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McCarran Amendment Passes House

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The House today passed legislation that included an amendment repealing the antitrust exemption for health insurers contained in the McCarran-Ferguson Act.

However, the amendment was significantly narrowed to explicitly exempt property and casualty and life products, as well as products allied with them, including workers’ compensation insurance.

Property and casualty and life insurance companies, which mobilized starting last week to try to either kill or modify the bill, noted their concerns in reacting to the vote.

Melissa Shelk, vice president for federal affairs at the American Insurance Association, said that, “Any attempts to broadly repeal McCarran-Ferguson are misguided and could have unintended consequences that, ironically, could stifle market competition while promoting regulatory uncertainty and increased litigation.”

She added that, “While we would prefer to see McCarran left intact, the amendment’s author recognized that property-casualty insurance products, along with other non-health insurance lines, should be exempted from the amendment’s scope.”

Shelk said that, “In the decades since McCarran’s adoption, insurers have been able, through state oversight of advisory organizations, to share loss cost data to predict future losses and to develop common policy forms, which has fostered competition in a manner that greatly benefits consumers.”

At the same time, the amendment’s sponsor, Rep. Paul Gosar, R-Ariz., highlighted in a House floor speech a provision of the amendment that would bar class action lawsuits in federal court against health insurance companies. 

“The Federal Trade Commission should have the power to investigate bad actors in the health insurance industry, but it helps no one if these companies, or for that matter any American business, gets mired in lawsuits that will cost millions,” Gosar said.

“Class action lawsuits often result in big bucks in attorney’s fees for greedy trial lawyers while leaving only pennies in the hands of the plaintiffs who were allegedly wronged in the first place,” he said. The amendment passed by voice vote.

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said after the vote that, “Health insurance is one of the most regulated industries in America at both the federal and the state levels.  The McCarran-Ferguson Act is extremely limited in scope and has nothing to do with competition within the health insurance industry.”

He added that, “The focus should be on addressing the underlying cost of medical care, which is the real driver of rising premiums.”

The underlying legislation, H.R. 5, Protecting Access to Healthcare (PATH) Act, imposes federal standards designed to further limit medical malpractice suits. It would do so by capping a medical malpractice victim’s recovery.

The bill passed the House, 223 to 181, in a mostly party-line vote.

In comments on the House floor, Rep. Linda Sanchez, D-Calif., said H.R. 5 is a deplorable bill.”

She said, “It is the most simplistic and useless method for addressing very real problems with our medical community. It is a ridiculous piece of legislation that is akin to trying to put out a forest fire with a squirt gun.”

The bill would also repeal a provision of the healthcare reform law that created an Independent Payment Advisory Board. The purpose of the board is to act to reduce the growth in Medicare spending.

But the legislation is unlikely to become law. Washington Analysis, which advises hedge funds and other institutional advisors, said earlier this week that the bill “should sail through the House, but it won’t go any further than that.”

Washington Analysis said that, “At one point, there were almost 20 Democratic co-sponsors, but Republican efforts to offset the bill’s costs via the malpractice liability provisions eroded much of that support.

“In any case, the opposition of Senate Democrats and President Obama ensures that it would not be signed into law regardless of the level of support in the House.” The analysts said.

The bill was timed to come up on the House floor this week because they wanted to highlight the unpopularity of the 2010 healthcare law, the Patient Protection and Affordable Care Act (PPACA).

The bill is observing its two-year anniversary this week. And, Supreme Court arguments over its constitutionality are scheduled for next week.

The Gosar amendment was revised earlier in the week to cite the definition of health insurance in the PPACA and the I.R.S. Code.

“The ACLI prefers that Congress review McCarran-Ferguson only in the context of overall insurance regulatory reform. Nonetheless, we are pleased that Congress approved an amendment excluding life insurance and annuities,”  said Steven Brostoff with the ACLI.

 To further insulate other forms of insurance, three other provisions were added to the amendment.

One would exempt life insurance and annuities products from the scope of the amendment; the second would exempt property or casualty insurance, “including but not limited to, automobile, medical malpractice or workers’ compensation insurance; and a third would exempt any “insurance or benefits defined as ‘excepted benefits’, from the scope of the amendment, whether offered separately or in combination with life insurance and annuities products.”


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