read the full letter, click here.
Scott Harrington op/ed (WSJ, “Competition and Health Insurance”, 11/6/09):
“Repealing the antitrust exemption for health insurers would not significantly increase competition, and it would not make health-insurance coverage either less expensive or more available. There is no evidence that the exemption has increased health insurers' prices or profits or contributed to higher market concentration.”
“In other words, the insurance industry's antitrust exemption is inconsequential to the health-care reform debate. It just distracts attention from important issues and further demonizes private health insurance.”
To read the full article, click here.
BNA article (“Bills to Repeal McCarran-Ferguson Act for Health, Malpractice Insurers Introduced”, 9/23/09):
“Attorneys who spoke to BNA said, however, there is no evidence that the act has been an impediment to either federal or private efforts to prevent or curtail anti-competitive conduct in these sectors.”
The article also quoted Jack A. Rovner, with The Health Law Consultancy in Chicago: “While the law does not have much impact on the health insurance industry, it makes a good political target,” he said. “This is more about politics than an effort to correct anti-competitive conduct by health insurers because the fact of the matter is that repeal would not make a significant difference with respect to either compliance or enforcement,” Rovner said. “McCarran-Ferguson has never been a valid defense to the price-fixing or other per se antitrust law violations targeted by the legislation, whether pursued by government or private parties,” he added. “While repeal could have a significant impact on the balance of state and federal relations, the proposed legislation will not change a lot in the legal landscape concerning the way health and malpractice insurers are regulated,” he said.
To read the full article, click here.
Business Week article (“Reviving an Old Threat in Health-Insurance Battle”, 10/19/09):
“’There would be quite a bit of confusion and legal action on the state and federal level as regulators try to figure out who's responsible for regulating what,’ says Joseph Paduda, principal of Health Strategy Associates, a managed-care consulting firm in Madison, Conn.”
“Austin Frakt, a health economist and assistant professor at Boston University's School of Public Health, says lawmakers also would have to take into account the other parties that contribute to driving up health-care costs—including doctors, hospitals, and drug companies—which McCarran-Ferguson does not address.”
“Threatening a repeal of McCarran-Ferguson ‘doesn't seem like it has been thoroughly thought through,’ says Frakt. As with every aspect of the proposed reform, the question of whether to regulate insurance at the federal or state level ‘requires a nuanced approach.’”
To read the full article, click here.
Health insurance is one of the most regulated industries in America at both the federal and the state level: http://bit.ly/PJuzm
FACT CHECK: Key Facts About McCarran-Ferguson
Posted by The Campaign on December 13, 2009 at 6:58 AM
Information on Repeal of McCarran-Ferguson
Click here for a letter that was sent to Representative Conyers this morning. The letter states that “the bills attempt to remedy a problem that does not exist.”
Click here for a letter that was sent to Senator Leahy and Representative Conyers on October 8, which says that “the two bills under consideration may be based on a misperception of the scope and impact of the McCarran-Ferguson Act.”
Here is a link to a CRS document that provides background on the McCarran Ferguson exemption: http://88.80.13.160/leak/crs/RL33683.pdf. On page 9 it states, “given the courts’ narrowing definition of the ‘business of insurance,’ they would not be likely, in any event, to find such activities as market allocation, tying, or monopolization protected by McCarran-Ferguson from the application of the antitrust laws.”
Health insurance is one of the most regulated industries in America. Here is a link to a chart showing how health insurance is regulated at both the federal and state level: http://www.ahip.org/content/default.aspx?docid=24689.
What People are Saying
In the Wall Street Journal this morning, Scott Harrington wrote the following: “Repealing the antitrust exemption for health insurers would not significantly increase competition, and it would not make health-insurance coverage either less expensive or more available. There is no evidence that the exemption has increased health insurers' prices or profits or contributed to higher market concentration.”………“In other words, the insurance industry's antitrust exemption is inconsequential to the health-care reform debate. It just distracts attention from important issues and further demonizes private health insurance.”
A recent BNA article said, “Attorneys who spoke to BNA said, however, there is no evidence that the act has been an impediment to either federal or private efforts to prevent or curtail anti-competitive conduct in these sectors.” The article also quoted Jack A. Rovner, with The Health Law Consultancy in Chicago: “While the law does not have much impact on the health insurance industry, it makes a good political target,” he said. “This is more about politics than an effort to correct anti-competitive conduct by health insurers because the fact of the matter is that repeal would not make a significant difference with respect to either compliance or enforcement,” Rovner said. “McCarran-Ferguson has never been a valid defense to the price-fixing or other per se antitrust law violations targeted by the legislation, whether pursued by government or private parties,” he added. “While repeal could have a significant impact on the balance of state and federal relations, the proposed legislation will not change a lot in the legal landscape concerning the way health and malpractice insurers are regulated,” he said.”
A recent Business Week article said “Repeal wouldn't be a simple process.”
"There would be quite a bit of confusion and legal action on the state and federal level as regulators try to figure out who's responsible for regulating what," says Joseph Paduda, principal of Health Strategy Associates, a managed-care consulting firm in Madison, Conn. Austin Frakt, a health economist and assistant professor at Boston University's School of Public Health, says lawmakers also would have to take into account the other parties that contribute to driving up health-care costs—including doctors, hospitals, and drug companies—which McCarran-Ferguson does not address.
Threatening a repeal of McCarran-Ferguson "doesn't seem like it has been thoroughly thought through," says Frakt. As with every aspect of the proposed reform, the question of whether to regulate insurance at the federal or state level "requires a nuanced approach."
Duke Professor Clark Havighurst wrote in Modern Healthcare that, “There is therefore no reason to think that the McCarran exemption is any broader in scope than the state-action doctrine, or that its repeal would change anything important.”
