Doctors, Hospital Officials & Patient Groups Join Pallone In Urging Repeal of Insurance Industry′s Anti-Trust Exemption

February 17, 2010

Doctors, Hospital Officials & Patient Groups Join Pallone In Urging Repeal of Insurance Industry′s Anti-Trust Exemption

Competition Would Reduce Costs & Help ′Keep Them Honest′

New Brunswick, NJ -  Insurance companies should not be exempt from anti-trust laws according to doctors, hospital administrators and consumer groups that participated in a policy forum with Congressman Frank Pallone, Jr. on Wednesday. The McCarran-Ferguson Act of 1945 has shielded the health insurance industry from the nation′s anti-trust laws for more than 60 years, effectively reducing competition and essentially immunizing the industry from "the laws of fair play and honest practices."

"Insurance companies shouldn′t be left to play by their own rules," said Pallone. "Fair competition will help keep them honest. The anti-trust exemption enjoyed by insurance companies may contribute to their profit margin, but patients and doctors are paying the price."

The anti-trust laws, primarily the Sherman Act and the Clayton Act, ban price fixing, bid rigging, market allocation and other forms of business collusion intended to reduce or bypass the elements of competition that are so essential to the marketplace, Pallone noted. The federal government has been prevented from even investigating competitive practices.

The exemption - and the intended repeal - apply to medical malpractice as well.

The forum, held at the Robert Wood Johnson Hospital in New Brunswick, brought doctors, hospital administrators and consumer groups together to discuss the anti-trust status of health insurance companies. Pallone said Democrats in Congress will soon introduce legislation - to be entitled The Health Insurance Industry Anti-Trust Enforcement Act - that would repeal the exemption.

Insurance companies are enjoying record profits at the same time consumer costs continue to increase, Pallone noted. There are no good reasons that they should be exempt from the laws that apply to other businesses in a free marketplace, Pallone added.

Most states are dominated by very few competing insurance firms. In New Jersey, two companies have 60 percent of the market.  While many states have anti-trust laws of their own, the standards vary as does the ability to enforce them. In fact, insurance companies charged at the state level have used the federal exemption as reason to justify their practices and defend themselves from state laws.