NU Online News Service

WASHINGTON--House legislation to repeal the antitrust exemption afforded health insurers will not apply to medical malpractice insurers, according to the latest draft of the bill.

The House Rules Committee will meet tomorrow to clear the bill for House floor action, expected as early as this week.

Under the provisions of the "Health Insurance Industry Fair Competition Act," sharing by health insurers of statistical trend analyses of historical loss cost data that is used by underwriters to determine insurance premiums would be prohibited.

But the provision has been removed that would have applied that language to medical liability insurance in the legislation as proposed Feb. 4 by Rep. Tom Perriello, D-Va., and Rep. Betsy Markey, D-Colo., according to the bill the House Rules Committee will consider tomorrow.

An official of the risk-retention industry noted that it "could have been particularly damaging to the formation of risk retention groups organized to cover medical liability risks."

Responding to the decision, Joel Kopperud, a director of government relations at the Council of Insurance Agents and Brokers, said, "We're grateful that medical liability has been removed from the bill."

The remaining exercise with regard to repeal of the McCarran-Ferguson Act antitrust exemption for health plans "is political, not substantive," he added.

Lawrence Smarr, president of the Physician Insurers Association of America, added that his trade group is "very pleased," but cautioned that the issue "has had a long life" and may be resurrected in the Senate.

At the same time, he said, it appears that supporters of McCarran-Ferguson repeal in the Senate, led by Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, don't have the votes to secure passage on the Senate floor.

"We've worked long and hard to try to see this happen, along with others in the industry," he said.

He noted the support of other insurance trade groups, such as the American Insurance Association, the Property Casualty Insurers Association of America and the Self-Insurance Institute of America Inc.

Officials of AIA and PCI also issued a statement noting the decision of the House leadership to remove medical liability insurance from the bill.

"Medical professional liability insurance is not a health insurance product and should not be included in any McCarran-Ferguson reforms," officials of the two groups said.

"We're appreciative of this important recognition by lawmakers not to include medical professional liability insurers as part of these proposed reforms," they added.

Kevin Doherty, chair of SIIA's Alternative Risk Transfer Committee, added, "This decision by Congress will preserve the existing ability of self-insured risk retention groups to provide medical liability insurance to their members."

Mr. Doherty explained that when risk retention groups were enabled by the federal Liability Risk Retention Act of 1986, groups comprised of hospitals, physicians and other medical specialties formed their own insurance companies against the risk of malpractice lawsuits.

"These risk retention groups helped to provide insurance solutions for health care providers and reduced the impact of the malpractice crisis that had begun to cripple health care in many states," Mr. Doherty said.

He explained that if the provision would have been included in final legislation, formation of medical liability risk retention groups would be made "extremely difficult."

"Loss cost data is the tool they need to be competitive and provide meaningful solutions to health care providers to help manage medical practice liability claims," he said.

Charles M. Chamness, president and CEO of National Association of Mutual Insurance Companies, whose organization applauded the change in the bill said, "The limited anti-trust exemption is one of the most misunderstood aspects of the insurance industry. Any repeal the limited anti-trust exemption in the name of reform would is misguided, and would ultimately harm the consumers that proponents claim to be working for."

Mike Becker National Association of Professional Insurance Agents (PIA) national director of Federal Affairs, said, "inclusion of medical malpractice insurance, a property/casualty product, was particularly inappropriate in that it did not relate directly to health insurance," said

He added PIA will oppose any effort now to amend the legislation to include medical malpractice or any other line of insurance.

"PIA National Executive Vice President and CEO Leonard C. Brevik said many small and mid-size insurance companies rely on jointly collected, pooled historical loss data to underwrite their policies and, "If this were no longer allowed, many of these companies could be forced out of business, with just a relative handful of companies remaining."