{
  "id": "R40968",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R40968",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 361503,
      "date": "2010-03-02",
      "retrieved": "2016-04-07T01:55:16.038718",
      "title": "Limiting McCarran-Ferguson Act\u2019s Antitrust Exemption for the \u201cBusiness of Insurance\u201d: Impact on Health Insurers and Issuers of Medical Malpractice Insurance",
      "summary": "Narrowing or eliminating the 1945 McCarran-Ferguson Act\u2019s antitrust exemption for the \u201cbusiness of insurance\u201d has been pursued for many years in many Congresses, and in the 111th Congress, there have been at least four measures\u2014three stand-alone bills, and a provision in the House health care reform bill. Unlike prior legislation to eliminate the entire exemption\u2014currently applicable generally to the extent such business is regulated by state law\u2014however, three of the current measures (H.R. 3596, S. 1681, and section 262 of H.R. 3962 (the House-passed health care reform bill)) are applicable only to the provision of health and medical malpractice insurance; H.R. 4626, as introduced, and as passed by the House on February 24, 2010, is applicable only to health insurance. Two of the stand-alone bills, H.R. 3596 and S. 1681, would prohibit issuers of such insurance from engaging in \u201cprice fixing, bid rigging, or market allocations in connection with the conduct of the business of providing\u201d health or medical malpractice insurance. H.R. 4626, like Section 262 of H.R. 3962, does not specify particular, prohibited activities, mandating instead that nothing in McCarran-Ferguson shall prevent the application of the antitrust laws to the business of health [or medical malpractice] insurance.\nH.R. 3596 as voted out of the House Judiciary Committee on October 21, 2009, was amended to permit the sharing of historical loss data or the \u201cperform[ance of] actuarial services\u201d if doing so \u201cdoes not involve a restraint of trade.\u201d H.R. 4626 contains no information-sharing provisions. Hearings have been held on S. 1681, but the bill remains in the Senate Judiciary Committee; whether it will ultimately be amended to contain a provision concerning information sharing is unknown, as is the likelihood that its substance will be inserted in a final health care reform bill. Section 262 of H.R. 3962 contains language similar to the information-sharing provision in H.R. 3596, including a section to define several of the terms used. There is not currently any provision addressing McCarran-Ferguson in the Senate health care reform bill (H.R. 3590), passed on December 24, 2009. Due largely to the importance of information sharing to insurers, the insurance industry has cooperated in the past in a variety of ways, including sharing loss information, jointly developing policy forms and rates, operating residual market mechanisms, and participating in state guaranty funds. Some forms of cooperation, including publication of mandatory advisory rates, have already been curtailed because of antitrust concerns. \nPassage of any of the measures is likely to precipitate litigation to define the scope of the prohibition and/or any remaining exemption. The precise impact on the affected portion of the insurance industry will depend critically, therefore, on future court decisions. \nNotwithstanding any limitation imposed at the federal level on the McCarran-Ferguson antitrust exemption available to health and medical malpractice insurers, however, any activity that the subject insurance companies currently (or might in the future) undertake\u2014including joint ratemaking or certain information sharing\u2014may nevertheless remain legally permissible. The \u201cstate action\u201d doctrine in antitrust law immunizes from the federal antitrust laws: (1) all actions of state (but not necessarily, municipal) public entities and (2) those of private entities that are \u201cclearly articulated\u201d and legislatively (or otherwise) mandated or authorized and are \u201cactively supervised\u201d by the states. Currently, all states regulate the insurance industry. The \u201cstate action\u201d issue, then, is whether and to what extent existing state mandates or authorizations, while adequate to meet the requirements of the McCarran-Ferguson exemption, would be adequate to meet the requirements of the antitrust \u201cstate action\u201d doctrine, which dictates both that there be a \u201cclear articulation\u201d of state policy, and that a state engage in \u201cactive supervision\u201d of the private activity that occurs in response to that articulation. This report will be updated as necessary.",
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