Holding Insurance Companies Accountable

By Srini Varadarajan, J.D.

Dental insurance companies have enjoyed an exemption from federal antitrust laws for over 70 years. Legislation introduced in 2019 could change that.

On Feb. 6, 2019, Sen. Steve Daines (R-Mont.) and Sen. Patrick Leahy (D-Vermont) introduced bipartisan Senate bill S. 350, entitled the “Competitive Health Insurance Reform Act of 2019.” S. 350 calls for amending the McCarran-Ferguson Act of 1945 to restore the application of antitrust laws to the business of health insurance, including dental insurance. On Feb. 28, 2019, Rep. Peter DeFazio (D-Ore.) and Rep. Paul Gosar (R-Ariz.) introduced H.R. 1418, the bipartisan House version of the legislation.

Enacted in 1945, the McCarran-Ferguson Act was an effort to resolve a perceived conflict between state and federal regulation of insurance companies. A year earlier, the U.S. Supreme Court decision in U.S. v. South-Eastern Underwriters Association had effectively held that the federal government could regulate health insurance companies that engaged in interstate commerce by virtue of the Commerce Clause of the U.S. Constitution. However, health insurance had largely been a state-regulated industry. Accordingly, the McCarran-Ferguson Act proposed a carve-out for health insurance from federal regulation, including certain provisions of the Sherman Anti-Trust Act of 1890 and Clayton Antitrust Act of 1914.

With the exemption, health insurers, including dental insurers, have collaborated to set prices and engage in other behaviors that limit competition and increase revenues. For the patient and practitioner, these anti-competitive behaviors may have translated to increased premiums, limited options, stunted annual maximums, and limited coverage and reimbursement.

If enacted, the Competitive Health Insurance Reform Act can be a significant step to restoring competition to the dental insurance marketplace. However, it is not a magic pill. Rather, it is analogous to a pathway to a more balanced diet that can, with compliance and enforcement, produce a healthier insurance landscape for patients and practitioners. Specifically, it can reopen the door to enable the U.S. Federal Trade Commission and the Justice Department to enforce federal competition laws against the health insurance industry.

However, it is important to understand that this is not the first bill to have been introduced in either the House or the Senate to remove the insurance industry’s exemptions under McCarran-Ferguson. For example, in 2017, H.R. 372 – the Competitive Health Insurance Reform Act of 2017 – passed in the House of Representatives by a vote of 416 to 7, and yet failed to make it out of the Committee on the Judiciary in the Senate. Organized dentistry has long fought for the repeal of the adverse sections of the McCarran-Ferguson Act, but the fact that it has yet to happen underscores the importance of every voice. It’s critically important that our members of Congress hear from us on these important pieces of legislation. Please visit congress.gov/ to find your representatives and contact their offices to encourage them to support S350 and H.R. 1418.

Srini Varadarajan, J.D., is AAE’s assistant executive director for advocacy and professional relations. He can be reached at svaradarajan@aae.org.