Will Health Insurance Companies Lose Their Antitrust Exemption?

For the past 65 years, the health insurance industry has been one of the few that is exempt from antitrust regulations. That means that the government has little recourse in preventing the creation of monopolies and price fixing among health insurance companies that raises health insurance rates for everyone. The House of Representatives is looking to change that with a new bill.

Why have medical insurance companies been able to avoid antitrust regulation for so long? There are mitigating factors that can be used to avoid the Department of Justice's attention; in the case of Major League Baseball, the fact that they are the only professional baseball league allows them decreased scrutiny for potentially anti-competitive business practices. However, there are many health insurers: publicly traded, for-profit companies such as United Health Care, as well as not-for-profit organizations like Blue Cross Blue Shield, are in the market.

According to the industry, their exemption from federal antitrust law is deserved because the states are responsible for regulating insurance. Many Democrats in the House worry that poorly-funded state regulatory agencies are insufficient, and several consumer groups share that concern. The Senate has not been as adamant about this type of reform, but Majority Leader Harry Reid has promised to consider it. Proponents believe that it will allow consumers more choice over their medical insurance.

Experts are speculating on what this recently introduced bill means for the comprehensive health insurance reform pushed by the Obama administration and Democratic party. The broader legislation passed by the House includes the repeal of the antitrust exemption, while the Senate version does not. A spokesperson for House Speaker Nancy Pelosi insists that this bill does not mean that reform will be chopped up into bits and pieces in order to pass it. Still, top Congressional Democrats are undecided on how to move on with the legislation after the loss of their filibuster-proof Senate majority.

Rules Committee Chairwoman Louise Slaughter, who wrote the House bill's antitrust provision, does not believe the nation can afford to wait for Pelosi and Reid to craft a new strategy. She thinks that low cost medical insurance will be more widely available if health insurance companies are forced to engage in more competition. It is possible that the separate bill could receive a few moderate Republican votes; while the appearance of the federal government infringing on states' rights is certainly an issue, the idea of removing what looks like an unfair advantage (as opposed to making over the entire health care system) has greater appeal to their constituents.