H.R. 4626: Health Insurance Industry Fair Competition Act

H.R. 4626

Health Insurance Industry Fair Competition Act

Date
February 24, 2010 (111th Congress, 1st Session)

Staff Contact
Sarah Makin

Floor Situation

The House is scheduled to consider H.R. 4626 on Wednesday, February 24, 2010, under a closed rule.  The rule provides for one motion to recommit with or without instructions. 

H.R. 4626 was introduced on February 22, 2010, by Rep. Tom Perriello (D-VA) and referred to the Committee on the Judiciary, which took no official action.  A similar bill, H.R. 3596, was considered by the Committee in November, 2009.

Bill Summary

H.R. 4626 declares that nothing in the McCarran-Ferguson Act would modify, impair or supersede the operation of antitrust laws with respect to the business of health insurance.  The bill would apply the antitrust laws to health insurance providers, regardless of whether they operate as for-profit or not-for-profit entities.

Background

H.R. 4626 is unlike the provision included in the Democrat Health Care bill (H.R. 3962) and H.R. 3596, which passed out of the Judiciary Committee by a vote of 20-9 in November, 2009.  H.R. 4626 does not apply to medical malpractice insurance, thereby maintaining the antitrust exemption for such insurance. H.R. 4626 also does not include exceptions for collecting insurance claims data used by insurers to set rates.

Since 1945, the McCarran-Ferguson Act has provided the insurance industry with a statutory exemption from the federal antitrust laws.  However, this exemption has been limited over the past 30 years by the courts.  According to CQ, in the 19th century, the Supreme Court granted states the right to regulate insurers, ruling that insurance was not "interstate commerce" and therefore not subject to federal regulation under the Constitution.  In the 1940s, President Franklin D. Roosevelt felt that states were not effectively regulating insurance companies and urged the court to reverse its earlier ruling.  In 1944, the Supreme Court reversed itself and decided that insurance constitutes "interstate commerce," and therefore is subject to federal regulation.  Insurance companies lobbied Congress to overturn this ruling.  The McCarran-Ferguson Act was the resulting compromise.  H.R. 4626 would undo the statutory exemption granted to the insurance industry via McCarran-Ferguson.

Cost

While there is no CBO score for H.R. 4626 because it did not go through Committee, there is a CBO score for H.R. 3596, which for the purposes of cost, is similar.  Implementing the bill would likely have no significant cost to the federal government.  Enacting the bill could affect direct spending and revenues, but any such effects would not be significant.

According to CBO, the bill could affect the costs of and premiums charged by private health insurance companies; whether premiums would increase or decrease as a result is difficult to determine, but in either case the magnitude of the effects is likely to be quite small.