Democrats eye insurance industry’s antitrust protection

Democrats launched a drive at both ends of the Capitol on Wednesday to strip the insurance industry of its decades-old exemption from federal antitrust laws, part of an increasingly bare-knuckled struggle over landmark health care legislation sought by President Barack Obama.

If enacted, the change would put an end to "price-fixing, bid-rigging and market allocation in the health and medical malpractice" insurance areas, said Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee. Leahy said he would seek a vote on the plan when the Senate debates health care legislation in the next few weeks.

Leahy made his comments at the same time the House Judiciary Committee voted 20-9 to end an industry exemption that dates to 1945. Three Republicans supported the move.

Senior Democratic officials said the leadership was inclined to incorporate the measure into the broader health care bill expected to be brought to the floor for a vote within a few weeks. No final decision has been made, they added.

Taken together, the actions reflect the fury Democrats have shown in response to recent insurance industry attempts to influence the shape of legislation. The events occurred less than a week after the insurers’ trade association issued a report saying a measure that cleared the Senate Finance Committee would produce sharp increases in premiums for millions who currently have insurance.

Democrats and the White House reacted angrily, attacking the study as flawed and politically motivated.

Responding to the day’s developments, the industry said the legislation was based on a misperception of existing law. "We believe that health insurers have not been engaging in anticompetitive conduct and that McCarran-Ferguson does not provide a shield for such conduct," Karen Ignagni, president and CEO of American’s Health Insurance Plans wrote to Rep. John Conyers, the Michigan Democrat who chairs the Houses Judiciary Committee.

"Thus, the bills attempt to remedy a problem that does not exist."

The flurry over antitrust law occurred as the Senate neared a vote on legislation to give doctors who treat Medicare patients an additional $247 billion in fees over the next decade. The measure would add to the deficit, and as a result, it appeared unlikely to gain the 60 votes needed to advance.

The bill’s demise would mark a defeat for the American Medical Association, which has lobbied furiously for its passage. The Senate Majority Leader, Sen. Harry Reid of Nevada, told reporters that without 60 votes in its favor, he was prepared to set the issue aside and return to it after passage of the broader health care bill.

The developments came as Democrats struggled in both houses of Congress to enact Obama’s call for legislation to expand health care to millions who lack insurance, provide greater consumer protections to millions more, and rein in the cost of medical care in general.

In the Senate, Reid, key committee chairmen and White House aides are at work crafting legislation the Senate can vote on later this fall.

The House is also on track for a vote this fall, although weeks of private negotiations among Democrats have yet to produce agreement on a bill.

Among the most controversial unresolved issues concerns proposals for the government to sell insurance in competition with private companies.

The House bill is certain to include such a provision, although the rank and file have yet to come to an agreement on key details, slowing action on the overall measure.

It is unclear what type of so-called "public option" will be incorporated into the Senate measure, where Democratic moderates are wary of the idea.

Until recently, the insurance industry has played a noncommittal role as legislative proposals developed in both houses of Congress. AHIP announced months ago it supported comprehensive health care reform and Obama called on Ignagni to speak at a televised White House event designed to showcase widespread agreement that the time had come to change the current system.

Essentially, industry offered a trade. It agreed to abandon practices such as denying coverage on the basis of pre-existing medical conditions if the legislation required nearly universal coverage, a step that would give it access to millions of new customers. At the same time, it vigorously opposes any legislation that would allow the government to sell insurance.

The tone began to change when the Finance Committee voted to excuse an estimated 2 million lower income Americans from a requirement to purchase insurance, at the same time it greatly reduced the penalties for those who were still covered, but refused to buy coverage.

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