Can someone explain the importance of the health insurance industry's anti-trust exemption

[hokies]

I've heard a little bit about it, but am not sure how much change will result from repealing it. :hi:

[fasttense]

By rigging the price of premiums, you have no alternative but to pay

inflated and unfair prices for very little service.

American consumers have the right to expect the benefits of free and open competition — the best goods and services at the lowest prices. Public and private organizations often rely on a competitive bidding process to achieve that end. The competitive process only works, however, when competitors set prices honestly and independently. When competitors collude, prices are inflated and the customer is cheated. Price fixing, bid rigging, and other forms of collusion are illegal and are subject to criminal prosecution by the Antitrust Division of the United States Department of Justice, except in the case of health insurance corporation.

Here is a good place to start:

http://www.usdoj.gov/atr/public/guidelines/211578.htm

[hokies]

2. So how did this fly under the radar for so long

It seems like a complete no-brainer that it should have been done away with a long time ago, but this year is the first time I've heard about it. Did it use to serve some useful purpose years ago?

[alc]

6. I found this quote

“The health insurance industry’s antitrust exemption is an accident of American history” dating to a time when state-based companies asserted they weren’t engaged in interstate commerce, Schumer said.

I think the supreme court ruled in the 40s that insurance was not subject to federal regulation so congress exempted them.

[Curtland1015]

1. I'm certainly not an expert, but I'd assume that it would discourage "business trusts".

By that, I mean just one or two top companies could just set whatever prices they want, secure in the knowledge they have a strangle hold on the industry. Revoking that exemption could (hopefully) open the market place up to more smaller companies looking for a foothold, which means they will all have to compete with each other by lowering premiums.

I'm super tired right now so I hope the above is coherent.

[Greyhound]

3. Repealing it would make the information sharing and price fixing they currently

engage in illegal, as it should be.

Since the 19th century, our government has been picking winners and losers and it always results in the citizen's being screwed.

[TreasonousBastard]

4. I'm not sure either, and I spent over 20 years in the business...

not the health part of it, though.

I wasn't around back in the 40s when the changes were made, but since the states have always regulated insurance companies, it made sense that they wouldn't come under Federal anti-trust rules. This was primarily for property/casualty and life companies, since there wasn't much health insurance back then. Many companies set up separate corporations in each state they did business to keep the books straight for all those regulators, but that was about it. Moastr of the regulation was done in the company's home state.

Property insurance wasn't actually affected much, since for most of the following years no company had more than 5% of the business, except in specialty lines. Specialty lines would be considered such things as ocean marine, crop insurance, malpractice, and other things that didn't amount to enough to worry about. A few companies specialized in these coverages, and the premiums generally worked out to be fair, with just enough competition to keep things honest. Things changed over the years, and for a lot of reasons that I won't go into now competition increased and a lot of the smaller conmpanies went out of business when premiums were driven down and claims went sky high.

With health insurance, Blue Cross went from not-for-profit to for profit, some life companies changed from mutuals to stock companies, and the premiums got high enough for old-line companies like INA to become CIGNA and get out of the nasty old property/casualty business and make real money on health insurance. But, because only a limited number of companies got into the business, only a limited number of them compete for business.

If the anti-trust exemption is removed, good chance some of the bigger ones will be broken up into smaller companies, and no one knows how that will work. We're used to companies consolidating or selling off units, but we're not sure how to take something like Blue Cross and tell it to become 5 separate companies in New York.

Premiums are directly related to losses and it rarely works out well when premiums are capped and losses aren't. In states that have tried that, companies have simply pulled out rather than lose money. If national rate reductions are imposed, no one knows what kind of horrorshow we're in for.

[Vinca]

5. I don't think it was a problem until health care became profit driven.

My earliest memory of providing my own health insurance was the late 1960's and at that point everyone had BC/BS that was dirt cheap and covered 100% of everything. BC/BS was a nonprofit. I think it was during the Nixon administration they started cooking up HMO schemes and began the rape of the consumers (formerly known as patients). Over the years it has snowballed - especially during Republican administrations. At the start of Shrub's failed presidency we were paying about $700 a quarter for health insurance (we're self-employed). By the second term we had to give it up when it hit $12,000+ a year with a huge deductible. The anti-trust laws made it possible for every insurance company in our state to have rates within a couple of hundred bucks of each other and when you're talking money like the latest quote - $19,200 - that isn't much. They conspire to screw us all over and it's entirely legal at this point.