Maybe I have missed it, but there has not been any discussion in the healthcare reform debate about what may be the biggest problem health insurance companies have.
Maybe I have missed it, but there has not been any discussion in the healthcare reform debate about what may be the biggest problem health insurance companies have. Actually, it is not a problem for them, but for those of us who have to pay for health insurance, and for physicians who are at the mercy of health insurers for reimbursements.
It is a little known fact that health insurance companies are exempt from the antitrust laws. A law passed at the end of World War II, the McCarran-Ferguson Act of 1945, exempts health insurance companies from the federal anti-trust legislation that applies to most businesses. Actually, the law gives states the authority to regulate the business of insurance without interference from federal regulation, unless federal law specifically provides otherwise.
Senator Patrick Leahy of Vermont has introduced legislation about three weeks ago called the Health Insurance Industry Antitrust Enforcement Act, which removes the exemption or immunity health insurers enjoy. The law would also apply to medical malpractice insurers. Hurrah!
We all know that the health insurers have been fighting very hard to keep Congress from adopting a public option which would provide for the government to be in the health insurance business. Many people oppose this, but largely because of the propaganda that has been distributed by the health insurers themselves. There is a positive benefit that would come from a publicly owned insurance company that I will describe in a moment.
Since health insurers and medical malpractice insurers are not subject to the antitrust laws, they can get together and determine the prices that they charge for health insurance. The two key provisions of the Health Insurance Industry Antitrust Enforcement Act will repeal the federal antitrust exemption for health insurance and medical malpractice insurance companies for flagrant antitrust violations, including price-fixing, bid rigging, and market allocations, and subject health insurers and medical malpractice insurers to the same good-competition laws that apply to virtually every other company doing business in the United States. What an idea!
Now why do you suppose you haven’t heard about that? If health insurers and medical malpractice insurers can join together and fix prices, rig bids, and allocate markets, then the poor consumer does not have a chance. The danger of a publicly owned insurance company is that it would force competition, because it would not participate in the price fixing, bid rigging and market allocation that insurers use to increase profits.
The insurance companies are prospering behind this exemption. The health insurance industry does not have to play by the same good-competition rules as other industries. According to Senator Leahy, antitrust oversight of the insurance industry will provide consumers with confidence that insurance companies are operating in a competitive marketplace.
Senator Leahy says that there is simply no justification for health insurance and medical malpractice insurers to be exempt from Federal laws prohibiting price fixing.
Ironically, Senator Leahy introduced a much broader repeal of the McCarran-Ferguson Act with Senator Trent Lott, the Republican Senator from Mississippi. Congress failed to reach consensus on that legislation.
Theoretically, the Missouri antitrust laws could be utilized to challenge sharp practices by insurers, but the insurers have placed arbitration clauses in all of their contracts and our appellate court upheld these provisions last year in a case brought by urologists, neurosurgeons, obstetricians and orthopedic surgeons. These physicians and medical groups sued Blue Cross and United Healthcare, alleging that the insurers had engaged in price fixing and monopolization in violation of the Missouri antitrust law.
The insurers filed motions to compel arbitration and the trial judge denied the motions, but on appeal all 10 judges of the Western District Court of Appeals found that the trial judge was wrong in denying the motions and therefore upheld the arbitration provisions. Thus, the doctors and their groups could not pursue these claims in courts. The Court did open the door for the doctors to challenge the arbitration provisions as unconscionable, but for the time being the antitrust laws cannot be enforced by doctors in state court.
This could all be corrected if Congress would repeal the exemption from federal antitrust laws for health insurers and medical malpractice insurers. Then, the Justice Department can start examining insurance company practices.
Surely, this is one thing lawyers, doctors and patients would agree upon. As the upcoming elections unfold, including the hotly contested campaign in Missouri between Secretary of State Robin Carnahan and Congressman Roy Blunt for the United States Senate, watch who the insurance companies support. And let’s all root for Senator Leahy in the meantime. Why should insurance companies be treated differently than you and I?