Sen. Leahy Proposes Amendment To Repeal Anti-Trust Exemption For Health Insurers

Sen. Patrick Leahy (D-VT), a long time supporter of ending the anti-trust exemption enjoyed by insurers, has filed an open amendment “to the pending Wall Street reform legislation” that would bar health insurance issuers or issuers of medical malpractice insurance from engaging in “any form of price fixing, bid rigging, or market allocations in connection with providing health insurance coverage or coverage for medical malpractice claims or actions.” The anti-trust provision passed in the House, but was not part of the Senate legislation or reconciliation package that ultimately became law. From Leahy’s office:

“The recent economic crisis showed all of us that corporations do not act responsibly without adequate oversight,” said Leahy. “It is important to remember that there is another industry that is not required even to play by the same rules of competition as everyone else. Benefiting from a six-decade-old special interest exemption, the health insurance industry is not subject to the Nation’s antitrust laws. We can surely agree that health insurers should not be allowed to collude to fix prices and allocate markets.”

All this sounds good, but it’s unclear if just lifting the exemption would lower health care costs or accomplish much of anything. As former anti-trust enforcer David Balto explained in an interview with the Wonk Room, “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. 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.”

Removing the exemption would allow anti-trust enforcers to begin preventing anti-competitive activities and enforcing the new regulations of reform. But regulators will probably need some more funding if they’re going to prevent insures from entering into collusive arrangements that would undermine any new competition created by health reform.

Leahy’s amendment is one of approximately 90 amendments filed to the Wall Street reform measure and will require 51 votes to pass.