September 26, 2022

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Health Insurance Antitrust Exemption Ending

Bill Awaits President’s Signature

Healthcare insurance companies, like other insurers, have enjoyed an exemption from U.S. antitrust laws since March 1945 when President Roosevelt signed the McCarran-Ferguson Act, one of his last major acts before his death one month later.

On Jan. 1, 2021, President Trump was presented a bill that would repeal this immunity for health insurers. The exemption would remain in place for other types of insurance, such as life, annuities, and property and casualty. The president had been expected to sign this bipartisan legislation before the tumult at the Capitol on Jan. 6. This and other antitrust reforms are likely to advance in the Biden administration now that the Democrats control both houses of Congress.

The Competitive Health Insurance Reform Act of 2020 (CHIRA) (H.R. 1418) passed in the House of Representatives on Sept. 21 and in the Senate on Dec. 22. “This bill declares that nothing in the McCarran-Ferguson Act modifies, impairs, or supersedes the operation of antitrust laws with respect to the business of health insurance, including the business of dental insurance,” an official summary of the bill reads. “Prohibitions against unfair methods of competition apply to the business of health insurance without regard to whether the business is for profit,” it adds.

Data sharing among insurance companies helps them take advantage of industry-wide experience to better conduct business, but it also leaves the door open to anticompetitive conduct. Under McCarran-Ferguson, though, the industry was immune from federal scrutiny.

CHIRA would continue to allow data sharing but points out that the practice is not without limits. It does not apply, the bill reads, to “a contract, combination or conspiracy to (1) collect, compile, or disseminate historical loss data; (2) determine a loss development factor for historical loss data; (3) perform actuarial services if the collaboration does not involve a restraint of trade; or (4) develop or disseminate a standard insurance policy form if adherence to the form is not required.”

More regulations are sure to follow once the bill is signed into law. In addition to increased federal government oversight, CHIRA opens the door to private litigation, something that was unlikely to advance before given the immunity granted health insurers by McCarran-Ferguson.