AGD Racks Up Legislative Win with End of McCarran-Ferguson for Dentistry: Now What?
For 70 years, the health insurance industry has been exempt from federal antitrust laws — leaving consumers susceptible to unfair price fixing, bid rigging and market allocation. On Jan. 13, 2021, H.R. 1418: Competitive Health Insurance Reform Act was signed into law, restoring competition within the health insurance market and protecting consumers from unfair practices.
H.R. 1418 eliminates the antitrust exemption found in the McCarran-Ferguson Act for health insurance, including dental insurance, thus resolving this issue by allowing federal agencies like the U.S. Department of Justice and the U.S. Federal Trade Commission to investigate and challenge collective action by insurance companies and enable those impacted by illegal and anticompetitive practices to seek remedies against those insurers.
The following is an update by Myron “Mike” Bromberg, DDS, chair of the AGD Legislative and Government Affairs Council and AGD Congressional liaison, on the significance of this law.
The McCarran-Ferguson legislation, which passed in 1945, gave limited federal antitrust exemption to insurance companies and essentially left insurance regulation to the states. The concern of policymakers was that the states did not have the time or resources to effectively investigate antitrust claims, and further concern about anticompetitive activities from the insurance carriers remained largely unchecked. These activities included unfair price fixing, bid rigging, gouging, collusion and market allocations that hurt consumers. Many practitioners referred to this legislation as ill-conceived and anti-consumer. It allowed health insurers to ignore the basic free-market rules of competition that operate throughout the rest of the economy, and it should have never been passed in the first place.
This antitrust exemption created a considerable lack of regulation over the insurance industry, and something had to be done. Repeal of this legislation has been long overdue, but traction to get it accomplished was nonexistent.
Several years ago, AGD and other entities such as the American Dental Association approached Congressman Paul Gosar (R-AZ) to help with this issue. Congressman Gosar, a dentist, attempted to address this issue by introducing legislation that would repeal McCarran-Ferguson but had trouble moving it through Congress. Some members of Congress felt that if the strategy changed — that, instead of including all insurance carriers, antitrust exemption was eliminated from health insurance carriers only — there would be a much better chance of support and passage. Again, Congressman Gosar worked tirelessly to gain support, and he did achieve bipartisan support. He was joined by Congressman Peter DeFazio (D-OR) and Senators Steve Daines (R-MT) and Patrick Leahy (D-VT).
This tremendous effort paid off, and the bill eliminating the federal antitrust exemption for health insurance carriers (the Competitive Health Insurance Reform Act, H.R. 1418) was signed into law Jan. 13, 2021. It should be made clear that passage of this bill does not affect insurers regarding state antitrust laws or other state regulatory activities. AGD is proud to have had a significant role in organized dentistry’s effort to see this policy enacted into law.
What effect will be felt and realized in dental offices? The short answer is: Don’t expect too much right away. There is also uncertainty as to the full, specific extent of the changes that dentists will see in the short term. Long term, dentists and patients should see greater innovation, more choices, and reining in of price gouging and fair competition promotion.
What is clear is that carriers will now have to compete with greater transparency and fairness, along with significant federal oversight. The result will be that providers and consumers will have more meaningful choices since health insurers will have to compete in a much larger and more significant manner than before.
As Congressman DeFazio stated, “As long as this exemption is still on the books, health insurance companies legally can collude to drive up prices, limit competition, conspire to underpay doctors and hospitals, and overcharge consumers. Our bipartisan legislation will protect consumers and make sure the health insurance industry plays by the same rules as virtually every other industry in America.”
The U.S. Federal Trade Commission and U.S. Department of Justice will now be able to enforce federal antitrust laws against health insurance companies engaged in anticompetitive conduct. It is quite possible that the insurance carriers will be subject to lawsuits, and we may see a number of them while this all gets sorted out.
AGD is pleased and gratified with its efforts to help get this landmark legislation passed. Whatever the short- and long-term results are, ultimately, they will be very positive. This was an enormous victory for dentistry and our patients.
Find more information online about AGD Advocacy efforts and the work AGD has done during COVID-19 to support our members.
H.R. 1418 eliminates the antitrust exemption found in the McCarran-Ferguson Act for health insurance, including dental insurance, thus resolving this issue by allowing federal agencies like the U.S. Department of Justice and the U.S. Federal Trade Commission to investigate and challenge collective action by insurance companies and enable those impacted by illegal and anticompetitive practices to seek remedies against those insurers.
The following is an update by Myron “Mike” Bromberg, DDS, chair of the AGD Legislative and Government Affairs Council and AGD Congressional liaison, on the significance of this law.
The McCarran-Ferguson legislation, which passed in 1945, gave limited federal antitrust exemption to insurance companies and essentially left insurance regulation to the states. The concern of policymakers was that the states did not have the time or resources to effectively investigate antitrust claims, and further concern about anticompetitive activities from the insurance carriers remained largely unchecked. These activities included unfair price fixing, bid rigging, gouging, collusion and market allocations that hurt consumers. Many practitioners referred to this legislation as ill-conceived and anti-consumer. It allowed health insurers to ignore the basic free-market rules of competition that operate throughout the rest of the economy, and it should have never been passed in the first place.
This antitrust exemption created a considerable lack of regulation over the insurance industry, and something had to be done. Repeal of this legislation has been long overdue, but traction to get it accomplished was nonexistent.
Several years ago, AGD and other entities such as the American Dental Association approached Congressman Paul Gosar (R-AZ) to help with this issue. Congressman Gosar, a dentist, attempted to address this issue by introducing legislation that would repeal McCarran-Ferguson but had trouble moving it through Congress. Some members of Congress felt that if the strategy changed — that, instead of including all insurance carriers, antitrust exemption was eliminated from health insurance carriers only — there would be a much better chance of support and passage. Again, Congressman Gosar worked tirelessly to gain support, and he did achieve bipartisan support. He was joined by Congressman Peter DeFazio (D-OR) and Senators Steve Daines (R-MT) and Patrick Leahy (D-VT).
This tremendous effort paid off, and the bill eliminating the federal antitrust exemption for health insurance carriers (the Competitive Health Insurance Reform Act, H.R. 1418) was signed into law Jan. 13, 2021. It should be made clear that passage of this bill does not affect insurers regarding state antitrust laws or other state regulatory activities. AGD is proud to have had a significant role in organized dentistry’s effort to see this policy enacted into law.
What effect will be felt and realized in dental offices? The short answer is: Don’t expect too much right away. There is also uncertainty as to the full, specific extent of the changes that dentists will see in the short term. Long term, dentists and patients should see greater innovation, more choices, and reining in of price gouging and fair competition promotion.
What is clear is that carriers will now have to compete with greater transparency and fairness, along with significant federal oversight. The result will be that providers and consumers will have more meaningful choices since health insurers will have to compete in a much larger and more significant manner than before.
As Congressman DeFazio stated, “As long as this exemption is still on the books, health insurance companies legally can collude to drive up prices, limit competition, conspire to underpay doctors and hospitals, and overcharge consumers. Our bipartisan legislation will protect consumers and make sure the health insurance industry plays by the same rules as virtually every other industry in America.”
The U.S. Federal Trade Commission and U.S. Department of Justice will now be able to enforce federal antitrust laws against health insurance companies engaged in anticompetitive conduct. It is quite possible that the insurance carriers will be subject to lawsuits, and we may see a number of them while this all gets sorted out.
AGD is pleased and gratified with its efforts to help get this landmark legislation passed. Whatever the short- and long-term results are, ultimately, they will be very positive. This was an enormous victory for dentistry and our patients.
Find more information online about AGD Advocacy efforts and the work AGD has done during COVID-19 to support our members.