Push is on to lift antitrust shield from health-insurance industry

WASHINGTON - Democrats launched a drive at both ends of the Capitol yesterday to strip the health-insurance industry of its decades-old exemption from federal antitrust laws, as the struggle over health-care legislation sought by President Obama became more bare-knuckled.

If enacted, the change would end "price-fixing, bid-rigging, and market allocation in the health and medical malpractice" insurance areas, said Sen. Patrick J. Leahy (D., Vt.), chairman of the Senate Judiciary Committee.

Leahy said he would seek a vote on the plan when the Senate debates health-care legislation in the next few weeks.

Leahy made his comments just as the House Judiciary Committee voted, 20-9, to end an industry exemption under the McCarran-Ferguson Act, enacted in 1945, that essentially gives states such authority over the industry. Three Republicans backed the move.

Other types of insurance business would not be affected by the change approved by the House panel.

Senior Democrats in the House said the leadership was inclined to incorporate the measure into the broader health-care bill expected to be brought to the floor for a vote within a few weeks.

The events coincided with a vote in the Senate that sidetracked legislation to head off a 21 percent cut in Medicare payments for doctors in January and to raise their fees by $247 billion over 10 years.

The 47-53 vote - with all area senators voting in favor - was 13 short of the 60 needed to advance the bill, reflecting concerns the measure would raise budget deficits.

The result was a defeat for the Democratic leadership and an embarrassment for the American Medical Association, which had mounted a seven-figure advertising effort to ensure passage of one of its top priorities.

Republicans grumbled that Senate Democrats timed the offensive on antitrust matters to obscure their defeat on the bill setting pay rates for doctors, a measure that GOP leader Mitch McConnell of Kentucky called "the Senate's first vote on health care this year."

Even so, taken together, the threats to revoke long-standing antitrust protections reflect the fury among Democrats at attempts by the health-insurance industry to pressure them on the health overhaul.

Less than a week ago, the insurers' trade association issued a report saying a Senate Finance Committee measure would bring sharp increases in premiums for millions who currently have insurance.

Democrats and the White House reacted angrily, attacking the study as flawed and politically motivated.

Yesterday, the industry said the antitrust legislation was based on a misperception.

"We believe that health insurers have not been engaging in anticompetitive conduct and that McCarran-Ferguson does not provide a shield for such conduct," Karen Ignagni, president and CEO of American's Health Insurance Plans (AHIP), wrote to Rep. John Conyers Jr., the Michigan Democrat who heads the House Judiciary Committee.

"Thus, the bills attempt to remedy a problem that does not exist," she wrote. The industry holds a large conference beginning today several blocks from the Capitol.

White House aides pointed to Obama's weekend statement that insurers are earning "profits and bonuses while enjoying a privileged exception from our antitrust laws, a matter that Congress is rightfully reviewing."

The insurance industry at first was nonadversarial in the health-care debate as legislative proposals developed in Congress.

AHIP announced months ago it supported comprehensive health-care reform, and Obama called on Ignagni to speak at a televised White House event.

Essentially, the industry offered a trade. It agreed to abandon practices such as denying coverage on the basis of preexisting medical conditions if the legislation required universal coverage, a step that would give it access to millions of new customers.

At the same time, it vigorously opposes any legislation that would allow the government to sell insurance.

The tone began to change when the Finance Committee voted to excuse an estimated two million lower-income Americans from a requirement to purchase insurance.