If We Don't Get A Public Option, We Should Support Repeal Of The McCarran-Ferguson Act !!!

[WillyT]

I have no idea why this hasn't been thrown into the mix. Except that hardly anybody is aware of this, and congress is pretty much owned by these guys...

:shrug:

Insurance Companies Exempt from Government Price Fixing Oversight
by: DocJess
Thu Aug 27, 2009 at 08:43:47 AM EDT

I was reading an article that claimed the only industries exempt from government price fixing oversight were the insurance companies and major league baseball.

Turns out it's true.

Bills were introduced in both the House and Senate in 2007, but never became law. Read the press release below, and commit it to memory when Bobby runs in 2012. I don't know why this hasn't come up again in the discussions of health reform. Unless I missed it, it never showed up in any of the legislation I've read this year on the topic.

WASHINGTON, DC—U.S. Congressmen Peter DeFazio (D-Ore.), Bobby Jindal (R-La.) and Gene Taylor (D-Miss.) announced today the introduction of legislation to remove the federal antitrust exemption from the insurance industry. Their bill, the Insurance Industry Competition Act, is companion legislation to a bill that was introduced in the Senate today by Senate Judiciary Committee chair Patrick Leahy (D-Vt.), Judiciary Committee Ranking Member Senator Arlen Specter (R-Pa.), Senate Majority Leader Harry Reid (D-NV), and Senator Trent Lott (R-Miss.).

Also cosponsoring the bill are Representatives Charlie Melancon (D-La.), Rodney Alexander (R-La.), and Walter Jones (R-NC).

"The insurance industry, like Major League Baseball, is exempt from federal anti-trust laws," DeFazio said. "But the insurance industry, unlike Major League Baseball, has a direct impact on the life, health, safety and economic security of all American families. There is no justification for the insurance industry to be exempt from federal anti-trust laws. It is a quirk of history that needs to be corrected."

"The insurance industry, as the result of an antiquated law, is currently one of the only consumer industries in the nation that is exempt from anti-trust laws," Jindal said. "This leaves every American at risk to collusion and price fixing by the insurance industry, a practice that is unfair at best, and despicable at worst. So many residents of Louisiana and the Gulf Coast can no longer find insurance coverage, much less affordable coverage, and something must be done to change that. It makes no sense that an industry that is so critical to so many has been given the legal ability to take advantage of its customers. By removing the anti-trust exemption, insurance customers will now not only be protected by their state insurance commissions, but the United States Department of Justice and the Federal Trade Commission as well. This is a huge step towards ensuring that all the residents of Louisiana, the Gulf Coast, and the rest of the country have access to the affordable insurance policies they need."

The Insurance Industry Competition Act would repeal the exemption and give the Department of Justice and the Federal Trade Commission the authority to apply the antitrust laws to anticompetitive behavior by insurance companies. This Act would not affect the ability of each state to regulate the business of insurance.

Background:

The McCarran-Ferguson Act, which gives states the authority to regulate the “business of insurance,” also exempts the business of insurance from the federal antitrust laws to limit competition. The only other industry exempt from antitrust laws is Major League Baseball. If there ever was, there is no longer any justification to exempt the insurance industry from federal government oversight. Such oversight could ensure that the industry is not engaging in anticompetitive conduct like price fixing, agreements not to pay, and divvying up geographical areas.

This issue is particularly timely given the insurance issues raised in the wake of Hurricanes Katrina and Rita. Insurers have denied claims and delayed payouts to residents along the Gulf Coast instead of honoring their contractual commitments to their customers, thereby contributing to the rebuilding and rejuvenation of the area.

Link: http://www.demconwatchblog.com/diary/2224/insurance-companies-exempt-from-government-price-fixing-oversight

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McCarran-Ferguson Act

The McCarran-Ferguson Act, 15 U.S.C. § 1011, is a United States federal law that allows state law to regulate the business of insurance without federal government interference. The McCarran-Ferguson Act was passed by Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that insurance could be regulated by the federal government via the Commerce Clause (the overturned case stated that the federal government had this power), or, in other words, that insurance was interstate commerce.

Intent

The McCarran-Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. However, it does empower Congress to pass laws in the future that will have the effect of regulating the "business of insurance." However, federal acts that do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance."

The Act also provides that federal anti-trust laws will not apply to the "business of insurance" as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation.

History

United States v. South-Eastern Underwriters Association (322 U. S. 533) came before the Supreme Court in 1944 on appeal from a district court located in North Georgia. The South-Eastern Underwriters Association controlled 90 percent of the market for fire and other insurance lines in six southern states and set rates at non-competitive levels. Furthermore, it used intimidation, boycotts and other coercive tactics to maintain its monopoly.

The question before the Court was whether or not insurance was a form of "interstate commerce" which could be regulated under the Commerce Clause of the United States Constitution and the Sherman Anti-Trust Act. The general opinion in law before this case, according to the Court, was that the business of insurance was not commerce, and the District Court concurred with the opinion. The Supreme Court concluded that:

"4. Any enactment by Congress either of partial or of comprehensive regulations of the insurance business would come to us with the most forceful presumption of constitutional validity. The fiction that insurance is not commerce could not be sustained against such a presumption, for resort to the facts would support the presumption in favor of the congressional action. The faction therefore must yield to congressional action and continues only at the sufferance of Congress.

5. Congress also may, without exerting its full regulatory powers over the subject, and without challenging the basis or supplanting the details of state regulation, enact prohibitions of any acts in pursuit of the insurance business which substantially affect or unduly burden or restrain interstate commerce."

In short, while not changing the opinion of prevailing law, the Court stated that the conclusion that insurance was not commerce under the law rested with Congress, and that the Court would follow the lead of Congress.

As a result, on March 9, 1945, the McCarran-Ferguson Act was passed by Congress. Among other things, it allows for:

* the state regulation of insurance
* allows states to establish mandatory licensing requirements
* preserves certain state laws of insurance.

Link: http://en.wikipedia.org/wiki/McCarran-Ferguson_Act

Maybe we should have threatened that from the start.

Here's a good place to start: http://www.taylor.house.gov/index.php?option=com_content&task=view&id=305&Itemid=36

:mad: