On January 13, 2021, President Trump signed the “Competitive Health Insurance Reform Act of 2020” (“CHIRA” - H.B. 1418, now Public Law 116-327; see https://www.congress.gov/bill/116th-congress/house-bill/1418/all-actions?overview=closed#tabs.) which partially repealed the 1940s-era “business of insurance” exemption from the antitrust laws. While certain specific activities are not included in the repeal, CHIRA generally eliminates the exemption for the “business of health insurance (including the business of dental insurance and limited-scope dental benefits).”
Clearly, the immediate sea change – the elimination of the antitrust exemption – is of significance, but opining just yet on exactly what that might mean to payors, providers and subscribers is premature. CHIRA’s impact will play out as time wears on. What is known is this -- CHIRA is staged to add a new layer of compliance and the concomitant oversight of federal antitrust enforcement authorities to the activities of all participants involved in and effected by the health and dental insurance industry.
Importantly, the partial repeal specifically states several exclusions, each addressing an important activity and practical in nature. To wit, historical loss information collection, compilation and dissemination, the determination of loss development factors applicable to historical loss data, the performance of actuarial services not involving restraints of trade, and the development of standard policy forms arguably remain exempt from antitrust scrutiny. And, at the same time, CHIRA also makes quite clear that the business of life insurance and property and casualty insurance remain subject to the McCarran-Ferguson exemption.
The 30,000 foot question is what “activities” – previously exempt – will now come under antitrust scrutiny by the Federal Trade Commission (FTC) and/or U.S. Department of Justice (DOJ)? Antitrust and regulation are opposite sides of the same coin and for years, the health and dental insurance industry was more regulated than it was at risk of antitrust liability. How this will change with antitrust scrutiny now more in the picture will be influenced heavily by the policy decisions relating to CHIRA to be made by the FTC and DOJ when setting their enforcement agendas. If anything is clear, payors, providers and subscribers will each in their own way be thinking about and analyzing more closely procompetitive aspects and benefits of things like their collaborative activities and communications.
We will be following these activities as they develop, and our antitrust and insurance practice will be reporting and updating on the issues CHIRA engenders as relevant policies are developed and enforcement decisions are made and implemented.
- In very general terms, case law has developed the elements of the “business of insurance” to cover those activities that involve the transfer of risk, are part of the classic carrier-policyholder relationship, are limited to the insurance industry, are subject to state regulation and do not involve coercion, intimidation or boycott.