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Health industry exemption decried

Thu., Oct. 15, 2009

Democrats threaten to revoke antitrust status

WASHINGTON – Days after the insurance lobby began an aggressive campaign against a Senate plan to overhaul the nation’s health-care system, senior Democrats fired back, threatening Wednesday to revoke the industry’s long-standing antitrust exemption.

Health insurance is one of only a few industries exempted from certain federal antitrust regulations, and Sen. Charles Schumer, D-N.Y., said the exemption was “one of the worst accidents of American history. It deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable.”

Senate Majority Leader Harry Reid, D-Nev., and Senate Judiciary Chairman Patrick Leahy, D-Vt., joined Schumer in a stinging denunciation of health industry practices, but the insurance lobby dismissed their threat as “a political ploy.”

The dispute came as House leaders pushed off a vote on health care until the first week in November and as Reid and other Senate leaders met for the first time with senior White House officials to discuss how to craft compromise legislation. High on their agenda was the array of contentious matters that must be resolved before a bill can come before the full Senate.

Among them is whether to create a government-run insurance plan, whether to fine people who do not purchase insurance, and whether to require employers to offer coverage to their workers.

Meanwhile, Senate Democrats sought Wednesday to shore up the support of a critical player in the health care debate: the American Medical Association.

Senate leaders met with representatives of the AMA and other doctors’ groups, then said they would press to repeal within days a decade-old law that subjects physicians who treat Medicare patients to regular pay cuts. The repeal would increase the federal budget deficit by nearly $250 billion over the next decade, but the influential organizations, whose members will face a 21 percent pay cut in January, had demanded a resolution to the issue as part of any health care overhaul.

The move could, however, trigger a fight with House leaders, who want the Senate to approve strict pay-as-you-go budget rules before consenting to such a large increase in future deficits.

Experts differ on the potential impact of repealing insurers’ antitrust exemption.

David Dranove, a professor of health industry management at Northwestern University’s Kellogg School of Management, said it could harm consumers, because the exemption permits health insurers to exchange information about their medical risks when deciding whether to sell them coverage.

David Balto, a former Federal Trade Commission official, described it differently: “This is a very expansive exemption that costs consumers hundreds of millions of dollars. It permits anti-competitive conduct that would not be permitted in any other market,” he said.

Robert Zirkelbach, press secretary for the group America’s Health Insurance Plans, contested that view.

“The health insurance industry is one of the most regulated industries in America,” subject to regulators at the federal and state levels, he said. “The focus on this issue is a political ploy designed to distract attention away from the real issues in this debate.”

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