Obama backs bill to boost competition among health insurers

The Obama administration took another swipe at health insurers Tuesday, announcing it “strongly supports” House legislation that would lift the antitrust exemption of the health insurance industry.

Enacted in 1945, the exemption has allowed health insurers to operate outside federal antitrust laws, though they are subject to state antitrust laws. Critics of the exemption say that state attorney general offices have a hard time enforcing the laws.

In throwing its weight behind the Health Insurance Industry Fair Competition Act, the White House argued in a statement that lifting the exemption “would give American families and businesses, big and small, more control over their own healthcare choices by promoting greater insurance competition.”

“The repeal also will outlaw existing, anticompetitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans,” the White House continued, in its statement.

The move follows the unveiling Monday of President Obama’s health reform plan (click here for Monitor coverage), which includes a proposal to create a federal authority that can limit exorbitant health premium increases. Recent efforts by health insurers to institute double-digit rate increases have fueled Democrats’ drive to rein in the health insurance industry.

On Thursday, the issue will come up again, as the White House hosts a bipartisan summit on healthcare reform.

The House bill, introduced by Rep. Betsy Markey (D) of Colorado and Rep. Tom Perriello (D) of Virginia – both of whom face tough reelection battles – has 64 additional cosponsors, all Democrats. It is slated to reach the House floor on Wednesday. The Senate is less likely to take action anytime soon.

Some analysts argue that while lifting the exemption may sound good, it would actually have little effect on how the health insurance industry works.