Understanding the Fear in CIGNA's Eyes--"We Will Lose Our Profits Without Exemption from Federal Anti-Trust Laws!"

As the Billionaires for Wealthcare have so astutely pointed out, "If we ain't broke, don't fix it." I'd like to show you why that saying is more true than you know.  And why our billionaire friends in the Insurance Industry and their powerful lobby are doing everything they can to derail the Public Option.

It's something called the McCarran-Ferguson Act of 1945.  It essentially leaves the "business of insurance" up to the states.  BUT, here's what else is in the McCarran-Ferguson Act--it EXEMPTS the "business of insurance" from Federal Anti-Trust Laws.  Hmm, what's all that mean to me, as an insurance consumer and what does that mean to a large corporation like CIGNA?  Hint, bad for us, good for them.

Here is a very good explanation of what the Act is and does from Daily Kos--link to site.

Below is the key provision in The Act:

No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended [15 U.S.C. 41 et seq.], shall be applicable to the business of insurance to the extent that such business is not regulated by State Law.

To help us all understand what this key provision does, I went to the Health Reform Watch blog at Seton Hall University School of Law.  Emphasis below is mine.

The McCarran-Ferguson Act(”the Act”) exempts the “business of insurance” from federal antitrust law. Which is to say that federal antitrust law applies only to the extent that “the business of insurance” is not regulated by state law.  The Act goes so far as to permit price fixing — joint ratemaking — if permissible under state law.  Hovenkamp Antitrust Hornbook, at 732.  In one case, Mackey v. Nationwide Insurance Co., 724 F.2d 419 (4^th Cir. 1984) (Superseded by Regulation as Stated in Home Quest Mort. LLC V. American Family Mut. Ins. Co., 340 F. Supp.2d 1177 (D.Kan. Oct. 12 2004), the Act even protected the practice of redlining on the reasoning that it “related to the particular types of risks [the] company [was] willing to insure against.”  State of Maryland v. Blue Cross and Blue Shield Assn., 620 F. Supp. 907, 916 (D.C. Cir. 1985) (referring to Mackey).
While the lack of competition in the health insurance industry may well have other causes, which may or may not be cured through a public plan, the Act, with its exemption from federal antitrust law has not helped.  Private competition may have more to offer than currently realized in the McCarran-Ferguson environment.  Repealing the Act coupled with increased antitrust enforcement would seem a relatively affordable first step if competition, with the ultimate goal of benefiting the consumers/patients, is the goal.

(And yes, I left in the paragraph about private competition because of the part about benefiting us, the consumers/patients, but I do think a public plan would cure competition issues and force costs down.)

The Act is responsible for the inflated costs of health care in our country.  It allows for the insurance companies to collude on price-fixing and it allows for lack of transparency because of so many conflicting state laws.  Hey, John Mackey of Whole Foods, you want transparency in the costs of health care--this is where it starts, fool, with Government help.  Not more of the same hands-off approach of exemption of federal anti-trust laws.

AND by extension, The Act is an exemption from federal consumer protection laws; you can only look to your state and your state's laws for help.

The Federal Trade Commission has no authority to help you.  The already-burdened states have little authority (varies state to state) to help you, so even if there is a violation of the law by the insurance company, your state's Insurance Commissioner may not be able to do a thing.  This is why the huge multi-national, AIG, got away with such bad behavior.

Even the National Association of Insurance Commissioners says they need help in helping you.

The NAIC recognizes that the nation’s health care crisis is beyond the capacity of the states to solve independent of federal reforms.

And without Federal intervention and repealing the exemption of the anti-trust laws, we will get more of the same: Rising costs passed on to us, collusion, an Insurance Industy beholden to shareholders and billionaire CEO's like H. Edward Hanway of CIGNA who, in rejecting my husband's claim, continue the cycle of money-making at the expense of the ill.