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AAG Varney Testifies on the Insurance Industry's Antitrust Exemption

Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division testified today at a Senate Judiciary Committee hearing on anticompetitive conduct in the health insurance industry.  In her testimony, AAG Varney presented the Department’s views on the antitrust immunity granted by the McCarran-Ferguson Act for the insurance industry.  AAG Varney stated the Department is generally opposed to exemptions from the antitrust laws in the absence of a strong showing of a compelling need.

“The antitrust laws reflect our society’s belief that competition enhances consumer welfare and promotes our economic and political freedoms.  Exceptions from that policy should be—and fortunately are—relatively rare.”

AAG Varney noted that the effects of the antitrust exemption granted by McCarran-Ferguson have been reviewed and debated over the years.  Concerns over the effects of the exemption are especially relevant today given the importance of health insurance reform to our nation:

“There is a general consensus that health insurance reform should be built on a strong commitment to competition in all health care markets, including those for health and medical malpractice insurance.  Repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case.”

There are strong indications, AAG Varney explained, that the possible justifications for the insurance antitrust exemption that existed in 1945, when McCarran-Ferguson was enacted, are no longer valid.  As a result of Supreme Court opinions, the exemption is no longer necessary to enable the states to regulate the business of insurance.  Additionally, the application of antitrust laws to potentially procompetitive collective activity has become more sophisticated in such a way that there is now less concern that overly restrictive antitrust rulings would impair the insurance industry’s efficiency. AAG Varney concluded her testimony by stating that the Department generally supports the idea of repealing antitrust exemptions, but it takes no position as to how and when Congress should address this issue.  She added:

 “In conjunction with the Administration’s efforts to strengthen insurance regulation and states’ role in setting and enforcing policies, the Department supports efforts to bring more competition to the health insurance marketplace that lower costs, expand choice, and improve quality for families, businesses, and government.”

Read the full testimony: "Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry"

Updated March 3, 2017

Topic
Antitrust