McCarran-Ferguson Act’s Antitrust Exemption Dodges Another Attempt at Repeal

By: James M. Burns
Williams Mullen, North Carolina, Virginia

When the Patient Protection and Affordable Care Act (“PPACA”) was passed earlier this year without any provision for a repeal of the health insurance industry’s antitrust exemption, Senator Patrick Leahy, who has been one of the leaders of the repeal movement, vowed that the fight to repeal McCarran this Congress was far from over.  To that end, in March Senator Leahy sent a letter to Senate Majority Leader Harry Reid, which was co-signed by 22 other Senators, urging Senator Reid to schedule a vote on HR 4626, the House’s McCarran repeal bill -- which passed in the House by a margin of 406-19.  However, when Senator Leahy’s letter failed to prompt any further action on the bill, Senator Leahy began looking for opportunities to attach the repeal bill to fast-moving legislation that would ensure further consideration of the issue.  In early May, Senator Leahy found such an opportunity with the financial services regulatory reform bill. 

Specifically, as the Senate was beginning its consideration of the financial services regulatory reform bill, Senator Leahy announced that “The recent economic crisis showed all of us that corporations do not act responsibly without adequate oversight.  It is important to remember that there is another industry that is not required even to play by the same rules of competition as everyone else.”  With that, Senator Leahy announced that he was introducing an amendment to the financial services regulatory reform bill (Amendment No.3823) that would repeal McCarran for health insurers.  Senator Leahy quickly added that “We can surely agree that health insurers should not be allowed to collude to fix prices and allocate markets.”

Throughout the first two weeks of May, the Senate vigorously debated numerous aspects of the financial services reform bill, ultimately falling well behind their proposed schedule for a final vote on the legislation.  Accordingly, while Senator Leahy’s McCarran amendment was slotted for action on the Senate Floor on May 13, it did not come up for consideration on that date.  Shortly thereafter, to cut off further debate on the bill, and further delay, the Senate invoked “cloture” on the legislation, which effectively cut off any opportunity for further consideration of Senator Leahy’s amendment.  In short, McCarran had once again survived repeal.

While the House and Senate versions of the “Restoring American Financial Stability Act” are still in the final stages of being reconciled, there is no opportunity for Senator Leahy’s amendment to be reinserted into the bill during that process.  Thus, with the Senate’s calendar continuing to constrict, and the August recess looming, it looks increasingly certain that, despite a very rocky last six months, McCarran will survive the 111th Congress.  Nevertheless, with both President Obama and Assistant Attorney General for Antitrust Christine Varney continuing to advocate for McCarran’s repeal – with AAG Varney doing so most recently in a May 24 speech to the American Health Lawyers Association – McCarran’s long term prospects remain uncertain, at best.