February 24th, 2010
07:27 PM ET
4 years ago

CNN Fact Check: Would exemption repeal lower premiums?

(CNN) - By a lopsided vote of 406 to 19, the House of Representatives has voted to repeal a law that protects health insurance companies from federal antitrust prosecution. Backers of repealing the exemption say it would inject new competition into the health insurance industry and reduce premiums, but its prospects of passing the Senate are uncertain.

Fact Check: Would eliminating health insurance companies' antitrust protections cut premiums?

(Get the facts and the bottom line after the jump)


– The McCarran-Ferguson Act, passed in 1945, grants insurers what the Kaiser Family Foundation calls "a limited exemption from federal antitrust scrutiny." Critics note that the only other industry with a similar exemption is professional baseball.

– In a 2009 analysis, the nonpartisan Congressional Budget Office reported that removing the exemption for health insurance would allow the federal government "to pursue cases it otherwise would not be able to
prosecute." But the report concluded that existing state laws already prohibit those activities, such as price-fixing, bid rigging and market allocations.

– David Balto, a senior fellow at the left-leaning Center for American Progress, argues that "individual states' departments of insurance are not necessarily equipped to take action." He says he studied 33 states, and "none had taken an antitrust enforcement action in the past five years."

– But the CBO predicts that removing the exemption would have "no significant effect on premiums." Scott Harrington, a professor at the University of Pennsylvania's Wharton School and an adjunct scholar at the
conservative American Enterprise Institute, agrees, writing in the Wall Street Journal, "There is no evidence that the exemption has increased health insurers' prices or profits or contributed to higher market concentration."

Bottom Line:

Eliminating the health insurance industry's exemption from federal antitrust law could open the door to more scrutiny of the health insurance industry, but there's no hard evidence it would reduce premiums.


Filed under: Fact Check • Health care
soundoff (19 Responses)
  1. Rowe

    "but there's no hard evidence it would reduce premiums. "

    A month's salary says that this is exactly the line that the corporate shills in the Senate will use to vote against the house measure.

    "More power to the big, bad old federal government when 'there's no hard evidence it would reduce premiums.'"

    February 24, 2010 07:32 pm at 7:32 pm |
  2. Former Republican, now an Independent

    Competition surely won't hurt. Under the Bush administration we witnessed hundreds of mergers and acquistions resulting a monopoly in several sectors of business and banking.

    February 24, 2010 07:33 pm at 7:33 pm |
  3. Four and The Door

    More pure politics by Obama, Pelosi and Reid. Same old same old.
    I wish they would spend a little of their precious time working on concerns outside of their little world in Washington DC.

    February 24, 2010 07:34 pm at 7:34 pm |
  4. Jeff Spangler, Arlington, VA

    If competition is superior to monopoly in this industry in the long run, does it really matter what the effects are on premiums this year or next? Insurance is a legally-sanctioned racketeering enterprise permitted to spread risks and profit exorbitantly from its exclusive knowledge of the underlying risk data. I hate them and all their employees.

    February 24, 2010 07:37 pm at 7:37 pm |
  5. Carmelle

    If it doesn't hurt the business or the ppl. Take it off. Let the market be free.

    What's the reason to have it anyway?

    February 24, 2010 07:41 pm at 7:41 pm |
  6. leonardofru

    More scrutiny means more harrasement of all health providers, ergo more money having to be spent on lawyers (who play kissey face with the Dems) and more time away from their real jobs defending themselves against Obamists smears.

    February 24, 2010 07:50 pm at 7:50 pm |
  7. catawungus

    Removing the exemption is not about 'lowering premiums'. Who researches your stuff?

    It is about subjecting Ins Cos to same laws as other companies. In other words, if Ins Co cuts your benefits w/out reason they can be sued for BAD FAITH. In that they never intended to pay for what they promise or hold up their end.

    With the exemption in place, there are NO checks or balances on their abruptly terminating ppl who then have to fight them and have no laws to hold them accountable.

    Not everything is about rates. However, this is about Ins Cos taking your money and giving you nothing in return. Once the exemption is gone, they have to live up to their end. And they cannot say they are "Exempt"

    Try to keep your posts informative. Twisting everything into a single line of reasoning, when multiple lines of offense exist, makes you look like you are adding to the noise, not trying to 'inform'.

    Just keepin' you honest.

    February 24, 2010 07:56 pm at 7:56 pm |
  8. Ted in Bloomington

    Bottom Line: Even if there isn't any hard evidence it would reduce premiums, the additional scrutiny of the health insurance industry is a good thing – if for no other reason than to make them follow the same laws as other companies and to be accountable for their actions. In theory, our confidence in them should then improve, shouldn't it? That said though, I personally believe that premiums would drop, regardless of what the "experts" say..

    February 24, 2010 08:02 pm at 8:02 pm |
  9. Allen in Hartwell GA

    I would think that state agencies might be reluctant to go after a company in their state, where a federal agency wouldn't be held back. The evidence would come after the exemption was lifted and a federal agency was staffed with competent people.

    February 24, 2010 08:13 pm at 8:13 pm |
  10. annie against biased news

    At this point no one with even just one brain cell left believes anything this faux so-called president or his chicago mafia adiministration says!

    February 24, 2010 08:20 pm at 8:20 pm |
  11. rdepontb

    Once the cross-state-line insurance policy is okayed, won't that in part make it a collective, national, _federal_ issue, instead of just a state-by-state issue? The voice of the entire American population can now be used, not the sometimes-bickering, separate voices of 50 individual states.

    The Insurance Companies have lost their ability to carry out their divide-and-conquer strategies.

    February 24, 2010 08:25 pm at 8:25 pm |
  12. JJ

    About time!

    February 24, 2010 08:34 pm at 8:34 pm |
  13. Charlie in Maine

    How much trouble can 41 Senators of the wrong party cause. I mean really 406 to 19 and it is un-certain in the Senate that just says it all. Even with the house Republicans for it????? America should be outraged that the Senate Republicans and some Democrats are so deep in with the insurance companies that they would go against their own party in the house to appease their masters. It is telling.

    February 24, 2010 08:39 pm at 8:39 pm |
  14. Tom from Vermilion, Ohio

    Good, now do something similar to pharmaceutical companies, medical equipment mfrs, health care institutions, et al. Then take a hard look at publically held financial corps, defense contractors and any corporations whose executives unjustifibly make over $500,000 annually at the expense of the american worker.

    February 24, 2010 08:43 pm at 8:43 pm |
  15. Henry Miller, Libertarian, Cary, NC

    No, removing the antitrust exemption will have no effect–unless the DOJ actively takes on the largest insurers and forces them to break up, thereby increasing competition.

    February 24, 2010 08:45 pm at 8:45 pm |
  16. southern cousin

    Next thing is Obama will be telling all of us what we can earn, except of course for the slimy crooks in unions.

    February 24, 2010 08:45 pm at 8:45 pm |
  17. Conservatism equals illiterate ignorance

    As an ex Insurance agent I can say it will drastically alter the monoploy many insurance companies have on different markets. This is one of the major problems with the industry, all markets are divided amongst the companies and there is little if no competition, in other words exactly what monoploy laws are set up to discourage. Why do you think the Insurance companies are trying so hard to derail this plan? Think they really want to compete and give you a fair shake? Guess again, Greed is thier underlying principle, gouge the public for all you can get.

    February 24, 2010 08:52 pm at 8:52 pm |
  18. Mastern8

    Its about time

    February 24, 2010 08:54 pm at 8:54 pm |
  19. Angela

    It may or may not lower premiums, however having the insurance companies open to more scrutiny is a good thing, a very good thing. If the insurance companies can't reduce their premiums having the money to pay their top officers literally BILLIONS of dollars they are so inefficient they should fail. Bring on the public option and if that isn't enough single payer shourly should be an option. I am fortunate enough to live in a state with a strong insurance comissioner and where our main insurer is a non-profit. Guess what? When I left California my retirment plan offered a blue cross policy for $1389 per month for 2 people. I bought the SAME policy in my state for $439 per month for the same 2 people. The insurance company was looking at almost a thousand dollars because the insurance comissioner in California is weak.

    February 24, 2010 09:07 pm at 9:07 pm |