House votes to strip health insurance companies of antitrust exemption

By Perry Bacon Jr.
Washington Post staff writer
Wednesday, February 24, 2010; 6:10 PM

The House voted Wednesday to strip health insurance companies of their exemption from federal antitrust laws, a Democratic measure that could resonate with public concerns about insurers but that has an uncertain future in the Senate.

The provision passed on a 406 to 19 vote, with most Republicans joining all the House Democrats in voting for the measure.

President Obama has said he favors the idea of repealing the exemption, and House Democrats say doing so would add scrutiny to the practices of health insurers. "The American people want and need this protection," said Rep. Peter A. DeFazio (D-Ore.)

The nonpartisan Congressional Budget Office, however, said last year that because states already investigate health insurance companies, repealing the exemption would not significantly reduce premiums. Under a 1945 law, health insurance companies are regulated by state governments to prevent collusion, price-fixing and other anti-competitive behavior.

The Senate has not said when or if it will take up the legislation. Senate aides said the chamber is focused on passing an overall health bill and is unlikely to take up the antitrust measure soon.

Republicans privately complained the House antitrust measure was designed for political reasons. Republican leaders circulated a memo before the vote saying the issue was being pushed by Democrats for "political calculations, rather than substantive reasons." But, wary of being tagged by Democrats as too close to the insurance industry, the GOP did not organize its members to oppose the measure.

"The Congressional Budget Office has noted that the states already have the laws on the books to prevent what we are trying to deal with here," said Rep. Scott Garrett (R-N.J.).

The measure comes as Obama steps up his effort to regulate the health insurance industry. In the health-care plan unveiled this week by the White House, Obama would allow the secretary of Health and Human Services to block rate increases and create a seven-member board to review whether increases are justified.

Meanwhile, in a hearing on Capitol Hill on Wednesday, congressional Democrats sharply criticized executives from insurance giant WellPoint, which owns Anthem, a large insurance company that recently proposed a major rate increase in California.

"Corporate executives at WellPoint are thriving, but its policyholders are paying the price," said Rep. Henry A. Waxman (D-Calif.).

WellPoint executives defended the rate increase, saying it reflected higher medical costs.

Health insurance companies opposed the antitrust repeal legislation, but spent little energy lobbying members on Capitol Hill to oppose it.

"The rhetoric surrounding repeal . . . does not match the reality of the situation," said Karen Ignagni, president and chief executive of America's Health Insurance Plans. "Health insurance is one of the most regulated industries in America at both the federal and the state levels."

But the Consumer Federation of America said more regulation of insurance companies is needed and estimated it could save Americans overall about $5 billion a year in health costs.

"If there was greater investigation of concentration [of insurance companies in a region] and thorough antitrust enforcement, there could be greater savings," said J. Robert Hunter, director of insurance for the CFA.

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