By Alexander Bolton - 09/24/09 10:00 AM EDT
Senate Majority Leader Harry Reid is keeping a brutal fight with the insurance industry out of the broader healthcare debate, mindful that including it could sink President Barack Obama’s signature domestic priority.
Reid (D-Nev.), who will play a key role crafting the final Senate healthcare overhaul in the next few weeks, is excluding a proposal to repeal a loophole that exempts health insurance companies from federal antitrust laws.
Republicans say Reid is being calculated in a different manner, dangling the standalone bill as a way of intimidating the companies into making concessions on Obama’s broader healthcare objective. But they will have to overcome recent testimony from former Senate Republican Leader Trent Lott, who backed a broader effort to lift the exemption for the entire industry.
So far the powerful insurance industry has held back waging a full-out battle against Democratic health reform proposals because companies stand to gain tens of millions of new customers. But adding language that would open health insurance companies to prosecution by the Justice Department would provoke a strong counterattack from the industry.
Reid has long argued that health insurance companies are able to gouge consumers because they are not subject to the Sherman Antitrust Act, which outlaws trusts and monopolies that stifle competition.
“They could be conspiring to fix prices as they do every day and not a single thing could be done about it because they are not subject to the law like everybody else,” Reid told a crowd of healthcare workers at a Tuesday rally.
“The only business that has a sweetheart [deal such as] they have is Major League Baseball. So is it any wonder that the biggest burden we have to fight [on] the healthcare reform issues that we have is the insurance industry? Of course not.”
But senior Democratic aides said that Reid would not include legislation repealing antitrust exemptions for the health insurance industry in the healthcare package he will bring to the Senate floor.
“The bill has enough problems,” said a Democratic aide, in reference to a bill pending in the Senate Finance Committee that has drawn an array of Democratic criticisms and failed to pick up any Republican support.
Many Senate Democrats strongly support the antitrust legislation, which Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) introduced last week. Seven other Democrats have signed on as co-sponsors, including Senate Democratic Whip Dick Durbin (Ill.) and Sen. Charles Schumer (N.Y.), vice chairman of the Democratic Conference.
Health insurance companies and HMOs employ 1,795 lobbyists, according to a new report by Public Campaign Action Fund, a group that tracks lobbying expenditures and fundraising.
The report found that health insurance companies and HMOs spent $126 million on political campaign contributions and lobbying expenses in the first half of 2009.
Richard Kirsch, the national campaign manager of Healthcare for America Now, a coalition of liberal groups and labor unions, said the Senate Finance Committee’s healthcare bill would do little to rein in the insurance industry.
“The insurance industry is doing pretty well; they’re getting a lot of what they want in the Finance bill,” said Kirsch. “Their ability to weaken the legislation is one more argument for taking them on directly” by repealing antitrust exemptions.
A report by Healthcare for America Now found that 94 percent of the insurance markets across the nation are not competitive under Justice Department standards.
The Leahy legislation would repeal antitrust exemptions for health insurance and medical malpractice insurance companies, opening them to investigations for price-fixing, bid-rigging and reserving various portions of the market for different companies.
Democratic Sens. Dianne Feinstein (Calif.), Russ Feingold (Wis.), Maria Cantwell (Wash.) and Arlen Specter (Pa.) have also endorsed the legislation, as have liberal groups such as the Consumer Federation of America.
“Some of my colleagues would like to destroy the insurance industry because they want a government-run healthcare system,” said Sen. John Cornyn (R-Texas), a member of the Senate Finance panel.
Cornyn said that Reid is waving the threat of antitrust legislation to cow the industry into making more concessions on healthcare reform.
“We all understand what he’s trying to do — it’s an intimidation tactic,” Cornyn said.
Sen. Chuck Grassley (Iowa), a Republican member of the Finance Committee who was part of negotiations that produced the pending healthcare bill, said that insurance companies are supportive of the legislation as it stands.
He said the insurance industry would accept legislation prohibiting it from discriminating against customers because of pre-existing medical conditions in exchange for a government mandate that requires tens of millions of Americans to sign up for coverage.
In the past, some Republicans have supported a review of antitrust exemptions for health insurance companies.
As a senator, Lott (R-Miss.) in 2007 co-sponsored legislation with Leahy that would have repealed an even broader swath of antitrust exemptions benefiting the entire insurance industry. Lott said that if the industry were not engaging in price-fixing and market allocation, it would not have to worry about losing antitrust exemptions.
“I cannot for the life of me understand why we have allowed this exemption to stay in place so long,” Lott testified in March 2007 before the Judiciary Committee.