Reps. DeFazio, Ferguson, Nadler, Cicilline, Buck Send Bipartisan Letter to Department of Justice Requesting Information on Federal Antitrust Enforcement in the Health Insurance Industry

WASHINGTON, July 28 -- Rep. Peter DeFazio, D-Oregon, issued the following news release and letter on July 27, 2022:

Yesterday, Reps. Peter DeFazio (OR-04), Drew Ferguson (GA-03), Jerrold Nadler (NY-10), Ken Buck (CO-04) and David Cicilline (RI-01) sent a letter to the U.S. Department of Justice (DOJ) requesting information regarding how the Department is exercising their expanded authorities to crack down on anticompetitive practices within the health insurance industry. DeFazio's bipartisan Competitive Health Insurance Reform Act (CHIRA), which was signed into law in January 2021, ended an outdated special interest loophole, allowing the DOJ to enforce federal antitrust law in the health insurance industry.

"Repealing the antiquated antitrust exemption for the health insurance industry was a monumental legislative achievement, but we must ensure the Department of Justice and the Federal Trade Commission use their expanded authorities to crack down on any anticompetitive practices in this wealthy industry," said Representative DeFazio. "Even before the COVID-19 pandemic, nearly 1 in 4 Americans--including insured Americans--were skipping medical care and prescription drug doses because of high costs. Today, while affordable medical care is more important than ever, health insurance companies continue to price-gouge consumers and reap massive profits on the backs of seniors, working families, and everyday Americans. The Department must keep the industry in check, and CHIRA is a vital tool to do so."

In the letter, the members state, "By repealing the McCarran-Ferguson Act's antitrust exemption, the Competitive Health Insurance Reform Act removes a key obstacle to the scope of the Department's enforcement authority over the health insurance industry and further empowers the Department to combat anticompetitive practices that have undermined competition and harmed consumers for decades. As the Justice Department noted in support of the law's enactment, removing this exemption "will strengthen the Antitrust Division's ability to investigate and prosecute anticompetitive behavior."

Rep. DeFazio's Competitive Health Insurance Reform Act passed Congress unanimously and was signed into law in January 2021. The letter sent yesterday to the Department of Justice aims to ensure the law is being properly implemented, and requests that the Department of Justice inform Congress should it need further resources to enforce federal antitrust laws.

The McCarran-Ferguson Act, passed in 1945, previously exempted the business of health insurance from federal antitrust laws that protect and promote fair competition. CHIRA repealed this antiquated exemption for the health insurance industry and gave the Department of Justice and the Federal Trade Commission the authority to apply federal antitrust laws to anticompetitive behavior by health insurance companies.

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To: The Honorable Jonathan Kanter, Assistant Attorney General, Antitrust Division, U.S. Department of Justice, 950 Pennsylvania Ave., N.W., Washington, D.C. 20530

Dear Assistant Attorney General Kanter:

We write regarding the antitrust enforcement authority of the Department of Justice (DOJ) in health-insurance markets following the enactment of the bipartisan Competitive Health Insurance Reform Act of 2020.

The enactment of this law amending the McCarran-Ferguson Act was a monumental and positive step for competition and consumer protection. And the amendment was much needed: In the decades following the 1945 enactment of the McCarran-Ferguson Act, health-insurance brokers became increasingly consolidated, leaving the industry ripe for abuse. With limited exceptions, the McCarran-Ferguson Act gave health-insurance companies free rein to exert market power and collude to drive up premiums, price-gouge consumers, restrict competition, and deny consumers choice./1

Despite the clearly anticompetitive nature of these practices, federal enforcement has been limited in this area due to the McCarran-Ferguson Act's outdated antitrust exemption--and due to courts' unduly broad interpretation of that exemption. For example, as the Department is aware, as recently as December of 2020, a U.S. District Court dismissed antitrust claims against the Blue Cross Blue Shield Association for allegedly conspiring with its members to deny patients and providers insurance coverage for telemetry monitors, holding that the Association was immune from suit./2

By repealing the McCarran-Ferguson Act's antitrust exemption, the Competitive Health Insurance Reform Act removes a key obstacle to the scope of the Department's enforcement authority over the health insurance industry and further empowers the Department to combat anticompetitive practices that have undermined competition and harmed consumers for decades. As the Justice Department noted in support of the law's enactment, removing this exemption "will strengthen the Antitrust Division's ability to investigate and prosecute anticompetitive behavior."/3

The importance of this law was made clear less than a month after its enactment. In February 2021, the American Hospital Association (AHA) asked the DOJ and FTC to use their new authority to investigate anticompetitive pricing by nurse-staffing agencies and conduct by several major commercial health-insurance companies,4 including UnitedHealth--a request that the DOJ may previously have encountered difficulty to act on despite evidence-based accusations. Conduct such as that alleged by AHA harms patients and healthcare workers and undermines the U.S. healthcare system.

For Congress to better understand how the Department is enforcing the antitrust laws in this area following the enactment of the Competitive Health Insurance Reform Act, we respectfully request answers to the following questions no later than August 30, 2022:

1. Since January 13, 2021, what actions, if any, has the Antitrust Division taken to enforce the antitrust laws against companies in the business of health insurance that are no longer exempt from enforcement under the McCarran-Ferguson Act?

2. Aside from the case highlighted in this letter, has the Antitrust Division submitted any amicus briefs, notices of supplemental authority, business advisory opinions, or other filings regarding the legal consequences of the Competitive Health Insurance Reform Act in any private litigation?

3. Given the expanded authorities following CHIRA's enactment, what steps has the Antitrust Division taken to review existing healthcare guidelines to determine whether refinements or new guidelines are needed?

4. Are there other statutes or case law that prevent or frustrate efforts by the DOJ to enforce the antitrust laws in health insurance markets?

5. Would an increase in resources help the Antitrust Division enforce federal antitrust laws in the health insurance industry?

Thank you for your attention to this important matter.

View footnotes here: https://defazio.house.gov/sites/defazio.house.gov/files/DeFazio%20Ltr%20to%20DOJ%20and%20FTC%20re%20CHIRA%20Implementation%20and%20Health%20Insurance%20Antitrust%20Enforcement.pdf

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Original text here: https://defazio.house.gov/media-center/press-releases/for-immediate-release-defazio-ferguson-nadler-cicilline-buck-send