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Bills target antitrust law exemption for health care and medical liability insurers
Some experts say the legislation misses the larger problem of health insurance company monopolies.
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In an effort to stem alleged price fixing and bid rigging, legislators in the U.S. House and Senate have introduced bills to repeal a 64-year-old act that exempts health care insurance companies from antitrust laws.
However, many experts argue that the new legislation turns a blind-eye to the monopolies these companies have created.
“Instead of price fixing, we believe a larger problem is the virtual monopolies many health insurance companies have,” Peter J. Mandell, MD, past president of the California Orthopaedic Association and representative of the group, said during a recent House subcommittee hearing regarding the Health Insurance Industry Antitrust Enforcement Act of 2009 (H.R. 3596). “In many parts of the country, there may be only one or two carriers. There is no effective competition. Physicians are told to ‘take it or leave it’ with the contracts that they are offered and accept below market reimbursement.”
Competitive markets
Rep. Hank Johnson (D-Ga.), chairman of the House Judiciary Subcommittee on Courts and Competition Policy and a sponsor of the bill, said that the proposed legislation would prevent health and medical malpractice insurance companies from using the McCarran-Ferguson Act of 1945 as a shield for price-fixing, bid-rigging and market allocation.
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“The insurance companies will tell us that they need this antitrust exemption because it really makes the industry more competitive,” Johnson said. “Oh, really? Insurance profits have grown nearly sixfold in the past decade as more than 40 million Americans go without insurance, and this is their idea of a competitive market. The only thing these companies are competing for are the people who need them the least.”
Medical liability companies
Mandell noted that antitrust data from the American Medical Association has failed to show any cases of health insurers charged with price-fixing, collusion or market allocation, and he argued that these companies have no need to practice these methods because of they have nearly monopolized the market. He said that there have been more than 400 health insurance mergers in the last decade and that the two largest companies control 36% of the market and, in turn, 67 million lives.
Mandell also argued that the bill should not extend to medical liability insurers, which he said are often physician-formed and achieve the goals of stability, accountability and affordability.
“We do not see any evidence that the medical liability insurance companies in this state are behaving in an anticompetitive way,” he told Orthopedics Today.
James D. Hurley, a medical professional liability subcommittee member who represented the American Academy of Actuaries at the hearing, said that he has not seen insurance companies engaging in price fixing or bid rigging. He warned that the wording of the bill could inadvertently prohibit data aggregation and analysis across companies and, therefore, decrease competition. In addition, he said that medical liability rates have been decreasing or remaining stagnant for the past few years.
Many experts at the meeting suggested one option of breaking up the larger insurance companies as an option to promote competition and bring down premiums.
“The other is give the doctors the same protection that the big insurance companies [have] against antitrust enforcement so that we can collectively bargain with them and not necessarily be handed a take-it-or-leave-it kind of contract without any ability to make such a contract work in the current medical environment where costs are going up considerably,” Mandell said. “In some of these contracts, it is hard to even make your expenses much less make any kind of a profit.”
For more information:
- Peter J. Mandell, MD, can be reached at 1663 Rollins Road, Burlingame, CA 94010; 650-692-2663; e-mail: pjm7383@pacbell.net.
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