February 24, 2010 
 
WASHINGTON -- The House of Representatives voted 406 to 19 to pass a bill that would apply federal antitrust laws to the insurance industry.

Currently, insurance companies are exempt from antitrust laws that prohibit companies from sharing cost information. The bill would eliminate the insurance industry's 64-year-old exemption and authorize the federal government to investigate insurers who allegedly share information to set rates.

Supporters of the bill say insurers use the exemption to compare market prices and engage in price-fixing and bid-rigging on health insurance and medical liability policies.

When insurance companies set premiums based on what competitors are charging, patients get slapped with higher costs, and physicians must pay more money to get malpractice coverage, supporters of the bill say.

Opponents, including the insurance industry and some Republicans, argue that insurers are are not bid-rigging and say the bill would do nothing to lower costs.

The insurance industry's exemption from general federal prohibitions on price sharing stems from the 1945 McCarran-Ferguson Act. It was enacted under the theory that states could regulate the industry and didn't need the federal government.

But supporters of the bill say the lack of federal scrutiny has allowed insurance companies to secretly trade information with competitors in setting their own rates, causing insurance premiums to increase.

"This industry should play by the same rules as other industries, plain and simple," said Rep. Pete Defazio (D-Ore.)

President Barack Obama strongly supports the legislation, and the White House released an official statement to that end on Tuesday.

"The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own healthcare choices by promoting greater insurance competition," the statement said.

Democrats took turns on the House floor Wednesday promoting the bill, with many saying that removing the exemption for insurance companies will save consumers money.

However, the nonpartisan Congressional Budget Office (CBO) in 2009 determined "enacting the legislation would have no significant effect on the premiums that private insurers would charge for health insurance."

The insurance industry called the bill an attempt "to solve a problem that doesn't exist."

"The rhetoric surrounding repeal of McCarran-Ferguson does not match the reality of the situation," said Karen Ignagni, President and CEO of America's Health Insurance Plans (AHIP), in a prepared statement.

"Health insurance is one of the most regulated industries in America at both the federal and the state levels. The Act is extremely limited in scope and has nothing to do with competition within the health insurance industry," she said.

House Democrats included a partial repeal of McCarran-Ferguson in their healthcare reform bill, but Senate Democrats did not. The Senate will now have to vote on the bill, and it's expected that a number of Republicans will oppose it.

The bill rode to passage on a swelling tide of resentment against the insurance industry following the announcement from Anthem Blue Cross that it would increase its premiums for individual insurance policies up to 39%.

An executive from Wellpoint, Anthem's parent company, told members of Congress on Wednesday that the higher premiums were justified by rising medical costs.

Obama has cited the soaring costs of insurance as evidence that healthcare reform -- or, as he often calls it, "insurance reform" -- is necessary. The White House is hosting a healthcare summit on Thursday with top lawmakers from both sides of the aisle.