McCarran–Ferguson Act --> Re: [practicemgt] House of Representatives introducing a bill to end health insurers monopoly/antitrust exemption per Fox News page

[Guest guest]

Interesting

 

Pretty good primer here...talks about pro/con.

 

http://www.kaiserhealthnews.org/Stories/2010/February/05/antitrust-health-insurance.aspx

 

snip

 

Proponents say that the legislation would spur competition among insurers and bring down costs for consumers. Reps. Tom Perriello, D-Va., and Betsy Markey, D-Colo., who are sponsoring the bill, said in a press release it would “end special treatment for the insurance industry that allows them to fix prices, collude with each other, and set their own markets without fear of being investigated.”

But many antitrust experts say that ending the exemption -- by repealing the 1945 McCarran-Ferguson Act -- wouldn't significantly increase competition or reduce premiums.

" This is just barking up the wrong tree for health insurance, " said Harrington, a professor of health care management at the Wharton School at the University of Pennsylvania. While many lawmakers are eager to pass some kind of health care bill, they " don't have a clue how the antitrust exemption works. It might sound good, but I can think of very few things in the bill that would be less consequential for consumers of health insurance. "

 

snip

 

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http://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act

 

McCarran–Ferguson Act

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This article includes a list of references or external links, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations where appropriate. (January 2010)

The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts insurance companies from the federal anti-trust legislation that applies to most businesses[1] and allows state law to regulate the business of insurance without federal government interference. The McCarran–Ferguson Act was passed by Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution.

The Act was sponsored by Senators Pat McCarran (D-NV) and Homer Ferguson (R-MI).

Wikisource has original text related to this article: McCarran-Ferguson Act

Contents[hide]

1 Intent

2 History

3 Notes

4 External links

[edit] Intent

The McCarran–Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. However, it does empower Congress to pass laws in the future that will have the effect of regulating the " business of insurance. " However, federal acts that do not expressly purport to regulate the " business of insurance " will not preempt state laws or regulations that regulate the " business of insurance. "

The Act also provides that federal anti-trust laws will not apply to the " business of insurance " as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation.

[edit] History

United States v. South-Eastern Underwriters Association (322 U.S. 533) came before the Supreme Court in 1944 on appeal from a district court located in north Georgia. The South-Eastern Underwriters Association controlled 90 percent of the market for fire and other insurance lines in six southern states and set rates at non-competitive levels. Furthermore, it used intimidation, boycotts and other coercive tactics to maintain its monopoly.

The question before the Court was whether or not insurance was a form of " interstate commerce " which could be regulated under the Commerce Clause of the United States Constitution and the Sherman Anti-Trust Act. The general opinion in law before this case, according to the Court, was that the business of insurance was not commerce, and the District Court concurred with the opinion. In dissent at 322 U.S. 588, Justice of the Supreme Court concluded that:

" 4. Any enactment by Congress either of partial or of comprehensive regulations of the insurance business would come to us with the most forceful presumption of constitutional validity. The fiction that insurance is not commerce could not be sustained against such a presumption, for resort to the facts would support the presumption in favor of the congressional action. The fiction therefore must yield to congressional action, and continues only at the sufferance of Congress.

5. Congress also may, without exerting its full regulatory powers over the subject, and without challenging the basis or supplanting the details of state regulation, enact prohibitions of any acts in pursuit of the insurance business which substantially affect or unduly burden or restrain interstate commerce. "

In short, while not changing the opinion of prevailing law, the Court stated that the conclusion that insurance was not commerce under the law rested with Congress, and that the Court would follow the lead of Congress.

As a result, on March 9, 1945, the McCarran–Ferguson Act was passed by Congress. Among other things, it:

partially exempts health insurance companies from the federal anti-trust legislation that applies to most businesses[1]

allows for the state regulation of insurance

allows states to establish mandatory licensing requirements

preserves certain state laws of insurance.

[edit] Notes

^ a b Buckley, Bob (October 28, 2009). " Health insurance companies exempt from anti-trust laws " . The Examiner. http://www.examiner.net/news/x1914248650/Health-insurance-companies-exempt-from-anti-trust-laws. 

[edit] External links

" McCarran-Ferguson Act from Rupp's Insurance & Risk Management Glossary " . NILS Publishing. 2002. http://insurance.cch.com/rupps/mccarran-ferguson-act.htm. Retrieved 2006-03-04. [dead link]

[1] Text of US vs. Southeastern Underwriters

[2] Text of the McCarran–Ferguson Act

Weller, D (1978). " The McCarran-Ferguson Act's Antitrust Exemption for Insurance:Language, History, and Policy " . Duke Law Journal (Duke Law Journal) 22: 587-643. http://www.jstor.org/pss/1372240. 

Koch, (1981). " McCarran-Ferguson Act Immunity from the Truth in Lending Act and Title VII " . The University of Chicago Law Review. http://www.jstor.org/pss/1599333. 

" Comments to the Antitrust Modernization Commission Regarding the McCarran-Ferguson Act " . American Bar Association. April 2006. http://www.abanet.org/antitrust/at-comments/2006/04-06/Com-AMC-McCarranFerguson.pdf.  Recommends that the McCarran–Ferguson Act be repealed and replaced with certain “safe harbor” exemptions from the antitrust laws.

Brostoff, (March 5, 1990). " The surprising history of McCarran-Ferguson " . National Underwriter Life & Health-Financial Services. http://www.highbeam.com/doc/1G1-8876041.html. Retrieved 2009-10-28.