The US Senate Tuesday passed the Competitive Health Insurance Reform Act, repealing healthcare insurers’ federal antitrust immunity. The House of Representatives previously passed the law in September, and Senate approval will now send it to President Trump to sign.
Many insurers were granted an exemption from federal antitrust law in 1945 with the passage of the McCarran-Ferguson Act. This law was passed on the assumption that insurers would be better able to predict appropriate rates for their products if they could share data on historic losses. Traditionally sharing data to determine rates would otherwise have been price-fixing, which is prohibited under section 1 of the Sherman Antitrust Act as a combination in restraint of trade.
Companies within the insurance industry argue that information-sharing increases competition within the industry because it allows new operations to accurately model risk without their own historical data. They also claim that without this information-sharing, only large insurance companies would have adequate information to price policies accurately.
Insurance companies have always been subject to antitrust enforcement by state attorneys-general, who are not subject to the McCarran-Ferguson restriction. Several state attorneys-general have recently filed prominent antitrust lawsuits in the technology industry against Facebook and Google. This law would also allow the Department of Justice Antitrust Division and the Federal Trade Commission to regulate the insurance industry.
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