House panel votes to get tougher on health insurers


WASHINGTON — Efforts to strip the health insurance industry
of key antitrust protections got significant boosts Wednesday, when a House of
Representatives committee voted to end the 64-year-old exemption and Senate
Democratic leaders moved swiftly to act.

The House Judiciary Committee voted 20-9 to approve
legislation to repeal the health insurers’ exemption. They would lose current
protections if they engaged in price fixing or similar behavior.

“No one on this committee believes that price fixing or
carving up markets is a good thing, and the wide, bipartisan support for this
bill’s passage reflects this,” said committee Chairman John Conyers,

In the Senate, Judiciary Committee Chairman Patrick Leahy,
D-Vt., said he’d offer an antitrust exemption repeal as part of the health care
overhaul bill when the Senate begins debate on it, probably in the next few

Consumer groups are convinced that ending the exemption
would prompt insurers to compete with one another more energetically. The
current practice, said Jim Guest, the Consumers Union chairman, is “bad
for consumers, bad for patients and bad for taxpayers.”

The push to end the exemption will have the backing of
Senate Majority Leader Harry Reid, D-Nev., who appeared with Leahy at a Capitol
news conference.

“The case for action is very simple,” Reid said.
“When companies are forced to compete with one another, that’s what our
free enterprise system is all about, and when you have one industry that has no
referee … you never win the ballgame.”

America’s Health Insurance Plans, the industry trade group,
fought back quickly.

“Health insurance is one of the most significantly
regulated areas of the economy,” Karen Ignagni, president and chief
executive officer, wrote Wednesday in a letter to Leahy and Conyers.

“AHIP and our members stand on the side both of
competition and of meaningful reform,” she said.

Insurance has been largely under state regulation since an
1868 Supreme Court decision ruling that insurance isn’t interstate commerce and
therefore not subject to federal regulation.

The high court reversed that finding in 1945, but according
to the Congressional Research Service, state regulation was so well established
that Congress granted a federal antitrust exemption to those engaged in the
“business of insurance,” leaving most authority with the states.

Several factors have combined to make this year’s push for
change significant, including broader scrutiny of the financial services
industry and efforts to revamp regulatory law.

The push to end the antitrust exemption has been building
for some time. In his weekly radio address Saturday, President Barack Obama
noted that insurers are “earning these profits and bonuses while enjoying
a privileged exception from our antitrust laws, a matter that Congress is
rightfully reviewing.”

In addition, House Speaker Nancy Pelosi, D-Calif., said,
“It is clear where the problem has been. It is absolutely clear that it is
an unsustainable situation as we go forward, and it is well known to the public
that the health insurance companies are the problem.”