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Healthcare Q&a

Insurers could face an upheaval

October 19, 2009|Kim Geiger and James Oliphant

WASHINGTON — Some reader questions on the national healthcare debate:

Some Democrats have proposed ending the insurance industry's antitrust exemption. What exactly is that?

A 1945 law prevented the federal government from regulating all forms of insurance, leaving that duty to the states. As a result, the law also shielded insurers from federal antitrust laws that prohibit price-fixing and collusion. This is seen as a problem for residents in many areas where only one or two health insurers operate. Rather than go to a neighboring state where another insurer might be offering a better deal, residents are forced to choose between the insurers that are regulated by their state government. Some Democrats are proposing to repeal a portion of the law that relates to health insurers specifically.

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Some Republicans have proposed allowing insurers to sell plans across state lines. Can't they do that already?

A proposal to allow this was part of the bill that passed in the Democrat-controlled Senate Finance Committee last week. Republicans, however, have been the ones arguing the loudest in support of the idea. Currently, a resident in one state cannot buy a policy offered in another state because it would not meet state requirements and there would be no government regulator to ensure that the policy was honored. If the law were changed to allow interstate sales of health insurance, this could open the industry to federal antitrust laws because an interstate insurance regime would have to be regulated by the federal government.

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What are some other proposals for increasing competition?

The one that draws the most attention is the "public option" -- a government-run health insurer. Proponents say such an entity could offer cheaper insurance rates because it could deliver healthcare services in a more cost-effective way, particularly if it paid doctors at the same rate, or slightly higher, than Medicare does. Some members of Congress favor private, member-owned cooperatives that they say would compete with insurers without government involvement. And some believe that simply requiring all residents to buy insurance will give insurers enough incentive to compete for those new customers.

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What about allowing national insurance plans?

That's another proposal that proponents say would give consumers more choices and drive down premium costs. A provision in the Senate Finance Committee healthcare bill would allow insurers to offer national plans that would compete with state-based ones. Critics say such plans would evade tougher state regulations. The bill does allow states to opt out of the national plans, but some question whether states would be willing to do so if it meant preventing residents from buying less expensive plans that don't meet state standards.

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joliphant@latimes.com

kgeiger@latimes.com

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