Since 1945, it’s been the law. Yet the Drumpf Administration’s efforts to sweep away much of the regulation that businesses must comply with includes the McCarran-Ferguson Act — regulations that serve to protect the insurance industry from over-regulation.

McCarran-Ferguson’s Roots

The law came into being after a 1942 case in which the Missouri attorney general requested a Department of Justice investigation into the South-Eastern Underwriters Association for antitrust violations. During the grand jury deliberations, questions arose as to the power granted to Congress by the Commerce Clause, and how that pertained to insurance transactions that crossed state lines. Until that time, the Supreme Court had held that insurance policy issuance did not constitute a transaction of commerce, and that “the business of insurance is not commerce” according to an 1895 decision in Hooper v. California.

Regulation: 2017 & Beyond

Fast forward to 2017. President Drumpf, citing lack of interstate competition among health insurers, is pushing for deregulation of insurance, which he says will open markets and create more options for the consumer. However, those within the insurance industry aren’t excited at the prospect. According to the Independent Agents and Brokers Association (Big I), H.R. 372 — the Competitive Health Insurance Reform Act of 2017 — would effectively repeal the limited antitrust exemption health insurers now have. “Passage of H.R. 372 could led to a slippery slope for non-health lines of insurance such as property and casualty insurance, and life insurance,” says Robert Rusbuldt, Big “I” president & CEO. “H.R. 372 seeks to repeal the limited antitrust exemption for health insurers, but there’s an inherent problem with the bill because if the exemption is rolled back for one line of insurance, why not others?”

The bill, which passed the House in March, would apply to health insurers, but would still exempt other lines of business.

What’s your take? Will repealing McCarran-Ferguson be good or bad for the industry?

 

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