Thursday, October 22, 2009

Applying Antitrust Law to Health Insurance

Congress is working on real health insurance reform after all. The idea is to repeal the industry’s antitrust exemption, so that health insurance companies can no longer act like a monopoly. A Washington Post story, since pulled, summed up the idea pretty well in its headline: “House committee votes to repeal antitrust protections for health insurers.”

The New York Times characterized the move as retaliation by the Obama administration after being double-crossed by the insurance industry, which initially supported reform, then had much of it rewritten for its own advantage, and now has begun openly attacking it. In truth, though, this is a measure that Congress has been working on for some time. If it hasn’t gotten much attention until now, it is largely because TV news shows have found it hard to explain what it means in ten seconds. For them, I can suggest a way to phrase it: It closes a loophole that allows health insurance companies to act like a monopoly. Any real TV news anchor can say that in six seconds or less.

The health insurance industry has fallen all over itself in the last two days to try to argue for keeping its monopoly-like powers. The best example I have seen is an opinion in the Wall Street Journal yesterday, which argues for keeping the exemption essentially because “the insurance industry’s antitrust exemption is inconsequential.” It is the same position that others in the industry have taken. But this argument doesn’t make much of a case politically. If there is no moral or practical justification for a law on the books, then most people would say the law ought to be repealed, even if the actual harm it causes is relatively small.

And you can make a pretty good case that the harm caused by the antitrust exemption is a big problem. The antitrust exemption allows insurance companies to create secret deals in which they agree not to cover specific diseases and treatments under certain conditions. When insurance companies collectively refuse to pay for routine tests for early-stage skin cancer, or to treat cervical cancer in patients under 30 years old, or for flu tests for patients who are not pregnant and have not been hospitalized, is this because of a secret arrangement among the insurers? The way the law stands, there is no way for the public or the government to find out. Regulators can’t compel industry officials to answer questions under oath because what the industry appears to be doing behind closed doors is not illegal. And this is just one of several problems that appear to result from secret deals within the health insurance industry — deals that would no longer be legal if Congress closes the antitrust loophole.

This is one measure where a few calls and letters from citizens could make a difference. If enough people call to say, “Please vote to close the antitrust loophole that allows health insurance companies to act like a monopoly,” Congress will know that they have to follow through.