{"id":3661,"date":"2021-02-17T23:21:09","date_gmt":"2021-02-18T05:21:09","guid":{"rendered":"http:\/\/blogs.luc.edu\/compliance\/?p=3661"},"modified":"2021-02-17T23:21:09","modified_gmt":"2021-02-18T05:21:09","slug":"antitrust-the-competitive-health-insurance-reform-act-of-2020","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=3661","title":{"rendered":"Antitrust & The Competitive Health Insurance Reform Act of 2020"},"content":{"rendered":"

Antitrust & The Competitive Health Insurance Reform Act of 2020<\/strong><\/span><\/p>\n

Joseph Ho, MPH<\/em><\/span><\/p>\n

Associate Editor<\/em><\/span><\/p>\n

Loyola University Chicago School of Law, JD 2022<\/em><\/span><\/p>\n

The Competitive Health Insurance Reform Act of 2020 (\u201cCHIRA\u201d) was signed into law on January 13, 2020, shifting not only how health insurance markets operate but lowering the bar for federal government agencies to bring successful actions against anticompetitive behavior. Prior to becoming law, health insurance companies retained robust antitrust exemptions under the McCarran-Ferguson Act (the \u201cAct\u201d). While it does not completely eliminate antitrust exemptions, the passage of CHIRA<\/a> sent a strong signal that the federal government intended to promote competitive conduct in health insurance markets and limit the scope of these antitrust exemptions. While the upshot is that consumers may benefit from increased access and potentially lower cost, the health insurance industry must begin to adjust its conduct or face contentious litigation.<\/span><\/p>\n

Health insurance markets<\/strong><\/span><\/p>\n

Anticompetitive behavior exhibited by the health insurance industry creates high levels of market concentration, which lessens competition and causes disproportionate effects of individuals paying higher insurance premiums<\/a>. Currently, the health insurance market is concentrated<\/a> in many areas throughout the United States. By analyzing the data of commercial enrollments<\/a> in HMO, PPO, and other insurance plans through the Hirschman-Herfindahl index<\/a> \u2014 a generally accepted method to calculate market concentration \u2014 an overwhelming number of health insurance markets throughout the United States exhibit high concentration. Consequently, commentators have viewed antitrust enforcement<\/a> as a means toward limiting<\/a> the overall exertion of health insurer market power.<\/span><\/p>\n

The McCarran-Ferguson Act<\/strong><\/span><\/p>\n

In 1944, the Supreme Court<\/a> held in United States v. Southern-Eastern Underwriters Association<\/em> that the federal government could regulate insurance companies. In response to this holding, Congress passed the McCarran-Ferguson Act in 1945 and gave states the authority<\/a> to regulate insurance. The Act provided antitrust exemptions to these health insurance companies. To qualify for this exemption<\/a> from federal antitrust law liability, the challenged practice must constitute the \u201cbusiness of insurance,\u201d be \u201cstate law regulated,\u201d and cannot constitute an \u201cagreement to \u201cboycott, coerce, or intimidate.\u201d<\/span><\/p>\n

In explaining the \u201cbusiness of insurance,\u201d \u2014 arguably the most complex of the criterion \u2014 the Supreme Court case of Pilot Life Ins. Co. v. Dedeaux<\/em><\/a> reiterated a three-part test to determine what constituted a \u201cbusiness of insurance.\u201d There, the Court looked to whether the practice has \u201cthe effect of transferring or spreading a policyholder\u2019s risk, whether the practice is \u201can integral part of the policy relationship between the insurer and the insured,\u201d and whether the practice is \u201climited to entities within the insurance industry.\u201d<\/span><\/p>\n

Those in favor<\/a> of exemptions believed the sharing of information protects the risk of future loss and that the insulation from antitrust litigation reduces cost. Alternatively, those against<\/a> the exemptions argued that anticompetitive behavior exhibited by those in highly concentrated health insurance markets contributed to an increase in premium rates, lower reimbursement rates paid to providers delivering care, and an overall decrease in quality of care available to consumers.\u00a0<\/span><\/p>\n

The Competitive Health Insurance Reform Act of 2020<\/strong><\/span><\/p>\n

Praised<\/a> by the Department of Justice\u2019s Antitrust Division as a means of limiting anticompetitive behavior in health insurance markets and increasing the Department\u2019s ability to investigate and prosecute this behavior, the Competitive Health Insurance Reform Act of 2020 repealed certain antitrust exemptions under the McCarran-Ferguson Act. The Act, however, does not fully repeal antitrust exemptions but will open those in \u201cthe business of health insurance\u201d to federal antirust liability<\/a> such as \u201cprice-fixing, bid-rigging, and market allocation.\u201d\u00a0<\/span><\/p>\n

Notably, even after the passage of CHIRA, health insurers retain federal antitrust immunity in four situations. These include<\/a> \u201ca contract, combination or conspiracy to collect, compile, or disseminate historical loss data, determine a loss development factor for historical loss data, perform actuarial services if the collaboration does not involve a restraint of trade, or develop or disseminate a standard insurance policy form if adherence to the form is not required.\u201d\u00a0<\/span><\/p>\n

Preparing for enforcement actions<\/strong><\/span><\/p>\n

Over the last five years, the Justice Department<\/a> (\u201cDOJ\u201d) said it enforced antitrust actions against \u201chealth insurers involved in transactions valued at over 160 billion dollars.\u201d Additionally, the passage of CHIRA could lead to private actions<\/a> against health insurers. In either regard, with the inevitable increase of enforcement actions, health insurers will need to increase their oversight and compliance capabilities and perform their due diligence to understand what actions they take in the market no longer find safe harbor in antitrust exemptions.<\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Competitive Health Insurance Reform Act of 2020 (\u201cCHIRA\u201d) was signed into law on January 13, 2020, shifting not only how health insurance markets operate but lowering the bar for federal government agencies to bring successful actions against anticompetitive behavior. Prior to becoming law, health insurance companies retained robust antitrust exemptions under the McCarran-Ferguson Act (the \u201cAct\u201d). While it does not completely eliminate antitrust exemptions, the passage of CHIRA sent a strong signal that the federal government intended to promote competitive conduct in health insurance markets and limit the scope of these antitrust exemptions. While the upshot is that consumers may benefit from increased access and potentially lower cost, the health insurance industry must begin to adjust its conduct or face contentious litigation.<\/p>\n","protected":false},"author":77,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[193,1010],"class_list":["post-3661","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-antitrust","tag-health-insurance"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/3661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/77"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3661"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/3661\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}