On December 22, the Senate voted to repeal the McCarran-Ferguson antitrust exemption for health insurance companies by passing HR 1418, the Competitive Health Insurance Reform Act. The House passed the bill on Sept. 21. President Donald J. Trump is expected to sign the bill into law later this week.

According to advocates for the bill, repeal of the McCarran-Ferguson antitrust exemption would empower federal agencies, like the Federal Trade Commission and U.S. Department of Justice, to enforce the full range of federal antitrust laws against health insurance companies engaged in “anticompetitive conduct.”

NAIFA has been a staunch defender of McCarran since its enactment in 1945. For NAIFA, the McCarran Act is the bedrock of the state insurance regulatory system because it dictates that the states – which currently have the only insurance regulatory expertise – are the sole regulators of the business of insurance.

States have the expertise and global understanding necessary to ensure that regulation and enforcement work together, ultimately, for the protection of consumers. For this reason, no other regulated sector of the financial services marketplace is subject to FTC unfair trade practices oversight. 

The segment of the industry likely to be most immediately affected by changes to McCarran is small and medium-size insurance companies, which now are permitted by state law to share some loss cost data and trending information through state-regulated third party entities. Without access to such actuarial data, small and medium-size insurers will be unable to price new risk and enter the insurance markets. Thus, the repeal of the McCarran-Ferguson Act will create an impact that will ensure there are fewer insurers in the marketplace and less competition – which will negatively impact consumers.

NAIFA opposes the repeal of the McCarran federal antitrust and FTC unfair trade practice exemptions. Such repeals would limit competition and undermine the only insurance regulatory authorities – the states – to the detriment of both policyholders and small and medium-size insurance carriers.

Repealing the McCarran-Ferguson Act will weaken states’ authority and harm American consumers, while in no way working to increase competition in health insurance markets. Elimination of McCarran-Ferguson will only serve to reduce competition, choice, and innovation in the health care arena.