Congressional leaders continue to seek information from the U.S. Department of Justice (DOJ) regarding the DOJ’s efforts to enforce the Competitive Health Insurance Reform Act (CHIRA), which partially repealed the antitrust exemption “business insurance of the McCarran-Ferguson Act for insurers and has been signed into law by former President Trump in the final days of his term after receiving bipartisan support from Congress.
On July 26, 2022, U.S. Representatives Peter DeFazio (Democrat, OR-04), Drew Ferguson (Republican, GA-03), Jerrold Nadler (Democrat, NY-10), Ken Buck (Republican, CO-04), and David Cicilline (Democrat, RI-01) sent a letter to the DOJ requesting an update regarding the agency’s efforts to clamp down on anti-competitive behavior in the health and dental insurance industries since Congress passed CHIRA and repealed the so-called “insurance business” antitrust exemption for health and dental insurers in January 2021.
Among other things, CHIRA amended the McCarran-Ferguson Act to repeal the insurance antitrust exemption for health and dental insurers, stating that “[n]nothing contained in this Act shall modify, interfere with, or replace the operation of any of the antitrust laws with respect to health insurance business (including dental insurance business and benefits limited range dental). Historically, the Supreme Court had interpreted insurance exempt activity narrowly and did not exempt insurers from the most common types of antitrust claims. But the courts had applied the McCarran-Ferguson Act to shield certain coordinated activities of insurers from antitrust challenges, including pricing, joint underwriting and reinsurance risk allocation. After CHIRA, these types of previously protected joint activities can now pose antitrust risks to health and dental insurers.
Although the amended law continues to exempt several categories of conduct from federal antitrust review (for example, the performance of actuarial services, and the dissemination of historical loss data), government officials and federal agencies anticipated an increase in antitrust enforcement following the passage of CHIRA. For example, the DOJ issued a Press release shortly after the enactment of CHIRA, noting that “limiting the scope of conduct exempt from antitrust laws will strengthen the [DOJ’s] ability to investigate and prosecute anti-competitive behavior. And while President Biden from July 2021 Executive Order on Promoting Competition in the U.S. Economy does not explicitly refer to CHIRA, the order states that “it is the policy of [the Biden administration] apply antitrust laws to combat excessive industry concentration, abuse of market power and the harmful effects of monopoly. . . especially since these problems arise in . . . health markets (including insurance markets . . .) . . . .”
In its recent letter to the DOJ, the bipartisan group of U.S. Representatives called the McCarran-Ferguson Act amendment a “monumental and positive step for competition and consumer protection,” and suggested that the business of insurance exemption before the amendment had allowed “health insurance companies have free rein to exercise market power and collude to drive up premiums, drive up customer prices, restrict competition and To ensure that the DOJ gives due consideration to CHIRA’s goals and additional enforcement resources, lawmakers asked the DOJ to provide answers to several questions by August 30, 2022. These questions include the following:
- Since January 13, 2021, what action, if any, has the Antitrust Division taken to enforce antitrust laws against companies in the health insurance industry that are no longer exempt from enforcement in under the McCarran-Ferguson Act?
- Apart from the case underlined in this letter [LifeWatch Servs. v. Highmark, Inc., 509 F. Supp. 3d 356 (E.D. Pa. Dec. 28, 2020), aff’d, LifeWatch Servs., Inc. v. Highmark, Inc., No. 21-1142, 2021 WL 5492811 (3d Cir. Nov. 17, 2021)]Has the Antitrust Division submitted any amicus briefs, opinions of additional authority, trade advisory opinions, or other documents regarding the legal implications of the Competitive Health Insurance Reform Act under a private dispute?
- Given the expanded powers following the enactment of CHIRA, what steps has the Antitrust Division taken to review existing healthcare guidelines to determine if improvements or new guidelines are needed?
- Are there other laws or case law that prevent or frustrate the DOJ’s efforts to enforce antitrust laws in the health insurance markets?
- Would increased resources help the Antitrust Division enforce federal antitrust laws in the health insurance industry?
This is the second time members of Congress have asked antitrust agencies for an update on their enforcement efforts following CHIRA’s enactment. In July 2021, Senators Patrick Leahy (Democrat, VT) and Steve Daines (Republican, MT) sent a letter to the DOJ and the Federal Trade Commission (FTC) for clarification of the agencies’ actions to use their expanded authority of CHIRA “to oversee, investigate, and take action against potentially anti-competitive practices within the healthcare industry. ‘Health Insurance”. The new letter from U.S. House members suggests that at least some Democratic and Republican congressional delegates are growing impatient with the DOJ’s apparent lack of initiative in using its expanded congressional authority to tackle alleged anti-competitive practices of health and dental insurance companies.
Antitrust laws are nuanced and complex, and their application depends on the unique facts and circumstances at play in each situation. Health and dental insurers who have questions about the impact of the CHIRA Amendment on their business are strongly encouraged to consult an antitrust attorney. Additionally, the CHIRA Amendment may have implications for insurers beyond the scope of antitrust laws, and companies should work with their attorneys to ensure they continue to meet all of their legal obligations.