Obama Threatens Insurers’ Anti-Trust Exemption

By PETER BAKER
Published: October 17, 2009

WASHINGTON — President Obama mounted a frontal assault on the insurance industry on Saturday, accusing it of airing “deceptive and dishonest ads” to derail his health care legislation and threatening to strip the industry of its longstanding exemption from federal anti-trust laws.

In unusually harsh terms, Mr. Obama cast insurance companies as obstacles to change interested only in preserving their own “profits and bonuses” and willing to “bend the truth or break it” to stop his drive to remake the nation’s health care system. The president used his weekly radio and Internet address to push back against industry assertions that legislation will drive up premiums.

“It’s smoke and mirrors,” Mr. Obama said. “It’s bogus. And it’s all too familiar. Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, ‘Take one of these, and call us in a decade.’ Well, not this time.”

Rather than trying to curb costs and help patients, he said the industry is busy “figuring out how to avoid covering people. And they’re earning these profits and bonuses while enjoying a privileged exemption from our anti-trust laws, a matter that Congress is rightfully reviewing.”

Mr. Obama’s sharp attack comes as the health care debate moves out of congressional committees to the wider stage of floor debates in the Senate and House. While he has criticized insurers before, his bare-knuckled language on Saturday reflected a more open break with the industry and recognition that his efforts to bring it into some sort of consensus had failed.

The White House is concerned that the insurance industry can undermine public support for changing the health care system much as it did in dooming President Bill Clinton’s overhaul efforts in the 1990s. A new industry study is fueling broader criticism that the plans advanced by Democrats will cost too much, raise consumer expenses and insert government more deeply into the health care sector.

The report issued by America’s Health Insurance Plans concluded that premiums would rise 18 percent more than they would otherwise in the next decade under provisions of a Senate bill, to an average of nearly $26,000 for families and $9,700 for individuals in 2019. The White House dismissed the study as “deeply flawed” and noted that it did not account for subsidies in the bill to help people who could not afford insurance.

In his address Saturday, Mr. Obama hailed that Senate bill, passed by the Finance Committee, as “a reform proposal that has both Democratic and Republican support.” But although Senator Olympia J. Snowe of Maine voted for it, she is the only Republican in either house of Congress to express support for any of the five Democratic health care bills.

The president complained bitterly about the insurers’ attack on the legislation. “The insurance industry is rolling out the big guns and breaking open their massive war chest to marshal their forces for one last fight to save the status quo,” he said. “They’re filling the airwaves with deceptive and dishonest ads. They’re flooding Capitol Hill with lobbyists and campaign contributions. And they’re funding studies designed to mislead the American people.”

He went on to attack other critics he described as tools of the industry. “Of course, like clockwork, we’ve seen folks on cable television who know better, waving these industry-funded studies in the air,” he said. “We’ve seen industry insiders — and their apologists — citing these studies as proof of claims that just aren’t true.”

His signal of support for reviewing the industry’s anti-trust exemption put him in league with Democratic leaders in Congress pushing for repeal or revision of the McCarran-Ferguson Act, which was passed in 1945 to keep regulation of insurers in the hands of the states. Legislation has been introduced in both the House and the Senate to partially or completely overturn the law.

Senator Harry M. Reid of Nevada, the Senate Democratic leader, personally testified at a Judiciary Committee hearing on Wednesday in favor of getting rid of the exemption. A day later, Representative Nancy Pelosi of California, the House speaker, said “there is tremendous interest in our caucus” in such a move.

Assistant Attorney General Christine A. Varney, the head of the anti-trust division at the Justice Department, testified at the Senate hearing that repealing McCarran-Ferguson would spark more competition, which could help reform industry practices. She said the department “generally supports the idea of repealing anti-trust exemptions” but did not take a position on “how and when” Congress should do so.

State agencies that regulate insurers and industry representatives argue that there is no evidence of widespread price fixing or other behavior to justify repealing the federal exemption. Industry representatives argue that getting rid of it would make it harder for smaller insurers and inevitably raise costs and reduce choices for consumers.

Sock it to 'em, Obama! Stop the criminal exploitation by health insurance companies of Americans with illnesses. These people making money, lot's of it, while putting whole families in the poor house, should be locked up if not given the same draconian economic choices they force on so many American lives.