House-Passed Repeal of McCarran-Ferguson is Gutted, May Be Moot
The U.S. House passed the Protecting Access to Healthcare (PATH) Act (H.R. 5) last week by a vote of 223-to-181, which included an amendment from U.S. Rep. Paul Gosar (R-Ariz.) to repeal the McCarran-Ferguson antitrust exemption for health insurers. The amendment had been modified to explicitly exclude property and casualty insurance and life insurance from the antitrust exemption repeal.
The primary purpose of the “antitrust exemption” provided by McCarran-Ferguson is to permit insurers to share loss data after the fact. This allows small and mid-sized insurers to develop sound actuarial models and sound pricing strategies that they could not develop with their own limited policy-holder loss experiences. This is vitally important to insurance consumers because it enables these small and mid-sized insurers to offer competitively priced insurance products and to remain in business.
What It Means to Agents: Without the ability to share loss data, as afforded by McCarran-Ferguson, many small and mid-sized insurers would ultimately go out of business. The end result of removing the McCarran-Ferguson antitrust exemption would actually be a marketplace dominated by a few, “too-big-to-fail”, national insurance companies.
PIA, the American Insurance Association (AIA) and a broad group of industry organizations oppose the repeal of McCarran-Ferguson. The White House threatened to veto H.R. 5 and Senate Democrats also opposed the legislation. The continued opposition of Senate Democrats and President Obama may ensure that the legislation will not be signed into law.