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.”
