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Reps. DeFazio, Gosar, Nadler’s Bipartisan Legislation to Curb Health Insurance Price Gouging and Promote Fair Competition Passes House and Senate

Dec 22, 2020
Press Release

The Competitive Health Insurance Reform Act, bipartisan legislation introduced by Reps. Peter DeFazio (OR-04), Paul Gosar (AZ-04) and House Judiciary Committee Chairman Jerrold Nadler (NY-10) to rein in health insurance price-gouging and promote fair competition, unanimously passed the Senate last night and is expected to be signed into law today. The bill passed unanimously in the House in September.

The bill, H.R. 1418, would repeal an antiquated exemption that allows health insurance companies to operate beyond the reach of federal antitrust laws and collude to set health care costs, increase profits, and price gouge consumers.

“Even before the COVID-19 pandemic, nearly 1 in 4 Americans—including insured Americans—were already skipping medical care and prescription drug doses because of high costs. Today, while affordable medical care is more important than ever, health insurance companies still have free rein to price-gouge consumers and reap massive profits on the backs of seniors, working families, and everyday Americans. That’s obscene,” said DeFazio. “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.”

“This is a major win for working Americans,” Nadler said. “The Competitive Health Insurance Reform Act repeals a longstanding antitrust exemption for the health insurance industry under the McCarran-Ferguson Act. This exemption effectively shielded health insurance companies from antitrust scrutiny for some of the most egregious forms of anticompetitive conduct, such as price-fixing, bid-rigging, and market allocation. There is absolutely no justification for this broad antitrust exemption, and its repeal is long overdue. Repealing this anti-consumer exemption has long been a priority of the House Judiciary Committee and I am thrilled the repeal finally made it across the finish line this week. I thank my colleague, Chairman DeFazio, for his leadership on this important legislation, and I look forward to it being signed into law.”

The McCarran-Ferguson Act, passed in 1945, exempts the business of insurance from the federal antitrust laws that protect and promote fair competition.

The Competitive Health Insurance Reform Act would repeal this antiquated exemption and give the Department of Justice and the Federal Trade Commission the authority to apply federal antitrust laws to anticompetitive behavior by health insurance companies. This would help rein in skyrocketing health care costs and ensure consumer protections are in place to guard against abuses and greed by the health insurance industry. This Act would not affect or interfere with the authority of each state to regulate the business of insurance.

In the midst of the COVID-19 pandemic and subsequent economic downturn, several major U.S. health insurers have reported increased profits, totaling billions of dollars. This comes at the same time as the number of uninsured Americans continues to rise.