No Anti Trust Laws for Health Insurance Companies: How it Affects You

Posted in Health Insurance

November 27th, 2009

In 1944, the Supreme Court ruled in the case United States vs. South-Eastern Underwriters Association. At that time, the judgment allowed the federal government to regulate the insurance industry. One year later, the McCarran-Ferguson Act managing the “business of insurance” was passed by Congress and the law mandated:

• States, not the federal government, are in charge of insurance oversight
• Individual states set up their own licensing requirements
• Health insurance companies exemption from federal antitrust legislation

The laws are still in place and as a result, health insurance providers and medical malpractice insurers are not beholden to the federal antitrust regulations. The administration of the Federal Trade Commission are in charge of managing the antitrust regulations that are in place to promoting free enterprise and good competition in the marketplace and prevent price fixing, but these are a set of rules that private insurers are exempt from.

Insurance Companies Fix Pricing Structures

Until this day, behind the scenes, insurance providers are working together regarding insurance forms and sharing loss data. This is the primary information used in determining industry pricing structures. According to the New York Times if the laws are not altered “…health spending will grow an average of 6.2 percent a year, to $4.4 trillion in 2018.”

Health Care Options

This antitrust exemption status hurts you, the consumer. The industry nearly has free reign in determining both the prices and the policies governing health insurance application denials or claim submissions rejections. Additionally, the health care industry has been able to band together and challenge the portions of health care reform not in their best financial interest, giving them the upper hand (i.e. public option). If the exemptions does not change, individuals and families may be legally responsible for obtaining health insurance, but may not have the affordable options available needed to make health care reform work.

In direct response to this legality and to help health care reform progress, Vermont U.S. Senator Patrick Leahy has introduced a bill to repeal antitrust exemption from health-related insurers. Leahy has clearly stated the detriment of ,antitrust exemptions to consumers stating, “Price fixing, bid rigging and market allocation are ‘per se’ violations of our laws precisely because there is no procompetitive justification for them. Health insurers should not be accorded immunity to engage in such otherwise illegal conduct.”