Competitive Health Insurance Reform Act: Congressman Farenthold’s Remarks
Subcommittee on Regulatory Reform, Commercial and Antitrust Law Hearing
As prepared for delivery:
Historically, the business of insurance was viewed as not falling within interstate commerce and thus subject to state, not federal, regulation.
In 1944, the Supreme Court effectively reversed itself on this question, holding that federal antitrust laws were applicable to an insurance association’s interstate activities in restraint of trade.
Both states and insurers decried the change.
Congress responded with the McCarran-Ferguson Act, which exempts insurance from certain federal antitrust laws.
As we have seen with the recent rejection of both the Anthem-Cigna and Aetna-Humana mergers, however, federal antitrust laws regarding mergers clearly still apply.
The 'Competitive Health Insurance Reform Act' would repeal the McCarran-Ferguson Act’s federal antitrust exemption so that it no longer applies to the business of health insurance.
The McCarran-Ferguson Act would remain in effect for other types of insurance, such as property, casualty and car insurance.
The issue of repeal has been discussed by the House Judiciary Committee on several occasions and various iterations of legislation to repeal McCarran-Ferguson have been offered for decades.
Within the broader ongoing discussions regarding efforts to repeal and replace Obamacare, the question of the continued necessity and viability of the McCarran-Ferguson Act has arisen once more.
In his plan outlined for reforming Obamacare, newly appointed Health and Human Services Secretary, Tom Price has called for permitting the sale of insurance across state lines.
Similar thinking has also been echoed by President Trump, and is included in House Republican’s 'A Better Way' plan.
Opening up the market to cross-border sales would increase both competition in insurance markets and the choice of insurance products offered to consumers.
The ability to sell insurance across state lines is often tied to discussions about the McCarran-Ferguson Act.
In fact, interstate insurance sales are already legal under certain conditions.
A provision included in Obamacare allows states to establish what are called 'health care choice compacts,' which permit insurers to sell policies to individuals and small businesses in any state that participates in the compact.
State regulatory agencies set the rules and minimums insurers must meet to sell plans in their states.
Instances of cross-state sales to date, however, have been limited.
We have excellent panels of witnesses before us today who will help us to evaluate these issues more fully and place this piece of legislation into the larger context of the looming health care discussion.
I look forward to our witnesses’ testimony on the merits of H.R. 372, and now recognize the Ranking Member, Mr. Cicilline, for his opening statement..."