Dems Get Religion on Health Care Antitrust Exemption
Suddenly the Obama administration decided to come out against the antitrust exemption for the insurance industry. Like they only just noticed the problem.
The insurance antitrust exemption has been an outrage for over fifty years. The original bill formalizing the industry’s exemption from the Sherman Antitrust Act, the McCarran-Ferguson Act, was dreamed up by two Hollywood villains. Nevada Senator Pat McCarran was the inspiration for the “Senator Pat Geary” character in Godfather Part II (”Senator… my final offer is this: nothing” — that guy), while Homer Ferguson was the inspiration for the Lloyd Bridges character in Tucker who whored himself out for the auto makers to get Tucker’s new car struck from the market. These two gigantic assholes teamed up to help the insurance industry avoid the albatross of competitive pricing.
McCarran-Ferguson was supposed to be temporary. Franklin Roosevelt clearly thought so when he signed it into law in 1944, saying that after “a moratorium period,” the antitrust laws “will be applicable in full force and effect to the business of insurance.” The law was supposed to expire in 1947. It didn’t.
http://trueslant.com/matttaibbi/2010/02/24/dems-get-religion-on-health-care-antitrust-exemption/
Being an expert in this area, I can tell you that this is not what it appears. The antitrust exemption allows small companies to merge their statistics in order to estimate loss costs. That allows more companies to compete. Without that exemption, small companies wouldn’t know whqat premiums to charge, so they wouldn’t compete.
In practice, this kind of merged statistics is very important in many lines of insurance, such as fire or liability, but is not significant in Health insurance. In short, this law will have little effect. To the degree it has an effect, it will be to reduce competition.