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House Passes McCarran-Ferguson Repeal Bill

Although the legislation seeks to repeal the limited antitrust exemption for health insurers, it would let the exemption remain in place for other lines of insurance.
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Yesterday, the U.S. House of Representatives passed H.R. 372, the “Competitive Health Insurance Reform Act of 2017” by Rep. Paul Gosar (R-Arizona), by a bipartisan vote of 416-7.

The legislation would repeal the limited McCarran-Ferguson antitrust exemption for health insurers; however, it would let the exemption remain in place for other lines of insurance, such as property-casualty and life insurance.

During consideration of H.R. 372, Rep. Jon Conyers (D-Michigan) put forth an amendment that would have expanded the bill to include medical malpractice insurance. The Big “I” opposed this amendment and sent a letter with a number of other insurance trade associations stating joint opposition. In arguing for his amendment, Rep. Conyers stated, “Democrats have long supported a full repeal of McCarran-Ferguson antitrust exemption for all insurers, not just for health insurers.”

The McCarran-Ferguson Act was signed into law in 1945 in order to affirm the primacy of state insurance regulation. Pursuant to McCarran-Ferguson, state regulated insurance companies hold a limited exemption from federal antitrust laws. One of the main benefits of the exemption is that it allows insurers to share information on insurance losses so that the insurance industry can better project future losses and charge actuarial-based prices for their products. The ability to pool data actually serves to increase market competition by giving small insurers access to large data sets that are needed to appropriately rate insurance products.

The Big “I” strongly supports state insurance regulation and the limited antitrust exemption for the p-c and life insurance markets via the McCarran-Ferguson Act. In particular, the association believes the exemption is vital to the competitiveness of state p-c insurance markets.

Furthermore, while the Big “I” appreciates the intent of the authors of this legislation to help reform the country’s health insurance markets, the Big “I” believes the repeal of the exemption is highly unlikely to result in increased competition and might actually lead to the opposite. Previously, the Big “I” submitted testimony to a congressional hearing outlining the association’s concerns regarding H.R. 372.

Jennifer Webb is Big “I” federal government affairs counsel.