Is Removing The Insurer Anti-Trust Exemption A Good Substitute For The Public Option?

“In the absence of government-sponsored health coverage, liberals now want negotiators to waive the anti-trust exemptions for insurance companies –another sticking point for Nelson,” Politico reports. “Oregon Rep. Peter DeFazio told his fellow Democrats on Thursday that it needs to be in the final package to keep insurance companies accountable.”

Progressives have argued that a public option would restore competition to concentrated markets, curtail abusive industry practices and lower health care costs — and they believe they can accomplish the same goals by removing the insurance industry’s anti-trust exemption. But anti-trust experts disagree. They argue that simply eliminating the exemption is not enough; lawmakers must strengthen enforcement mechanisms if they wish to hold insurers accountable.

“At some point in time, the anti-trust exemption probably served as some type of an obstacle and inhibited the federal anti trust agencies from going in and blocking some of the mergers that have led to such a concentrated market,” former anti-trust enforcer David Balto explained in an interview with the Wonk Room. “At this point, there is really no need from the industry’s perspective, for an anti trust exemption. This anti trust exemption permits them to coordinate activities which would be considered collusion in other industries. When you are a monopolist, there is no need to collude.” Today, one in six “metropolitan areas in a 2008 study of more than 300 U.S. markets is [are already] dominated by a single health insurer that controls at least 70% of consumers enrolled in health maintenance organizations or preferred provider organizations.”

Removing the exemption would allow anti-trust enforcers to begin preventing anti-competitive activities and enforcing the new regulations of reform, but lawmakers need to buttress the capabilities of the Department of Justice and Federal Trade Commission if they wish to prevent insurers from entering into collusive arrangements that would undermine any new competition, Balto argues. He proposes several ways to jump start enforcement:

1. Marshal competition and consumer protection enforcement resources to focus on insurers’ anticompetitive, egregious, and deceptive conduct.

2. Create a vigorous health insurance consumer protection enforcement program.

3. Reinvigorate enforcement against anticompetitive conduct.

In light of the compromises progressives have made to advance health care reform, simply removing the anti-trust exemption is too little too late. If progressives want to achieve some of the goals of the public plan — and hold insurers to account — they better give their exemption demands some teeth.