In a rare appearance as a witness at a Senate hearing, the majority leader, Harry Reid of Nevada, told the Judiciary Committee on Wednesday that it should repeal a 1945 law that granted the insurance industry limited exemption to national antitrust laws by allowing states to regulate insurers.
The law, the McCarran-Ferguson Act, is often cited by Mr. Reid and other critics of the health insurance industry as a reason why coverage can be so expensive for many people. They say the law allows insurers to monopolize markets and fix prices in ways that are usually illegal.
'Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act,' Mr. Reid said.
'Providing an exemption for insurance companies to antitrust laws has been anticompetitive and damaging to the American economy,' Mr. Reid continued. 'Health insurance premiums have continued to rise at a rapid rate, forcing businesses to cut back on health insurance coverage and forcing many families to choose between health insurance and basic necessities.'
He added: 'Insurance companies have become so large they dominate entire regions of the country. They have become so powerful they block start-up businesses from entering the market, and they put smaller companies out of business. They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy.'
Also, the chief anti-trust enforcement officer in Obama administration weighed in with similar sentiments, as reported by Bloomberg News via the Philadelphia Inquirer:
Christine Varney, the Obama administration's chief antitrust enforcer, told lawmakers yesterday that repealing the insurance industry's antitrust exemption would spur competition and further the drive to control the cost of health insurance.
Varney, head of the Justice Department's antitrust division, told the Senate Judiciary Committee that ending the exemption would 'allow competition to have a greater role in reforming health and medical malpractice insurance markets.'
So why would this discussion be relevant to Health Care Renewal? First of all, the exemption of insurance companies from anti-trust laws (US laws designed to prevent monopolies and other anti-competitive business practices) may have allowed these companies to grow into business behemoths, and for individual companies to dominate local insurance markets. In some locales, businesses and individuals have very few health insurance policies available because only a few companies dominate the market. In fact, every recent year, the US American Medical Association (AMA) has put out a report on insurance market consolidation decrying concentration among power in local markets among few companies.
For example, the AMA news release for the 2009 report said:
The vast majority of health insurance markets in the U.S. are dominated by one or two health insurers, according to a new study by the American Medical Association (AMA) that examined insurer competition in markets across the country. Most alarmingly, in nearly all 314 metropolitan areas studied, there is evidence that patients and physicians have fewer options and are left vulnerable to the demands of the health insurer.
So this does seem to be a case of concentration, if not necessarily abuse of power in health care.
Why this is real news however, is that the 1945 McCarran-Ferguson Act, its baleful influence, and calls for its repeal are not old news. In fact, up to now, they have not been news, or part of health care policy discussions at all.
My first response to the news articles above was "the McCarran what act?" I had never heard of this 64 year old law, and never heard it cited as an enabler of concentration of power in health insurance, and never heard a call for its repeal.
Maybe that means I am no expert in this field. But, the first 10 pages of a Google Scholar search for the terms "McCarran Ferguson health insurance exemption" revealed precisely one article in the health care / services/ policy research literature that discussed this act (from 1998, in Health Affairs,(1) and without clearly relating the act to concentration of power in health insurance.) Similarly, a PubMed search, using the term "McCarran-Ferguson Act" produced nine articles, none in mainstream health care/ services/ policy research journals, much less general medical journals (three were in the Am J Law Med, 2 in AIDS Policy Law, one in Benefits Q, one in J Am Osteopath Assoc, one in J Pediatr Health Care, one in Am J Hosp Pharm, the most recent published in 2004, all the others in 1999 or earlier. There was nothing except the article above in Health Affars, nothing in Medical Care, nothing in Health Services Research, and nothing in any of the big general medical journals.)
Therefore, maybe the 1945 McCarran-Ferguson Act was a major cause of consolidation in the health insurance market, and this consolidation may be an important contributor to high health care costs and poor health care access. But this notion apparently has not appeared in any major medical or health care/ services/ policy research journal in the last 20 years.
If the McCarran-Ferguson Act has been around for 64 years, and is a major cause of rising health care costs and declining health care access, why has no one bothered to discuss it where any physician or health care/ policy researcher might see it?
It seems that the failure to bring the McCarran-Ferguson Act into polite conversation is another example of the anechoic effect. We have noted again and again that for physicians or health care professionals to discuss certain aspects of our dysfunctional health care system, often aspects that relate high costs, declining access, and poor costs to concentration and abuse of power, is "just not done." So it seems like discussing how a federal law from another era barred government action to prevent concentration of power in the health care industry, concentration of power that made some people very rich, was "just not done."
Of course, if there was any discussion of this law and its effects, maybe someone would have called for its repeal before 2009.
Dr Aubrey Blumsohn provided a reminder from the UK to us in the US: ""the desire to maintain decorum and status in medicine seems also to overwhelm all standards of decency. Our profession is inclined to fixate on the irrelevant while ignoring some very bad things."
If we really want to improve health care here in the US, and around the world, a modest beginning would be to begin open discussion of the various skeletons rattling around in the health care closet.
1. Nichols LM, Blumberg LJ. A different kind of ‘New Federalism’? the Health Insurance Portability And Accountability Act of 1996. Health Aff 1998; 17 (3): 25. [Link here.]