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Congress acts to restore competition to health insurance by removing 75-year-old antitrust exemption

WASHINGTON, D.C. — Consumer Reports is hailing Congress’s passage of the Competitive Health Insurance Reform Act, which removes the antitrust exemption that since 1945 has allowed health insurers to disregard the basic free-market rules of competition that operate throughout the rest of the economy.

“Enactment of this bill promises to finally bring consumers the benefits of competition for their essential health insurance coverage needs,” said George Slover, senior policy counsel for Consumer Reports.

“Consumer Reports has been urging Congress to remove this ill-conceived and anti-consumer antitrust exemption for decades,” said Slover.  “We are thrilled to see it finally happening.  We especially want to congratulate Congressman Defazio of Oregon, Congressman Gosar of Arizona, Senator Daines of Montana, and Senator Leahy of Vermont for their leadership in accomplishing this win for competition and consumers.”

The House passed the bill, H.R. 1418, in September by voice vote without opposition.  The Senate passed the bill early this morning by unanimous consent. The bill is now headed to the President for signature.

The antitrust exemption being removed by this legislation was enacted 75 years ago, as an afterthought slipped into the McCarran-Ferguson Act, when the country was preoccupied with winning the Second World War.  The antitrust exemption, originally intended to last only three years, has created a significant drag on meaningful competition for this vital consumer need ever since.

The antitrust exemption has essentially allowed health insurers to act as a monopoly, making demands in lockstep on the terms they will offer consumers and health care providers.  The resulting squeeze puts pressure on providers to cut corners on service in order to increase the profits the health insurers can extract.  In a competitive marketplace, consumers and providers would have meaningful choices, because health insurers would be competing.  They would be looking for ways to set themselves apart by offering better coverages, expanded provider networks, and other improved features.  But with the antitrust exemption, consumers and providers have been denied this basic right when it comes to health insurance.

Enactment of this legislation will change that.  It will open up more opportunities for new insurance companies to enter the market, and compete in offering better and more affordable coverage to consumers and better terms to doctors, hospitals, and providers.  Existing insurance companies will also have to start finding ways to offer those choices.  Ultimately these choices will mean a better deal for consumers, and a better deal for all who seek to provide health care to them.

It is important to emphasize that, contrary to claims by some opponents, removing this antitrust exemption will not compromise or diminish the authority of states to regulate insurance.  Clarifying this state authority was the core purpose of the McCarran-Ferguson Act, and that authority is being fully preserved in this bill.  


Contact: David Butler, david.butler@consumer.org