Bill Seeking to Repeal the McCarran Ferguson Act’s Antitrust Exemption Introduced in Congress

by Dickinson Wright

On September 18, Congressman Phil Roe (R-Tennessee) introduced legislation (H.R. 3121) that would, among other things, amend Section 3 of the McCarran-Ferguson Act (15 U.S.C. 1013) to repeal the Act’s antitrust exemption for health insurers. Congressman Roe’s McCarran-Ferguson repeal provisions (Subtitle B of the legislation) are part of a larger piece of legislation – almost 200 pages in all – that would also repeal the Affordable Care Act. In adding a McCarran repeal component to his bill, Congressman Roe’s bill joins several other bills currently pending in Congress that would repeal McCarran’s antitrust exemption for health insurers, including H.R. 99 (introduced by Congressman John Conyers, D-Michigan), H.R. 344 (introduced by Congressman Steven Lynch, D-Massachusetts), H.R. 743 (introduced by Congressman Peter DeFazio, D-Oregon) and H.R. 911 (introduced by Congressman Paul Gosar, R-Arizona).

The McCarran-Ferguson Act provides an exemption from the federal antitrust laws for the “business of insurance,” provided that such conduct is subject to state regulation and does not constitute an act of “boycott, coercion or intimidation.” Enacted in 1945, over the last few years, McCarran’s antitrust exemption has been under considerable attack, particularly with respect to its application to health insurance. Under Congressman Roe’s bill, “the business of health insurance (including the business of dental insurance)” would be carved out of the “business of insurance,” placing it within the scope of the federal antitrust laws. H.R. 3121 also makes clear that the “business of health insurance” does not extend to life insurance, annuities or property & casualty insurance, thus continuing the exemption as to those activities. Finally, H.R. 3121 would also subject health insurers, whether for-profit or non-profit, to Section 5 of the FTC Act, which prohibits unfair competition.

The McCarran repeal provisions of H.R. 3121 are quite similar to those of the previously introduced bills. Specifically, each proposed bill would extend the federal antitrust laws only as to the business of health insurance, except for Congressman Conyers’s bill (H.R. 99), which would also repeal the exemption as to medical malpractice insurance. All of the proposed bills would also extend the scope of Section 5 to for-profit and non-profit health insurers.

H.R. 3121 has been sent to the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law for further action, which is where all of the previously introduced bills currently reside. Notably, when Congressman DeFazio introduced H.R. 743 earlier this year, he noted that over 400 House members voted in favor of similar legislation last Congress and urged legislators to act swiftly, and favorably, on the legislation this Congress. Nevertheless, to date, none of these McCarran repeal bills has been taken up by the subcommittee, and with Congress now undoubtedly set to focus on budget issues in early 2014, the prospects for any of these McCarran repeal bills is quite uncertain. Stay tuned.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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