Harry Reid Turns Up Heat on Insurance Industry

Posted by Steve Benen, Washington Monthly at 3:42 PM on October 14, 2009.

It's pretty unusual for a Senate Majority Leader to testify as a witness at a committee hearing, so I was glad to see Harry Reid (D-Nev.) make an exception today on a key issue.

In a provocative move, the Majority Leader spoke directly to the Senate Judiciary Committee, and raised the specter of repealing the 1945 law pertaining to the insurance industry's limited exemption to national antitrust laws.

The law, the McCarran-Ferguson Act, is often cited by Mr. Reid and other critics of the health insurance industry as a reason why coverage can be so expensive for many people. They say the law allows insurers to monopolize markets and fix prices in ways that are usually illegal.

"Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act," Mr. Reid said. "Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we're both Nevadans, I'm not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn't be happy with the state of the insurance industry."

"Providing an exemption for insurance companies to antitrust laws has been anticompetitive and damaging to the American economy," Mr. Reid continued. "Health insurance premiums have continued to rise at a rapid rate, forcing businesses to cut back on health insurance coverage and forcing many families to choose between health insurance and basic necessities."

He added: "Insurance companies have become so large they dominate entire regions of the country. They have become so powerful they block start-up businesses from entering the market, and they put smaller companies out of business. They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy."

Reid's remarks were well received by the Judiciary Committee's chairman, Pat Leahy (D-Vt.), who is the lead sponsor of the Health Insurance Industry Antitrust Enforcement Act, which would repeal the insurance industry's limited exemption.

Of course, there's a very clear political motivation behind the Majority Leader's remarks today. As Ezra explained, "Reid isn't an expert on anti-trust law, and as Senate Majority Leader, he doesn't spur legislative action by testifying before Senate Committees. He was really there to send a clear and unmistakable signal to the insurance industry in the aftermath of Monday's assault on health-care reform: Attack us, and we'll hurt you. Badly."

Time will tell if insurers get the message, but either way, I like seeing Reid play some hardball with the industry.

Tagged as: harry reid, health insurance

Steve Benen is "blogger in chief" of the popular Washington Monthly online blog, Political Animal. His background includes publishing The Carpetbagger Report, and writing for a variety of publications, including Talking Points Memo, The American Prospect, the Huffington Post, and The Guardian. He has also appeared on NPR's "Talk of the Nation," MSNBC's "Rachel Maddow Show," Air America Radio's "Sam Seder Show," and XM Radio's "POTUS '08."