Obama, Reid Draw Bead on Health Insurance Monopoly

Are the Democrats planning to bust up the insurance monopoly to force competition?

Supporters of the public option in the current health care debate have long pointed to the lack of competition in the health insurance industry. Now that the public option appears stalled in the U.S. House of Representatives, vigorous antitrust enforcement might be the Democrats' secret weapon to create a competitive environment that would make health insurance more affordable to consumers.

Early hints that the Obama administration might be gearing up to look into price-fixing in the insurance industry surfaced in late summer. Addressing the Las Vegas Chamber of Commerce in August, Sen. Majority Leader Harry Reid (D-Nev.) said he favored repealing a law that exempts insurance companies from antitrust regulations. Those remarks were largely overlooked in press reports at the time, but Reid has been steadily -- and stealthily -- working to overturn the McCarran-Ferguson Act that has essentially exempted the health insurance industry from federal antitrust laws for the past 50 years. "What a sweet deal they have," Reid told the Las Vegas Sun.

Then, last week, in what the New York Times described as "unusually harsh terms," President Obama threatened the industry, throwing his support behind congressional efforts to review McCarran-Ferguson. In his weekly radio and Internet address, Obama accused the insurers of earning profits and bonuses "while enjoying a privileged exemption from our antitrust laws." It was the first time Obama publicly addressed the issue. As the strategy gained momentum, Reid joined other Democratic leaders in Congress pushing for repeal of the act, claiming it allowed the industry to collude in setting prices and that repeal would create competition. In a highly unusual move, Reid testified this week before a congressional committee in favor of eliminating the exemption and announced he would sponsor an amendment to the Senate health care bill overturning McCarran-Ferguson.

The pro-capitalist, free enterprise plan seems to have increasing bi-partisan support. This week the House Judiciary Committee approved the bill that would allow Justice Department enforcement of federal anti-trust regulations in the health insurance industry. The bill passed with a vote of 20 to 9, with 3 Republicans joining 17 Democrats. "No one on this committee believes that price-fixing or carving up markets is a good thing," Committee Chairman John Conyers, Jr. (D-Mich.) said.