Dems Seek Repeal of Insurance Trust Exemption

WASHINGTON (CN) - The Justice Department says that repealing the insurance industry's exemption from federal antitrust oversight under the McCarran-Ferguson Act would bolster its efforts to strengthen insurance regulation - and would be a boon to states' rights.

Because of the law's broad definition of what is exempt under the "business of insurance," Assistant Attorney General Christine Varney told the Senate Judiciary Committee that one can view the Act as barring "federal antitrust action whenever there is a state regulatory scheme, regardless of how perfunctory or ineffective it may be."

Senator Harry Reid, D-Nev., and Representative John Conyers, D-Mich., have introduced legislation to repeal the antitrust exemption that McCarran-Ferguson gives health and medical malpractice insurers.

Speaking at the Senate Judiciary Committee hearing Wednesday, Varney said that "the most egregiously anticompetitive claims, such as naked agreements fixing price or reducing coverage, are virtually always found immune."

Varney said the law was adopted in 1945, and today's climate no longer justifies a broad antitrust exemption of the "business of insurance."

"Some forms of joint activity that might have been prohibited under earlier, more restrictive doctrines are now clearly permissible," Varney said at the hearing on "Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry."

"There is far less reason for concern that overly restrictive antitrust rulings would impair the insurance industry's efficiency," Varney added.

Repealing the Act falls in line with recent efforts to make the health insurance marketplace more competitive, Varney said. The Justice Department supports this as a means to "lower costs, expand choice, and improve quality for families, business, and government."

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