For Insurers, a Question of Trust (and Antitrust)

" . . . They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy”

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By David M. Herszenhorn

New York Times

In a rare appearance as a witness at a Senate hearing, the majority leader, Harry Reid of Nevada, told the Judiciary Committee on Wednesday that it should repeal a 1945 law that granted the insurance industry limited exemption to national antitrust laws by allowing states to regulate insurers.

The law, the McCarran-Ferguson Act, is often cited by Mr. Reid and other critics of the health insurance industry as a reason why coverage can be so expensive for many people. They say the law allows insurers to monopolize markets and fix prices in ways that are usually illegal.

“Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act,” Mr. Reid said. “Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we’re both Nevadans, I’m not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn’t be happy with the state of the insurance industry.”