Antitrust Tsunami: Even Howls From Powerful Insurance Lobby Can’t Save Exemption

Turning their backs to the howls of protest from the powerful health insurance lobby, more than 400 Democrats and Republicans voted to do away with the antitrust exemption the insurance industry has enjoyed for 65 years.

In an almost-unheard-of bipartisan move on the issue of healthcare, House members overwhelmingly voted, 406 to 19, to approve H.R. 4626, the Health Insurance Industry Fair Competition Act, which would repeal the health insurance industry’s antitrust protection.

“This antitrust exemption was passed again around over 60 years ago and was supposed to last three years. Sixty-five years later, we are on the floor of the House to finally repeal the special exemption that insurance companies have that no other industry, except Major League Baseball, has in our country,” House Speaker Nancy Pelosi says in remarks on the House floor.

The dramatic House vote comes just a day before a high-stakes televised summit between President Obama and Republicans over the future of the Democrats’ broader comprehensive healthcare reform measures.

Supporters of the Health Insurance Industry Fair Competition Act say eliminating the exemption will level the playing field and inject new competition in the healthcare industry. The bill must now go to the Senate, where Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, has legislation to repeal the exemption.

The political standing of health insurers have taken a tumble in recent weeks, as Anthem Blue Cross, an insurer in Pelosi’s home state of California, has come under fire for wanting to jack up premiums by as much as 39 percent this year on some individual health policies even as a study revealed that the profit margin of Anthem’s part company, WellPoint Inc., 7.2 percent, was the highest of the five big insurers.

Further, WellPoint, UnitedHealth Group, Cigna Corp., Aetna Inc. and Humana Inc. covered 2.7 million fewer people than they did the year before.

What’s even more remarkable about Wednesday’s lopsided vote to end the industry’s special protection over the complaint of its Washington lobby, America’s Health Insurance Plans (AHIP).

Karen Ignagni, AHIP president and CEO, tried to cast the repeal as an empty gesture on the part of Congress, and in a letter to lawmakers last week, tried to make a case that ending the exemption would actually hurt the cause of healthcare reform.

Not so, according to Wendell Potter, a former executive Cigna and Humana, two of the largest U.S. insurers who today strongly supports the antitrust repeal.

“The insurance industry has enjoyed an exemption, as everyone has said, for 65 years. And that has contributed to a health care system that has become one of the most dysfunctional and one of the most expensive in the world,” Potter says. “And this is time that the health insurance industry begins to abide by the same rules and regulations that every other industry in this country has to abide by.”

Although Ignani says existing regulation prohibits price-fixing and other anticompetitive behavior, health insurers hold “a blatant disregard for regulation,” Potter says.

“And over the 20 years that I was in the industry, I saw competition vanish,” he adds. “We have seen so many mergers and acquisitions over the years that industry now is dominated by a cartel of about seven very large health insurance companies, all of them for profit.”

Publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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