Sometimes, in American politics/public policy, the unexpected occurs. A year ago, if you had said health care reform in 2009 would lead to the end of the health insurance industry's anti-trust exemption, you probably would have been classified as a candidate for 24-hour observation. It still hasn't become law yet, but on Wednesday the above took one more step toward becoming reality as the U.S. House Judiciary Committee approved a bill that would curb the health insurance industry's limited exemption from antitrust law and would allow the U.S. Justice Department to enforce laws relating to price fixing and market allocation, The New York Times reported. The committee voted 20-9 in favor of the measure, with three Republicans joining 17 Democrats.
Insurers argue the elimination of the exemption would ultimately lead to fewer insurance companies and higher premiums.
Critics of the exemption say that's already occurred, with insurers taking advantage of the exemption to carve-up territories -- tacitly if not overtly agreeing not to compete in certain regions -- leading to near monopolies, de-facto price fixing, a breakdown of the competition requirement for free markets, higher prices, and other abuses.
Fiscal Analysis: The view from here still argues the U.S. Congress will not be able to pass both health care reform and end the health insurance industry's antitrust exemption. If it did, however, the duo would represent a public policy achievement of New Deal proportions. Based on the current 'territoriality' and highly-concentrated system, there's little incentive for health insurers to compete on price. If the antitrust exemption is removed, competition would increase in every region of the United States -- insurers would have real, viable competition to deal with in their primary zones, and premiums would likely fall substantially.
But again, removing the exemption would be a non-incremental policy change for Congress -- and that change, combined with health care reform, would result in Congress passing TWO policies in the public interest in one year -- FDR-level achievements. Again, I'll believe it when I see it.
- -
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
10-22-2009 @ 6:13PM
Lee Gibson said...
But we can dream, can't we?
10-22-2009 @ 6:55PM
Sam Houston said...
We accept most health insurance plans at www.InternationalDrugRehab.com
10-22-2009 @ 9:08PM
rann948 said...
More choices does not necessarily mean better choices.
10-22-2009 @ 10:10PM
Antonio Sosa said...
The Obamacare stench is so nauseating, even the Democrats are trying to distance themselves from the Obamacare scam. Obama and his accomplices may paint the scam in different colors and call it by different names, but people understand it's a SCAM, a power grab that will further destroy our health care, our economy and our country.
To solve our healthcare problems, we need to go in the OPPOSITE DIRECTION to Obamacare. The last thing we need is more backroom deals, more corruption and more ACORN-type bureaucracy.
10-22-2009 @ 10:18PM
John Thacker said...
"If the antitrust exemption is removed, competition would increase in every region of the United States -- insurers would have real, viable competition to deal with in their primary zones, and premiums would likely fall substantially."
You have no idea what you're talking about. The antitrust exemption is a *federal* exemption; states can still use antitrust laws if they want. In any case, removing the antitrust exemption still won't change the more important problem with competition-- it will still be illegal to buy health insurance from another state. *That* is what causes all the state monopolies. The federal antitrust exemption works because there is *no* United States of America insurance market; just a collection of 50 state markets, each regulated independently, with some holding companies that operate in multiple states.
More importantly, removing the federal antitrust exemption could actually *reduce* competition. The federal antitrust exemption allows small insurers from different states to pool data with each other; without it, they wouldn't be able to collect the actuarial data necessary to compete with the large, multi-state behemoth holding companies.
10-23-2009 @ 2:18AM
mentallyretired said...
If they were to remove individual state insurance regulations it would be no different than the credit card industry where every credit card company moved their headquarters to states with the least regulation and no usury laws. That's why most major credit card issuers' operations are based in Wilmington, Delaware (Bank of America, Chase, Discover, Barclays, HSBC) or Sioux Falls, South Dakota (Citi, Wells Fargo) because they raced to the bottom in regulation to attract businesses.