End health insurers' antitrust exemption, Clinton aides urge

June 22, 1993|By New York Times News Service

WASHINGTON -- To increase competition in the market for medical care, White House officials are recommending that the health insurance industry be stripped of its long-standing immunity from federal antitrust law.

The proposal reflects the concern of administration officials and consumer advocates that a handful of big insurance companies may soon dominate the industry, especially if Congress approves the plan President Clinton is developing to overhaul U.S. health care.

Under the Clinton plan, to be sent to Congress later this year, consumers and small businesses would band together to buy coverage from large networks of doctors and hospitals. Many networks would be organized by insurance companies.

"You don't want a cartel of insurers to be able to set prices or limit the terms of coverage free from antitrust scrutiny," said an official who has worked closely with Hillary Rodham Clinton in developing the administration proposal.

Mr. Clinton is expected to make the antitrust proposal part of his health care plan.

Linda A. Lipsen, chief lobbyist for Consumers Union, endorsed the proposal.

"We have been opposed to the antitrust exemption for years," she said yesterday. "Health insurance companies decide not to provide coverage for people in certain ZIP codes. They decide what diseases will be covered and which ones won't. But these practices are shielded from antitrust scrutiny."

Insurance companies generally want to retain the antitrust exemption, but some say they are willing to consider changes if they can share data on claims and continue some other joint activities.

In the 1992 campaign, Mr. Clinton said he would "take on the big insurance companies." But big insurers see a potentially lucrative new market in the health plan emerging from the White House.

Five big insurers, Aetna, Cigna, Metropolitan Life, Prudential and Travelers, have formed an alliance to promote the idea of managed competition, which is at the heart of Mr. Clinton's plan. In theory, under this plan, doctors and hospitals would cooperate within a network, and the networks would compete with one another.

White House officials and many insurance executives predict that Mr. Clinton's plan will lead to consolidation in the health insurance industry, as scores of smaller companies merge or fail.

The insurance business has been largely exempt from federal antitrust law since 1945. The Supreme Court ruled in 1944 that insurance was interstate commerce subject to federal antitrust law. But the insurance industry won a reprieve nine months later, when Congress passed the McCarran-Ferguson Act.

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