It is, of course, arguable that the McCarran Act gives states too much authority to regulate insurers in anti-competitive ways or, by mandating early disclosure of prices or competitive initiatives, to facilitate insurers' coordination of their pricing and other policies. The bill, however, in its final section declares that state regulators would retain authority to engage in “information gathering and rate setting.” I see no improvement here.
In any event, if this legislation were adopted, the judicially developed “state-action” doctrine would presumably still limit the reach of federal antitrust law in areas where anti-competitive state-regulation controls. As articulated by the Supreme Court in the California Retail Liquor Dealers Association v. Midcal Aluminum case, the exemption for state action is not easy to distinguish, substantively, from the McCarran exemption.
To be sure, the latter exemption is embodied in explicit legislation rather than inferred judicially from congressional intent in passing the Sherman Act. But it was enacted well before the Supreme Court arrived at the Midcal test to govern other situations in which a state substitutes regulation for competition. There is therefore no reason to think that the McCarran exemption is any broader in scope than the state-action doctrine, or that its repeal would change anything important. If one were really interested in strengthening competition in healthcare markets, one might consider specifying more clearly that the state-action doctrine should not exempt anti-competitive private conduct or state regulation not expressly authorized by the state legislature.
As I have written, “Few things are more foreseeable than that a trade or profession empowered to regulate itself will produce anti-competitive regulations.”
Emeritus professor of lawDuke UniversityDurham, N.C.
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