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Harry Reid Gets Tough With the Insurance Industry

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Senate Majority Leader Harry Reid appeared before the Judiciary Committee today in an unusual capacity: as a witness. He was there to argue that the Senate should repeal the insurance industry's exemption from anti-trust statutes (an exemption that they share only with Major League Baseball). "Insurance companies have become so large they dominate entire regions of the country," Reid said. "They have become so powerful they block start-up businesses from entering the market, and they put smaller companies out of business. They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy.”

But Reid isn't an expert on anti-trust law, and as Senate Majority Leader, he doesn't spur legislative action by testifying before Senate Committees. He was really there to send a clear and unmistakable signal to the insurance industry in the aftermath of Monday's assault on health-care reform: Attack us, and we'll hurt you. Badly.

Photo credit: By Mark Wilson -- Getty Images

By Ezra Klein  |  October 14, 2009; 2:10 PM ET
Categories:  Health Reform  
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Comments

Another outbreak of DSSS (Democratic Senators showing Spines). Now if we can get a transplant to the part of Reid's brain that controls who gets committee chairs and hardwire it so that those who oppose cloture are denied perks, we will be getting somewhere.

Posted by: srw3 | October 14, 2009 2:23 PM | Report abuse

Oh yeah! Pull out the big guns! Take that Karen Ignagni and Blue Cross!

Hey Ezra, what is the probability that they actually throw away this exemption.

They ought to do it. I say take every action possible to hasten the demise of these corporations.

Posted by: bcbulger | October 14, 2009 2:25 PM | Report abuse


Probably need some lawyers to jump in, but my understanding is that repealing the exemption (McCarran-Ferguson Act of 1945) would also, interestingly, allow insurance companies to sell insurance across state lines, and authorize the feds to regulate it (per the commerce clause). Though it'd create a giant regulatory vacuum that'd have to be filled by some new national agency.

I think I read Obama supported repealing this in the Senate for purposes of getting cheaper malpractice premiums, actually.

Posted by: ThomasEN | October 14, 2009 2:39 PM | Report abuse

As earlier commentator asked, really what are the chances of anything like this indeed getting enacted? Sen. Schumer is also shooting the same way.

Is there any negative side in removing this 'anti-trust' protection for Health Insurance companies? Is it only for Health Insurance companies or all types of insurance companies? What is the history of why did it come in the place?

And by the way, we may get Megan McArdlee to agree for this change for once. Not that she is 'the bar' we judge reforms in this country. But something to note about Libertarians here.

Posted by: umesh409 | October 14, 2009 2:39 PM | Report abuse

Well, looks like our government will start punishing and rewarding industries based upon their support of the administration's priorities. Yay! Sounds like a healthy democracy to me!

Posted by: jfcarro | October 14, 2009 2:49 PM | Report abuse

Harry gets backbone! Wow!

There is no reason for any industry to be exempt from anti-trust legislation. We say we want free markets, capitalism, etc....then why is insurance exempt?

I think the insurance industry is in a bit of a jam what with the PWC report and all. The average Joe understands that for what it was.

Posted by: scott1959 | October 14, 2009 3:30 PM | Report abuse

This is the most promising development I've seen since the election.

Posted by: akmakm | October 14, 2009 3:38 PM | Report abuse

look at what barack obama will have accomplished in less than a year in office.
change we can believe in!

this will be an historic accomplishment.

Posted by: jkaren | October 14, 2009 3:40 PM | Report abuse

This is actually pretty fascinating. The historical justification for exempting insurance companies from antitrust was that they needed to pool risk, and that competition would lead to really pernicious market segmentation with the poor and sick clustering in certain unreliable plans. But you don't need to worry about that as much with an individual mandate connected to a highly regulated exchange.

Posted by: NS12345 | October 14, 2009 3:49 PM | Report abuse

This spectacle is repulsive. Either there are legitimate reasons to end insurers anti-trust exemption or there aren't. If there are, then by all means let's consider it.

Whether insurers kiss Reid's ring on reform shouldn't be the catalyst for this event. Disagreements over policy should not lead to de facto threats by government officials.

Posted by: mbp3 | October 14, 2009 4:13 PM | Report abuse

Of course this is what the Public Option was supposed to fix.

And the idea of a national public option that individuals states can opt out of is a very good idea.

But....there is yet another possibility to remember if needed: regulation of payout ratios (what % insurers must pay out of their premiums to health care claims).

More on how to do that, and whether to do it (this depends on the real competition, such as the Wyden proposal could affect, etc.):

http://findingourdream.blogspot.com/2009/10/how-senator-snowe-can-help-everyone.html

Posted by: HalHorvath | October 14, 2009 4:40 PM | Report abuse

This is all show. They aren't going to repeal it.

John

Posted by: toshiaki | October 14, 2009 5:01 PM | Report abuse

You really think we'd only be getting 3% margins if we had monopoly power and no competition? I would love to have some of the echo chamber here explain to me exactly how the lack of anti-trust regulation is doing anything to help health insurers. I'll be waiting anxiously.

Posted by: ab13 | October 14, 2009 5:31 PM | Report abuse

--"[Reid] was really there to send a clear and unmistakable signal to the insurance industry in the aftermath of Monday's assault on health-care reform: Attack us, and we'll hurt you. Badly."--

Rah rah rah. Klein waves his pom poms and does the splits for thug government!

We'll hurt you!

Yaaaaaaaaaaaaaaay!

Posted by: msoja | October 14, 2009 6:09 PM | Report abuse

Nitpick - Harry Reid is not 'an appointed' government official; but an elected Senator. I would expect difference between their behavior and execution of roles.

Posted by: umesh409 | October 14, 2009 6:15 PM | Report abuse

"Klein waves his pom poms and does the splits for thug government!"

msoggy the glibertarian dunce stands up for anti-trust exemptions! Yaaaay monopolies!

Posted by: pseudonymousinnc | October 14, 2009 6:33 PM | Report abuse

--"Yaaaay monopolies!"--

Haven't seen one yet that could throw me in jail for refusing to "contribute" to it.

Haven't heard of one yet with the disposition of the thugs currently holding the monopoly on power in Washington, D.C.

Posted by: msoja | October 14, 2009 9:22 PM | Report abuse

What a glibertarian fraud you are, msoggy.

Posted by: pseudonymousinnc | October 14, 2009 9:49 PM | Report abuse

--"What a glibertarian fraud you are, msoggy."--

More socialism isn't change. More socialism is nothing to hope for.

Posted by: msoja | October 15, 2009 12:01 AM | Report abuse

I wish Harry Reid would stop the silent filibuster of the public option within his own caucus.

Regarding the antitrust issue, I suspect it won't have much effect. It may open up insurers to more lawsuits which they will defend by pointing out that the providers they do business with are monopolies too. If anything we're going to see even more consolidation under Obamacare if the Dutch experience is any guide.

Posted by: bmull | October 15, 2009 6:06 AM | Report abuse

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