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24–271 PDF 2017

COMPETITIVE HEALTH INSURANCE REFORM ACT 

OF 2017 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON

H.R. 372 

FEBRUARY 16, 2017 

Serial No. 115–3 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MARTHA ROBY, Alabama 

MATT GAETZ, Florida 

MIKE JOHNSON, Louisiana 

ANDY BIGGS, Arizona 

JOHN CONYERS, JR., Michigan, Ranking 

Member 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

ERIC SWALWELL, California 

TED LIEU, California 

JAMIE RASKIN, Maryland 

PRAMILA JAYAPAL, Washington 

BRADLEY SCHNEIDER, Illinois 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

MATT GAETZ, Florida 

DAVID N. CICILLINE, Rhode Island 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ERIC SWALWELL, California 

PRAMILA JAYAPAL, Washington 

BRADLEY SCHNEIDER, Illinois 

DANIEL FLORES, Chief Counsel 

SLADE BOND, Minority Counsel 
(III) 

C O N T E N T S 

FEBRUARY 16, 2017 

Page 

THE BILL 

H.R. 372, the ‘‘Competitive Health Insurance Reform Act of 2017’’ .................... 3 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable David N. Cicilline, a Representative in Congress from the 

State of Rhode Island, and Ranking Member, Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law ............................................................ 7 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 8 

WITNESSES 

Honorable Paul Gosar, a Representative in Congress from the State of Arizona 

Oral Testimony ..................................................................................................... 10 

Prepared Statement ............................................................................................. 13 

Honorable Austin Scott, a Representative in Congress from the State of 

Georgia 

Oral Testimony ..................................................................................................... 19 

Prepared Statement ............................................................................................. 21 

Thomas P. Miller, Esq., Resident Fellow, American Enterprise Institute 

Oral Testimony ..................................................................................................... 35 

Prepared Statement ............................................................................................. 37 

David Balto, Esq., Principal, David A. Balto Law Offices 

Oral Testimony ..................................................................................................... 53 

Prepared Statement ............................................................................................. 55 

Robert W. Woody, Esq., Vice President, Policy Property Casualty Insurers 

Association of0 America (PCI) 

Oral Testimony ..................................................................................................... 77 

Prepared Statement ............................................................................................. 79 

George Slover, Esq., Senior Policy Counsel, Consumer Union 

Oral Testimony ..................................................................................................... 87 

Prepared Statement ............................................................................................. 89 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable David N. Cicilline, a Representative 

in Congress from the State of Rhode Island, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................. 27 

Material submitted by the Honorable Eric Swalwell, a Representative in 

Congress from the State of California, and Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 33 

Material submitted by the Honorable David N. Cicilline, a Representative 

in Congress from the State of Rhode Island, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................. 100 
(IV) 

OFFICIAL HEARING RECORD 

UNPRINTED MATERIAL SUBMITTED FOR THE HEARING RECORD

Submissions for the Record. These submissions are available at the Subcommittee 

and can also be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=105573 
(1) 

COMPETITIVE HEALTH INSURANCE REFORM 

ACT OF 2017 

THURSDAY, FEBRUARY 16, 2017 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:06 a.m., in room 

2141, Rayburn House Office Building, the Honorable Blake Farenthold (Vice-Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Farenthold, Issa, 

Collins, Buck, Ratcliffe, Gaetz, Cicilline, Conyers, Johnson, 

Swalwell, Jayapal, and Schneider. 

Staff Present: (Majority) Ryan Datilo, Counsel; Andrea Woodard, 

Clerk; and (Minority) Slade Bond, Minority Counsel. 

Mr. FARENTHOLD. The Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the Committee at any time. We welcome everyone to today’s hearing on H.R. 372, the ‘‘Competitive Health Insurance Reform Act of 

2017.’’ 

We will start with my opening statement. This morning, the Subcommittee meets to examine H.R. 372, the ‘‘Competitive Health Insurance Reform Act of 2017.’’ Historically, the business of insurance was viewed as not falling within interstate commerce and, 

thus, subject to State, not Federal regulation. 

In 1944, the Supreme Court effectively reversed itself on this 

question, holding that Federal antitrust laws were applicable to an 

insurance association’s interstate activities and restrain of trade. 

Both States and insurers were not happy with that change. 

Congress responded with the McCarran-Ferguson Act, which exempts insurers from certain Federal antitrust laws. As we have 

seen in the recent rejection of both the Anthem-Cigna and AetnaHumana mergers, Federal antitrust laws regarding mergers still 

clearly apply. The Competitive Health Insurance Reform Act would 

repeal the McCarran-Ferguson Act’s Federal antitrust exemption, 

so that it no longer applies to the business of health insurance. The 

McCarran-Ferguson Act would remain in effect for other types of 

insurance, such as property, casualty, and automobile insurance. 
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The issue of repeal has been discussed by the House Judiciary 

Committee on several occasions, and various iterations of legislation to repeal it have been offered for decades. Within the broader 

ongoing discussions regarding efforts to repeal and replace 

ObamaCare, Affordable Care Act, the question of the continued necessity and viability of the McCarran-Ferguson Act has, once again, 

arisen. 

In his planned outline for reforming ObamaCare, newly appointed Health and Human Services Secretary, Tom Price has 

called for permitting the sale of insurance across State lines. Similar thinking has been echoed by President Trump and is included 

in House Republicans’ ‘‘A Better Way’’ plan. Opening up the market to cross-border of sales would increase both competition in insurance markets, and the choice of insurance products offered to 

consumers. The ability to sell insurance across State lines is often 

tied to discussions about the McCarran-Ferguson Act. In fact, interstate insurance sales are already legal under certain conditions. 

A provision in the Affordable Care Act allows the states to establish what are called ‘‘healthcare choice compacts,’’ which permit insurers to sell policies to individuals and small business in any 

State that participates in the compact. State regulatory agencies 

set rules and minimums insurers must meet to sell plans in their 

State. 

Instances of cross-state sales to date, however, have been relatively limited. We have an excellent panel of witnesses before us 

today who will help update us to evaluate the issues more effectively, and place this litigation into the larger context of the looming healthcare discussion. I look forward to our witnesses’ testimony on the merits of H.R. 372. 

[The bill, H.R. 372, follows:] 
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Mr. FARENTHOLD. And I now recognize the Ranking Member, the 

gentleman from Rhode Island, Mr. Cicilline, for his opening statement. 

Mr. CICILLINE. Thank you, Mr. Chairman. Before I begin my remarks, I would like to take a moment to thank Chairman Marino, 

who was detained on other matters this morning, for his gracious 

welcome to this new position. I want to recognize my immediate 

predecessor, Mr. Johnson, and thank him for being here, as well as 

the Ranking Member of the full Committee, Mr. Conyers, for being 

here as well. 

As Ranking Member of the Subcommittee, it is my foremost priority to work with the majority wherever possible to be find pathways to lowering prices for consumers, promoting innovation in existing new markets, and ensuring that every business has a fair opportunity to compete on an even playing field. Free markets only 

work for consumers to improve standards of living where there are 

sufficient competition. As the Council of Economic Advisers under 

the Obama administration reported last year, robust enforcement 

of the antitrust laws is an important way in which the government 

makes sure the market provides the best outcomes for society with 

respect to choice, innovation, and price as well as fair labor and 

business markets. 

This Subcommittee plays a vital role in ensuring this outcome 

through oversight of the antitrust agencies’ competition policy and 

the antitrust laws. Just this month, the Justice Department has 

won two important civil antitrust lawsuits initiated under the 

Obama administration to prevent unprecedented consolidation in 

the health insurance market. According to the Justice Department, 

these transactions would have stifled competition, harming consumers by increasing health insurance prices, and slowing innovation aimed at lowering the cost of health care. 

But long before the Justice Department filed a lawsuit to enjoin 

these transactions, this Subcommittee held an important oversight 

hearing of these mergers, providing the public with insight into the 

matter and underscoring the importance of hearings and other 

oversight activity conducted by the Subcommittee. 

In terms of the immediate topic of today’s hearing, there are few 

better examples of entrenched market power resulting in higher 

consumer costs than those found in the healthcare market. The 

McCarran-Ferguson Act was enacted more than 70 years ago in response to the Supreme Court’s ruling in South-Eastern Underwriters Association. That insurance activity across State lines is 

commerce within the meaning of Article I of the Constitution and, 

therefore, subject to the antitrust laws. 

To qualify for this exemption, an insurer must be engaged in the 

business of insurance that is not designed to boycott, coerce, and 

intimidate, and is regulated within the State. While these requirements somewhat constrain anticompetitive conduct by insurers, it 

has long been clear that they do not preclude the most egregious 

forms of anticompetitive conduct, such as price fixing, bid rigging 

and market allocation by health and medical malpractice insurance 

insurers. 

Indeed, as then-Assistant Attorney General Christine Varney 

testified in 2009, decades of case law suggests that the McCarran- 
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Ferguson Act exempts many forms of anticompetitive conduct that 

occur within State regulation, no matter how toothless State regulatory schemes may be. It is, therefore, critical that we use every 

tool to preserve and promote competition in these markets. I believe that proposals to repeal McCarran-Ferguson Act, such as H.R. 

372 and H.R. 182, Ranking Member Conyers’ proposal, are important to achieving this result. But make no mistake, promoting competition in the State markets must not occur at the expense of 

strong regulatory protections that establish health insurance exchanges, make health markets more efficient, and ensure baseline 

protections against discrimination. Far from it. 

As Professor Tom Greaney, a leading expert of competition in 

healthcare markets testified last year, the Affordable Care Act 

vastly improves conditions necessary for competition to take hold 

and flourish in these markets. 

Lastly, I would be remiss if I did not renew my call for a hearing 

on drug price competition. There are few other issues that so directly affect the lives of working American families as the price and 

availability of prescription drugs. While this Subcommittee has 

held a hearing on competition in the market for opioid treatment 

medicine, we have not considered the broader issue of drug price 

competition, and it is my hope that we will. 

With that, I thank the Chairman for holding today’s hearing. I 

very much look forward to the testimony of our witnesses. And I 

want to particularly welcome our colleagues, Mr. Gosar, Mr. Scott, 

and I look forward to hearing your testimony. 

And I yield back the balance of my time. 

Mr. FARENTHOLD. Thank you very much, Mr. Cicilline. 

We will now go to the Ranking Member of the full Committee, 

Mr. Conyers of Michigan, for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman. Welcome to our distinguished witnesses this morning. I am pleased that the Subcommittee’s first hearing of this new Congress is on H.R. 372, the ‘‘Competitive Health Insurance Reform Act of 2017,’’ which repeals the 

antitrust exemption in the McCarran-Ferguson Act for the health 

insurance business. 

For many years, I have advocated for such a repeal, so I am 

heartened to see the bipartisan nature of the support for this position. 

My own bill, H.R. 143, would similarly repeal the McCarran-Ferguson antitrust exemption from the health insurance business, and 

it does so for price fixing, bid rigging, and market allocation, the 

most egregious kinds of anticompetitive conduct there is. 

Additionally, my legislation would repeal the exemption for the 

business of medical malpractice insurance, as this would be another key component ensuring competition in healthcare markets. 

There are several important reasons why Congress should repeal 

this antitrust exemption. To begin with, there is no justification for 

continuing such a broad antitrust exemption for health insurance 

insurers. 

Congress passed the McCarran-Ferguson Act in response to a 

1944 Supreme Court decision finding that antitrust laws applied to 

the business of insurance, like everything else. Both insurance 

companies and the States express concern about that decision. 
9 

Insurance companies worry that it would jeopardize certain collective practices like joint rig setting and the pooling of historical 

data. And the States were concerned about losing their authority 

to regulate and tax the business of insurance. 

To address this concerns, McCarran-Ferguson provided that Federal antitrust laws apply to the business of insurance only to the 

extent that it is not regulated by State law, which has resulted in 

a broad antitrust exemption. Industry and State revenue concerns 

rather than the key goals of protecting competition in consumers 

were the primary drivers of the Act. 

In passing, McCarran-Ferguson, Congress, however, initially intended to provide only a temporary exemption and, unfortunately, 

gave little consideration to ensuring competition. Not surprisingly, 

three commissioners observed in the 2000 Southern Antitrust Modernization Commission report that McCarran-Ferguson should be 

repealed because it has outlived any utility it may have had and 

should be repealed. 

And another commissioner stated that the Act is among the most 

ill-conceived and egregious examples of antitrust exemptions, that 

its repeal should not be delayed. 

In addition, repeal would be timely, given that the health insurance industry is highly concentrated, the situation that exacerbates 

harms against consumers. 

Although Federal courts have recently blocked two mergers 

among four of the Nation’s largest health insurance companies, the 

situation before these proposed mergers look bleak. 

The American Medical Association has warned that the health 

insurance markets are highly concentrated with mere total collapse 

of competition among health insurers. The blocking of these mergers in the already high level of market concentration further suggests that for the good of consumers and the economy, the business 

of health insurance should not continue to enjoy an antitrust exemption. 

And, finally, repeal of the McCarran-Ferguson antitrust exemption where the business of health insurance is a complement, not 

an alternative, to the affordable health care act. Some may be 

think that appealing McCarran-Ferguson alone would be sufficient 

to help patients and other healthcare consumers obtain affordable 

health insurance, but we should remember that the House included 

language almost identical to H.R. 372 in its version of the Affordable Care Act. 

This is not an either/or situation. We need both measures to be 

in place to maximize benefits, improve quality, and lower price for 

consumers. And so I look forward to the testimony of our witnesses 

today. 

I yield back my time. Thank you, Mr. Chairman. 

Mr. FARENTHOLD. Thank you. Without objection, other Members’ 

opening statements will be made part of the record. 

Now, we now turn to our first panel of witnesses. Dr. Paul Gosar 

represents the Fourth District of Arizona and is a sponsor of the 

legislation that is the subject of this hearing today. Dr. Gosar 

serves on two Committees, the House Committee on Oversight and 

Government Reform, and the House Natural Resources Committee. 

Before being elected to Congress in 2010, Dr. Gosar owned his own 
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dental practice and was a small business man in Flagstaff for 25 

years. 

Mr. Austin Scott represents the Eighth District of Georgia. Mr. 

Scott serves as Chairman of the House Agriculture Committee, 

Subcommittee on Commodity Exchanges, Energy and Credit. Additionally, he is an active Member on the House Armed Services 

Committee. 

Prior to joining us in Congress in 2010, he spent 14 years in the 

Georgia State House, and has owned and operated an insurance 

brokerage firm for nearly 20 years. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. I would ask you to summarize your 

thoughts within 5 minutes and you understand how the signal system works, so let’s get going. 

Dr. Gosar. 

TESTIMONY OF THE HONORABLE PAUL GOSAR, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA 

Mr. GOSAR. Thank you, Chairman Farenthold, Ranking Member 

Cicilline, and the full Chairman Goodlatte, and Ranking Member 

Conyers. I appreciate it. 

I thank you for having this hearing on our bill, the Competitive 

Health Insurance Reform Act, and for the time you devoted to 

studying the issue of McCarran-Ferguson, the antitrust exemption 

for health insurance. 

As Congress once again faces the preeminent test of repairing 

our Nation’s healthcare system, first and foremost, we must establish the proper foundation for a competitive and consumer-driven 

health insurance marketplace. The Competitive Health Insurance 

Reform Act of 2017 will restore the application of Federal antitrust 

and competition laws through the health insurance industry. Ending the special interest exemption is the essential first step to 

broader healthcare reform. Popular cost-reducing reform priority, 

such as selling insurance across State lines and developing diverse 

consumer-driven plans, are predicated on the robust competition 

marketplaces this bill would ensure. 

As a healthcare provider for more than 25 years, I understand 

firsthand the importance of a competitive and dynamic health insurance market. Patients, doctors, and hospitals alike benefit when 

health insurers compete to provide a variety of quality coverage 

policies. 

As a dentist, I have a unique perspective of the power a truly 

competitive marketplace could have on price control. Staying far 

away as possible from government-run health care and utilizing 

doctor-led insurance practices, industry has been able to deliver 

care at cost that closely matches inflation, unlike general medicine, 

whose costs have risen more than 20 times that. 

The McCarran-Ferguson Act of 1945 exempted the insurance industry from the Sherman Act and the Clayton Act, acts that have 

a purpose of ensuring fair competition. This broad exemption was 

intended to assist the newly developing business of insurance, so 

that those companies could set sustainable premiums by permitting 

data sharing between insurance companies. It is important to note 

that this industry-specific exemption was created and built around 
11 

antiquated rudimentary practices for data collection and information processing. The health insurance industry of 1945 was far different than that of today. Today’s health industry is concentrated 

into vertically integrated behemoths, with immense computing 

power able to access and process more information than the quaint 

insurers of the 1940s could ever dream of. It seems the only thing 

that hasn’t changed is the special interest antitrust exemption that 

only this market enjoys. 

However, after 70 years, it is apparent that the broad stroke exemption created by Congress in the 1940’s was not wise. Over the 

decades, and expeditiously since the passage of ObamaCare since 

2009, the health insurance market has devolved into one of the 

least transparent and more anticompetitive industries in the 

United States. These antiquated exemptions are no longer necessary. There is no reason in law, policy, or logic for the insurance 

industry to have special exemptions that are different from all 

other businesses in the United States. 

The interpretation of antitrust law has narrowed dramatically 

over the decades. Many of the practices which insurers say they 

need this exemption to do, such as analyzing historical loss data, 

have proven to be permissible by the FTC and courts over the decades since McCarran-Ferguson was passed. 

This narrowing of the scope has resulted in the zombie law, 

whose efficacy and usefulness has long since expired; yet, it looks 

to scare off potential legitimate legal challenges from States, patients, and providers. These entities do not have the tools, money, 

or manpower to challenge these monopolies in court or head on in 

the current market. Only the Federal Government with its resources can enforce the laws which rebalance the playing field fairly. Repeal of the specific section of the McCarran-Ferguson Act, 

which applies only to health insurance, has strong bipartisan support. As we saw in the 2009, 111th Congress, a vote of 406-19 

passed the democratically held Congress. In the 112th Congress, it 

passed by a voice vote. Similar legislation has been introduced by 

multiple Democratic Members of the House, and attached to my 

bill has been included in the Republican Study Committee’s 

healthcare reform bill for the last 4. In fact, they even appeared in 

the Republican Party platform in the convention in Cleveland last 

year. 

As a dentist, I know how important robust competition is to dynamic and effective health insurance. It should protect the patient 

as well as the healthcare provider. 

It should provide uniformly applied associated checks and balances that incentivize competition and prevent monopolies. Today, 

in the healthcare market, those equally applied antitrust predictions don’t exist. 

Now, I don’t have a crystal ball that will tell you what the future 

of health care would look like. I don’t think anybody knows. But 

I can tell you that history is an important guide. The 70-year antitrust exemption for the health insurance industry has resulted in 

a consolidated, anticompetitive, and nontransparent scheme controlled by five mega corporations. That is not what we want for the 

future. Instead, let’s liberate the market by removing this antitrust 

exemption. Imagine what could exist when we put the patient first 
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and demand that health insurance companies compete for their 

business. This market should be patient centric, provide a variety 

of affordable, quality options, and empower patients’ involvement 

and accountability. I thank everybody for their time today in considering this bill. I look forward to its passage, and thank you for 

considering it today. Thank you very much. 

[The prepared statement of Mr. Gosar follows:] 
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Mr. FARENTHOLD. Thank you. 

Mr. Scott, you are recognized for 5 minutes. 

TESTIMONY OF THE HONORABLE AUSTIN SCOTT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. SCOTT. Chairman Farenthold, Ranking Member Cicilline, 

Chairman Goodlatte, Chairman Conyers, and Members of the Subcommittee, thank you for allowing me to submit my testimony in 

support of H.R. 372, the ‘‘Competitive Health Insurance Reform Act 

of 2017.’’ 

Many of you have law degrees from very distinguished schools, 

none quite as distinguished as the University of Georgia, where I 

received my degree in risk management and insurance in the early 

1990’s. This is when I was first licensed to sell life and health insurance during an internship in the summer of 1991. All in all, I 

spent approximately 20 years as an employee benefits broker, licensed in multiple States representing approximately 40 carriers. 

I was designated by the American College as a charter life underwriter, charter financial consultant, registered health underwriter, 

and a registered employee benefits consultant. I might also mention that my father is a surgeon in a small town, so I have seen 

this situation from the rural provider’s side as well. I have actually 

read the contracts. 

Before I go any further, I want to be clear that I believe there 

were a number of problems in the health insurance market before 

the Affordable Care Act passed. I think most brokers would tell you 

that. I also think that patients, physicians, pharmacists, people 

who work in the hospitals, would tell you that many of the problems that existed have been made worse by the lack of competition 

in the health insurance industry today. If I may be so bold as to 

ask you a few questions. 

Do you think that pharmacies should be exempt from the antitrust laws of the country? Do you think that physicians should be 

exempt from the antitrust laws of the country? What about hospitals? Nobody in this room has or would put forward a bill that 

exempted any of these people who actually provide health care to 

patients from the antitrust laws of the country. So why would we 

allow the health insurance industry, who controls, through their 

contracts, who our doctor is, who our pharmacist is, which medicine we can get, and which hospital we can go through to being exempt from the antitrust laws of our country? 

No doubt, their lawyers will tell you they are exempt because 

they are regulated by the States. Nothing in this legislation 

changes the fact that they are regulated by the States. 

The groups that I just mentioned are also regulated by the 

States: Physicians, pharmacists, hospitals, and insurance brokers, 

all licensed and regulated by the States, not by the Federal Government. None of that changes with this legislation. All of those 

are subject to the antitrust laws of our country just as they should 

be. 

The only thing that would change is that the health insurance 

industry would no longer be exempt. I very distinctly remember a 

renewal letter that a client received with a choice of sign here and 

accept the new preexisting acceptance clause, and your renewal 
20 

will be a certain dollar amount, or don’t sign and your renewal 

would be significantly higher. 

The people who argue that the health insurance industry should 

be exempt from the antitrust laws will also defend this pricing as 

just good business. This was from one of the biggest of the big carriers, and they are bigger and more controlling today than ever before. They are, in fact, the only carrier available to many of my constituents today. 

The dominance of the market that these large carriers enjoy has 

forced many providers to move, close, merge, or sell to larger regional hospitals. The end results of this is that in the 24 counties 

that I represent, patients have fewer healthcare providers left. How 

is the antitrust issue relevant here? By definition, health care and 

health insurance are not the same thing. 

But when one insurance company controls such significant portions of the cash flow of all of the providers in a region, no provider 

can stay in business without a contract with that carrier. Therefore, the insurance company gets to determine who is and who is 

not able to provide health care. Sign a contract with the competing 

carrier, we will cancel your contract. Accept the lower reimbursement, or we will cancel your contract. It is closer to extortion than 

negotiation. 

I don’t believe that all of this anticompetitive conduct is technically exempt from the antitrust laws. I have no doubt that in this 

room, the insurance industry would say the most reprehensible of 

these conducts is not. But in the courtroom down the street, they 

know that no provider has the resources to challenge them. The 

fact is most States don’t have the resources to challenge them. The 

insurance company will simply cancel the provider’s contract, and 

the provider would be broke, and that is the end of the case. A few 

brief comments to finish. This exemption is not only damaging to 

the consumer when they purchase health insurance, it damages the 

healthcare providers and, therefore, further limits access to health 

care. 

I don’t think this issue alone solves all of the problems in the 

health care industry, but I don’t think that any of the problems in 

the insurance market will be solved if this exemption stays in 

place. Just as Mr. Conyers spoke to, I think it is noteworthy that 

on February 24th of 2010, the Health Insurance Industry Fair 

Competition Act passed the House with a vote of 406-19, yet, it was 

not included in the Affordable Care Act. The sharing of historical 

loss data primarily benefits small carriers. I think it would be wise 

to consider specifically allowing historical loss data to be shared to 

prevent costly, unnecessary litigation. 

And I want to thank you for your time and the opportunity to 

provide testimony this morning. And with that, I yield back the 29 

seconds that I don’t have. 

[The prepared statement of Mr. Scott follows:] 
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Mr. FARENTHOLD. And we appreciate your testimony here today 

on this important issue. 

I think this concludes our first panel. Thank you, again, for sharing your insights with us. 

I believe Mr. Cicilline—— 

Mr. CICILLINE. Yes. Mr. Chairman, I would ask unanimous consent that written testimony of the Honorable Tom Perriello, our 

former colleague from Virginia, be entered into the record. Tom 

was the lead sponsor of the Health Insurance Industry Fair Competition Act, which passed by a vote of 406–19 in the 111th Congress and has long supported competitive health insurance markets. 

Mr. FARENTHOLD. Without objection, so ordered. 

[The prepared statement of Mr. Perriello follows:] 
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Mr. FARENTHOLD. We will take a short break here while they set 

up. But as soon as they get set up, we are going to get going. We 

have a busy day in Washington today. 

Mr. SWALWELL. Would the gentleman yield just briefly? 

Mr. FARENTHOLD. Sure. 

Mr. SWALWELL. Thank you. Also, I will also be going between 

hearings. I was hoping I could enter into the record an American 

Association of Oral and Maxillofacial Surgeons’ letter dated February 16, 2017, from their president, Douglas Fame. 

Mr. FARENTHOLD. Without objection, so ordered. 

Mr. SWALWELL. Thank you. 
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Mr. FARENTHOLD. I see the usual efficiency of our Judiciary Committee staff as they have gotten you guys ready to go in no time 

at all. So we will get going on panel two. 

We will begin by swearing in our witnesses before I introduce 

them. 

Gentlemen, would you all please rise and raise your right hand. 

Do you swear the testimony you are about to give before this 

Committee is the truth, the whole truth, and nothing but the truth, 

so help you God? 

Let the record reflect that all witnesses answered in the affirmative. 

You all may be seated. 

Or distinguished panel today includes Mr. Thomas Miller, a resident fellow at the American Enterprise Institute, AEI, where he 

studies healthcare policy, including health insurance and market 

based-alternatives to the Affordable Care Act. Prior to joining AEI, 

Mr. Miller served as a senior health economist for the Joint Economic Committee, JEC, in Congress. He’s testified before Congress 

on issues such as the uninsured healthcare cost, Medicare, prescription drug benefit, health insurance tax and credits, generic information, Social Security, Federal reinsurance of catastrophic 

events, among others. Mr. Miller also practiced as a trial attorney 

for the firm of Powell Goldstein Frazer & Murphy in Atlanta, Georgia, where he served as a lead attorney in a lawsuit challenging 

the State of Georgia’s proposed Medicaid regulations. Mr. Miller received his bachelor’s degree in political science from New York University, and his JD from Duke University School of Law. 

Mr. David Balto is an antitrust attorney with over 15 years of 

government antitrust experience. Mr. Balto has worked as a trial 

attorney in the Antitrust Division at the Department of Justice, 

and several senior level positions in the Federal Trade Commission 

during the Clinton administration. He received his bachelor’s degree from the University of Minnesota and his JD from the Northeastern University School of Law. 

Mr. Robert Woody is Vice President for policy at PCI with a primary focus on the development of PCI’s policy position on Federal 

issues. He was deeply involved in the PCT’s efforts to educate Congress on the impact of the Dodd-Frank Act, as it was considered 

in Congress, and continues to be involved in the implementation 

and reform issues. He is also responsible for reinsurance and guaranteed fund issues at the State and Federal level. 

Prior to joining PCI, Mr. Woody practiced law for 16 years at an 

international law firm. He advised both U.S. and non-U.S. citizens 

on insurance regulatory matters from the firm’s Washington and 

London office. He was active in lobbying the Congress on the enactment of the Terrorism Risk Insurance Act in 2002, and its subsequent reauthorizations and continues to advise insurance on compliance with what that statute does and its implementing regulations. He is the author of several published articles on various insurance law topics including privacy compliance. 

Prior to joining the firm, he was a legislative assistant to Representative Bill Emerson, and previously worked in several capacities in the Virginia General Assembly. He got a bachelor’s degree 
35 

from James Madison University and a JD from the Catholic University of America. 

Mr. George Slover is a senior policy counsel at Consumers Union, 

where he helps develop and coordinate regulatory comments across 

a wide range of policy issues, focusing on antitrust and competition 

issues. Mr. Slover has three decades of Federal Government policy 

experience with service in all three branches, including 9 years in 

this Committee, 2 years at the Energy and Commerce Committee, 

and 11 years at the Justice Department’s Antitrust Division. He 

also serves on the advisory board of the American Antitrust Institute, the Steering Committee of the D.C. Bar’s antitrust and consumer law section, and is an elected member of the American Law 

Institute. 

Mr. Slover received his bachelor’s degree from Vanderbilt, a master’s degree in public affairs from the LBJ School of Public Affairs 

at the University of Texas, and his JD from the University of Texas 

Law School. Fellow Longhorn. 

All right. So each of your written statements has been provided 

to us, and will be entered into the record. I would like you to summarize your testimony in 5 minutes. You have got the timer in 

front of you. I think all of you are familiar with how that works 

as well. Much like a traffic stoplight, green means go, yellow means 

hurry up, and red means stop. So we will get going here, and we 

will start with Mr. Miller. 

TESTIMONY OF THOMAS P. MILLER, ESQ., RESIDENT FELLOW, 

AMERICAN ENTERPRISE INSTITUTE 

Mr. MILLER. Thank you, Vice Chairman Farenthold, Chairman 

Goodlatte, Ranking Member Conyers, Subcommittee Ranking 

Member Cicilline, and all the Members of the Subcommittee for the 

opportunity to testify today on this proposed legislation, and more 

generally, on competition policy considerations involving limited 

antitrust exemption for health insurers under the McCarran-Ferguson Act. 

Overall, the approach in this bill and similar ones in the recent 

past does not raise new or pressing issues. It appears to advocate 

at best the uncertain and limited remedy in search of problems 

that are hard to find and quantifying empirically, particularly 

within the health sector of the insurance industry. Many other existing tools already remain in place to police health insurance competition. The likely gains and reciprocal cost of removing the limited antitrust exemption in this sector may appear minor; however, 

the additional risks of adding new regulatory uncertainty, increasing boundary testing litigation, and distracting policymakers from 

more important ways to reduce healthcare costs and improve 

healthcare competition suggested further caution and delay on this 

front is advisable, at least until the post Affordable Care Act policy 

path is determined. 

Increasing the Federal Government’s role in regulating health insurance even more through expanded antitrust enforcement would 

appear to conflict with proposed reforms to delegate more responsibility to State governments and individual consumers. 

The McCarran-Ferguson Act to reaffirm the basic policy against 

Federal Government regulation of insurance, and more particu-
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larly, antitrust regulation, but this rule would apply as long as 

State governments took on that responsibility. 

As interpreted and fleshed out by a long series of court decisions 

in later years, the Act’s protection against Federal antitrust regulation applies only when the conduct of insurers constitutes the business of insurance, is regulated by State law, and does not constitute an agreement to act—an agreement or act to boycott, coerce, 

or intimidate. 

Over the decades, court interpretation of which activities meet a 

three-factor test for being within the business of insurance have become tighter in accordance with the general rule disfavoring expansive interpretations of exemptions to the Federal antitrust laws. 

My written testimony includes a long list of insurer practices 

that have been ruled to be outside the antitrust exemption. Moreover, the extent of State and Federal regulation of insurers remains broad and deep. 

McCarran-Ferguson provides no safe harbors under scrutiny 

under State antitrust laws, merger enforcement activity over insurers remains at both the State and Federal levels. States also have 

consumer protection laws and unfair claims practices statutes that 

further police health insurers’ practices. The primary argument 

over time for establishing retaining—and retaining the antitrust 

exemption under McCarran-Ferguson has been to facilitate economically efficient sharing of information that helps insurers to 

evaluate risk and price accurately. However, those cooperative activities always have mattered far more to property casualty insurers than to health insurers. Health insurers have no similar history 

of utilizing advisory organizations for the joint estimation and projection of medical claims cost. 

One can make an argument that many, if not all, the remaining 

efficiency enhancing and pro-competitive aspects of advisory organization activities today might well pass muster under modern rule 

of reasoned applications of antitrust enforcement. However, the uncertain risk of litigation challenges and organizational change pressures would produce some offsetting costs. Another less anticipated 

counter reaction instead might be greater alliance on the State action doctrine, which might not just deflect antitrust concerns but, 

actually, further enshrine unwise and overaggressive State regulation. 

The Competitive Health Insurance Reform Act of 2017 really provides little, if any, evidence of absence of current antitrust and regulatory review of health insurance services, or court decisions allowing anticompetitive conduct under current law, or actual marketplace behavior by health insurers that was enabled by the limited antitrust exemption. 

This legislation lacks any real empirical basis for suggesting that 

health insurers have persistently achieved high, let alone abnormally high profits due to the antitrust exemption. When the congressional Budget Office last examined in 2009, similar legislation 

to remove the antitrust exemption for health insurers, and also 

medical liability insurers, it concluded that any effect on insurance 

premiums is likely to be quite small, because State laws already 

bar the activities that would be prohibited under the proposed Federal law if enacted. 
37 

The larger problem in health policy today is that health care and 

health insurance is regulated too heavily, not too lightly, particularly after passage of the Affordable Care Act in 2010. In all likelihood, concentrating on this stale issue of the McCarran-Ferguson 

antitrust exemption, will merely distract our attention from more 

urgent tasks encouraging and adopting far more important marketoriented reforms that our health system definitely needs. Thank 

you. 

[The prepared statement of Mr. Miller follows:] 
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Mr. FARENTHOLD. Thank you, Mr. Miller. 

Mr. Balto, you are up for 5 minutes. 

TESTIMONY OF DAVID BALTO, ESQ., PRINCIPAL, 

DAVID A. BALTO LAW OFFICES 

Mr. BALTO. Thank you, Chairman Farenthold, Ranking Member 

Cicilline, and the other Members of the Committee. I am David 

Balto. I am for—used to be the policy director of the Federal Trade 

Commission. This is actually the 15th time I have testified on 

healthcare competition issues before Congress, the sixth time before this Committee. I welcome returning to you. I also lead a consumer coalition on healthcare competition issues, the Coalition to 

Protect Patients’ Rights. 

The question before you is simple, easy, and clear: Is the 

McCarran-Ferguson Act necessary—is it necessary to exemptions 

to the antitrust laws? The answer is clear. It is not. The antitrust 

modernization committee that this committee helped form says 

that for there to be an antitrust exemption, there has to be clear 

case that the conduct in question would subject the actors to antitrust liability, and there is no less restrictive way to solve the problem. 

The proponents of keeping the exemption cannot demonstrate a 

clear case. The law is crystal clear here that the conduct that they 

would like to engage in would not violate the antitrust laws. 

Mr. Miller, in his testimony, actually says they don’t even need 

to engage in this kind of information sharing. 

Why are antitrust exemption disfavored? There has not been an 

industry-wide antitrust exemption passed since this one. That is 

because the anti—an antitrust exemption replaces the discipline of 

the free market with private regulation, not government regulation. Even worse, private regulation. Private parties get to determine the terms of competition. That is the worse result for consumers. 

Now, the two of us can engage in a debate. You can bring lots 

of lawyers in front of you debating about how bad the exemption 

is. But Herb Hovenkamp, Professor Herb Hovenkamp, who is sort 

of the Tom Brady of antitrust, when the Supreme Court makes a 

decision on antitrust, they open his treatise first. He says that this 

distracts a significant toll on competition and on consumers. And, 

in fact, in the worst ways possible. 

Sure, there are exceptions to the Act that the court has tried to 

form by—in sort of a Swiss-cheese approach, but when you look at 

a variety of egregious practices, those are permitted by the Act. 

Now, what—the proponents of the legislation want you to ask the 

wrong question. They want you to ask, is there any harm from the 

exemption? That is not the right question. The right question, according to the Antitrust Modernization Commission, is there an essential benefit that is necessary from this legislation? 

Now, they pose three myths, the proponents to the legislation: 

The first is sort of like, there is only a small pothole. There is a 

little bit of problem here, but it is, you know, not that big a deal. 

Well, according to Herb Hovenkamp, it is. And in any case, why do 

we want to permit potholes in any case? Why do we want to create—give the health insurance industry a get-out-of-jail card? Of 
54 

all the industries to give a get-out-of-jail card, the health insurance 

industry is probably the last one. 

Second, they sort of say that there aren’t costs imposed, but 

there are costs imposed. I’ll just give the issue of, currently, Blue 

Cross has agreements that prevent Blue Cross subsidiaries from 

being able to effectively invade each other’s territory. So CareFirst 

in northern Virginia can’t makes its way down to Richmond, and 

the Blue Cross of Virginia can’t make its way up into northern Virginia. That loss of competition costs consumers in higher premiums, and it costs healthcare providers, too. 

Third, they say State regulation is enough, but careful studies of 

State regulation that we cite in our report demonstrate that the 

vast majority of States do no consumer protection enforcement action. There is zero consumer protection enforcement actions in over 

33 States. 80 percent of the actions are done by five States. We 

went back and searched the websites of all of the insurance commissioners and the NAD. Mr. Miller cites a 2009 case. Great. That 

was, you know, 8 years ago. There haven’t been any cases brought 

since then. So State regulation isn’t enough. There is real harm, 

and it is no small pothole. 

This Committee should go further in its oversight. So illuminating the exemption, the exemption only causes harm. There is 

no benefit that it causes whatsoever. This Committee should continue, in its oversight function, to make sure that antitrust enforcement continues to be strong in the health insurance industry. That, 

and smart regulation, work hand-in-glove together to make sure 

that these markets begin to start to work effectively. 

Just to give an example, the Justice Department’s challenge of 

the Aetna-Humana merger, would result in savings of over $500 

million a year to American taxpayers and to American consumers, 

particularly over a million Medicare beneficiaries who would be 

vulnerable to anticompetitive conduct. This exemption has outlived 

its usefulness and should be abolished. 

[The prepared statement of Mr. Balto follows:] 
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Mr. FARENTHOLD. Thank you very much, Mr. Balto. 

Mr. Woody, you are recognized for 5 minutes. 

TESTIMONY OF ROBERT W. WOODY, ESQ., VICE PRESIDENT, 

POLICY PROPERTY CASUALTY INSURERS ASSOCIATION OF 

AMERICA (PCI) 

Mr. WOODY. Thank you, Chairman Farenthold, Ranking Member 

Cicilline, and Chairman Goodlatte, and Ranking Member Conyers. 

I am Robert Woody, the vice president for Policy and Property Casualty Insurers Association of America. PCI is composed of nearly 

1,000-member companies representing the broadest cross-section of 

insurers of any national insurance trade association. 

PCI appreciates that the sponsors of H.R. 372 are genuinely concerned about the availability and affordability of health insurance, 

the consumers, and we share that concern. 

We also appreciate that the bill does not include property casualty insurers in the proposed repeal of the limited antitrust provisions of the McCarran-Ferguson Act. As such, PCI has no formal 

position on the bill. But I am here today because PCI is extremely 

concerned that supporters of this bill have misidentified McCarran 

as the source of the problems in the health insurance industry, and 

that misperception of how and why McCarran-Ferguson works as 

it does could ultimately cause significant harm to our industry and, 

more importantly, to our consumers and your constituents were the 

repeal ever expanded to cover the PC industry. 

The bill appears to be premised on the mistaken perception of 

McCarran’s antitrust provisions leave insurers unfettered by antitrust laws, and free to engage in what would otherwise be illegal 

and anticompetitive activity, but this is not the case. The decision 

Congress made in enacting McCarran was not to excuse the industry from antitrust compliance completely, but, instead, to assign to 

the States the power to enforce certain limited antitrust functions 

with respect to the business of insurance. 

In particular, they recognize that some joint insurer activity is 

actually pro-competitive, and, thus, good for consumers. For example, small and medium-sized insurers don’t have a base of loss experience large enough to be statistically significant. And, so, they 

must rely on historical loss costs, and industry loss costs data to 

be able to look into the future and to project loss costs and then 

price their products responsibly. If they can’t do that, they are effectively driven from the market, leaving it only to their largest 

competitors. 

Those are all things that are part of the insurance pricing process. And so the Congress said, in 1945, why shouldn’t the entire 

regulation process be overseen by the same regulators? And the result has been that the State insurance regulatory system has performed remarkably well, I think, especially as compared to the Federal regulators in other financial services sectors. 

I want to highlight several particular misperceptions about 

McCarran as it relates to health insurance. First, McCarran is 

being cited as a barrier to the ability of the health insurers to sell 

insurance across State lines. Now, PCI takes no position on that 

health industry issue, but it arises because of differences from 
78 

State to State in the regulation of health insurance products, not 

from antitrust concerns. 

There is no connection between that issue and the antitrust provisions of McCarran. Moreover, when the Congress reserved to the 

States the right to regulate the business of insurance, it was also 

very careful, to preserve for itself, the right to preempt State regulation whenever it sees the need. All Congress must do is to be 

clear that the legislation it passes expressly applies to insurance. 

Congress has done that many times without seeing the need to 

amend McCarran. 

But some has suggested that McCarran is also responsible for 

the high level of market concentration in the health industry, 

which can result in a lack of competition. But McCarran also applies to the property casualty insurance industry, and yet, the PC 

industry is extremely competitive, has very low market concentration. If McCarran caused higher levels of concentration in the 

health insurance market, wouldn’t it also be expected to have the 

same effect in the property casualty market? Clearly, it does not. 

Moreover, just this week, we have seen the power of the Federal 

Government at work to block not just one, but two major proposed 

mergers in the health insurance industry. The Department of Justice and the courts are actively blocking M&A activity in that industry. Again, McCarran-Ferguson has not stood in the way. 

And, finally, the Congressional Research Service has said that 

repealing McCarran could spur further consolidation in insurance 

markets. The Congressional Budget Office has said that repeal is 

not likely to reduce the cost of health insurance for consumers, and 

the National Association of Insurance Commissioners, our regulators, said that this bill could ‘‘hinder competition, harm consumers, and weaken the health insurance market.’’ 

So listen to the nonpartisan organizations that serve Congress 

and listen to those who regulate insurers and protect consumers, 

your constituents. PCI urges the Subcommittee to investigate the 

true causes of the problems in the health insurance market and to 

recognize that the McCarran-Ferguson Act is not one of those 

causes. 

Thank you, again, for the opportunity to testify today. 

[The prepared statement of Mr. Woody follows:] 
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Mr. FARENTHOLD. Thank you very much, Mr. Woody. 

Mr. Slover, 5 minutes is yours. 

TESTIMONY OF GEORGE SLOVER, ESQ., 

SENIOR POLICY COUNSEL, CONSUMER UNION 

Mr. SLOVER. Thank you. Consumers Union supports this bill. We 

have long supported removing this antitrust exemption, so the 

rules of competition can apply as they do in the rest of the American free market economy. The antitrust laws help the free market 

work for consumers, and the insurance industry should not be left 

out. 

This antitrust exemption was created by accident. It was supposed to be a 3-year breathing spell so insurers could adjust to a 

Supreme Court decision. That was 70 years ago. We hope that, for 

health insurance, the stars have aligned. A similar bill passed the 

House with over 400 votes a few years ago, and there is bipartisan 

support in this Committee now. 

Since our founding more than 80 years ago, we have worked to 

make health care available and affordable for all Americans. We 

are strong supporters of the Affordable Care Act, which has significantly improved health care availability and affordability for many 

millions of Americans, including millions who previously had no 

health insurance. 

We would be very concerned by any move to repeal it without 

having an effective new plan already figured out and in place that 

maintains comparable coverages in consumer choices and protections. 

The healthcare marketplace is complex in how it operates, and 

an effective regulatory framework is needed to shape that complex 

environment to help safeguard consumers and keep costs under 

control, and make a full range of healthcare services widely available. 

Our country’s long experience shows you can’t expect a 

healthcare system to function effectively on competition alone. For 

example, making sure preexisting conditions are not excluded required a rule. The free market simply wasn’t going to give us that 

key protection. 

But while the regulatory framework sets important requirements 

and safeguards, competition within—the bounds of that framework—adds a market-driven business incentive to improve service 

while holding down prices and providing better value. Regulation 

and competition both work best when they can work hand in hand. 

For these reasons, we support the bill the Subcommittee is considering today. The rest of the healthcare supply chain is already operating under the antitrust laws, and we would like to see health 

insurers join in. 

As the healthcare marketplace evolves, we want health insurers 

motivated to continue improving the way coverage is provided to 

consumers with higher quality, better choice, and more affordability. A key part of that motivation is knowing that if they don’t, 

others likely will, and they could be left behind. 

But an antitrust exemption dampens that motivation, inviting insurers to make a pact to delay making improvements until everyone is ready to agree that no one will get out in front of the others 
88 

and offer consumers a better deal. That harms consumers, and it 

blocks progress. 

For example, consumers like to have a choice about which doctors they can see, and which hospitals they can go to. But some insurers have been moving to narrower provider networks as a costcutting measure. If there is effective competition and transparency, 

consumers who don’t like the narrower network can switch. But if 

insurers can make a pact that they will all move to narrower networks, consumers don’t have the power of choice. Regulation can 

address the too-narrow-network problem by setting some minimum 

baselines for what qualifies as an adequate network. But we don’t 

want health insurers all just doing the bare minimum, agreeing 

among themselves to treat the regulatory floor as also their ceiling. 

Competitive incentives can and should augment whatever minimum that regulation sets. 

Just to be clear, having a health insurance activity subject to the 

antitrust laws is not the same as automatically outlawing that activity. Passing this bill won’t warp the antitrust laws into a straitjacket that keeps health insurers from engaging in activities that 

benefit consumers. To violate the antitrust laws, the activity would 

have to significantly harm competition and consumers, like a pricefixing conspiracy would, or the improvement stalling pact I just described, or restrictive deals to lock up providers blocking other insurers from getting fair access so they can offer consumers better 

choices. 

This bill won’t be the cure-all for everything that ails health insurance, but it is a constructive step that is going to help give insurers better choices, and, as a result, help promote better value. 

Health insurers play a key role in our healthcare system. Adding 

a dose of competition would help focus their incentives in line with 

benefiting consumers. Healthcare markets, for all their complexities and special characteristics, are no exception to this economic 

fact of life. Thank you. 

[The prepared statement of Mr. Slover follows:] 
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Mr. FARENTHOLD. Thank you very much. 

And we will get started with questions. And I will recognize myself for 5 minutes. 

Mr. Miller, I am a big fan of AEI. I tend to agree with them on 

most issues, but this one kind of issue I struggle with. By definition, antitrust laws were designed to promote competition. And by 

exempting them, the natural occurrence in, somebody who is not an 

expert in the field’s mind is, if we exempt them from antitrust 

laws, you are going to get anticompetitive behavior. And that is 

what antitrust laws were designed to protect against. 

I understand the devolving things to this date. I know it is something AEI supports devolving as much as possible to the States. 

But one of the key features of the debate on the replacement of 

ObamaCare is creating competition across State lines. So all of a 

sudden, some of these regulations are going to be preempted just 

out of necessity by whatever provisions we choose to enact to enable sale across State lines. 

So I guess my question is, what is so special about the insurance 

industry when we create a more traditional market for it that 

would require this exemption to continue? 

Mr. MILLER. Well, I am trying to put this in a little bit of a larger context to suggest you just might want to curb your enthusiasm 

on this. There is more than one school of antitrust thought and 

practice, and there is a mixed history as to what antitrust means 

beyond the pro-competitive wrapper. So we need to have the same 

skepticism about antitrust regulation, which is not uniform and always good, and from Administration to Administration, you will see 

how it changes, 

In the same way, we need to have some skepticism about the 

proclaimed virtues of independent, politically driven regulation. It 

is somewhat like, if you will, Forest Gump opening up a box of 

chocolates. You don’t always know what you are going to get in 

antitrust regulation. 

Now, on the McCarran-Ferguson—or on the across-State-lines 

issue, you are talking to someone who probably wrote the first academic article in favor of that about 15 years ago. First, that issue 

has changed. There is less space to really do much on that front, 

but in this particular context, Congress can, at any time, write a 

new law that deals with that issue. 

McCarran-Ferguson is just a, you know, initial place setting, 

which Congress periodically changes in terms of—you mandated 

various benefits in health insurance, and have done other types of 

Federal moves into the healthcare space. So it is not an end-all/beall. Also, there are interstate compacts which get around that issue 

as well. The magnitude, though, is a little bit exaggerated as to 

how much savings you get from—— 

Mr. FARENTHOLD. I want to talk to Mr. Woody about across State 

lines and State regulatory issue as well. It would seem to me that, 

as just a cost of compliance, having to deal with 50 different State 

regulations for an insurance company would be more expensive 

than trying to deal with just one Federal standard. Again, that— 

I am kind of loathe to say that, because I am opposed to Federal 

regulation, but we have got a real crisis right now on how to deal 

with the cost of health care. So what is your take on that? 
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Mr. WOODY. Mr. Chairman, PCI has over 1,000 members, and 

many of them are small- to medium-sized companies that don’t do 

business on a 50-State basis. So to them, State regulators are closer to them, closer to their markets and closer to their consumers. 

I can certainly understand why an insurer who does business nationally might say, well, it might be more efficient to have one regulator instead of 50. And, indeed, over the years, we have seen 

some discussion within the industry, and in Congress, about an optional Federal charter. Even from those who, at one time, supported an optional Federal charter, we don’t hear much talk about 

that now. And I think one of the main reasons is there is concern 

about the regulatory environment at the Federal level that they see 

with respect to other sectors of the financial services industry, and 

I think even those insurers are now saying, at least for the time 

being, we are happier at the State level than at the Federal level 

on balance. 

Mr. FARENTHOLD. Finally, I just want to talk for a second about 

barriers to entry. One of the arguments for the exception was to 

make data more available. 

I will give Mr. Miller and Mr. Slover a chance to just give me 

about 15 seconds on this, since I am almost out of time. 

How do we effectively remove barriers of entry to bring more 

competition? I will give Mr. Balto 15 seconds, too. 

Mr. Miller? 

Mr. MILLER. I will be simple. It is a different context in health 

insurance, since it is mostly actuarial consulting firms. Although, 

you never can tell where you may go with antitrust once you open 

them up to challenge, I suppose, they may have a lot of lawsuits. 

But the barriers, to answer you, are more a matter of lightening 

the load so that less conventional insurers or other people approaching this space can get in. We have made it so dense and difficult, only the largest operators can basically comply with the burden of regulation. We keep loading on, plus what we add from the 

ACA. 

Mr. FARENTHOLD. I know, Mr. Balto, you wanted to weigh in on 

this. And I know I am running out of time. 

Mr. BALTO. The simple message for this Committee is that 

McCarran-Ferguson could conceivably facilitate dominant insurers 

to engage in anticompetitive practices that would keep other insurance companies from entering. 

Example, in Michigan, Blue Cross of Michigan had a most-favored-nations provision that kept other insurers out. Aetna sued, 

and successfully challenged that provision. Aetna, not a small competitor—— 

Mr. FARENTHOLD. Again, I apologize. I will give you an extra 

minute, Mr. Cicilline. 

But, Mr. Slover, did you want to weigh in on that real quick? 

Mr. SLOVER. Yes, just briefly. 

Briefly, from an antitrust perspective, the—removing the exemption will make it harder for insurance companies to create barriers 

to entry across the board. 

Mr. FARENTHOLD. Thank you very much. 

Mr. Cicilline. 

Mr. CICILLINE. Thank you, Mr. Chairman. 
98 

I want to start with Mr. Miller. I want to be sure I understand 

your argument. In your written testimony, and you repeated it 

again today, you say the primary argument over time for establishing and retaining the antitrust exception under McCarran-Ferguson has been to facilitate economically efficient sharing of information that helps insurers to evaluate risk and price accurately. 

You go on to argue in your written testimony that that really 

doesn’t apply in the health insurance market. And that really—— 

Mr. MILLER [continuing]. A component of the historical background to this. 

Mr. CICILLINE. Yeah. ‘‘Meanwhile, health insurers have no similar history of utilizing advisory organizations for the joint estimation and projection of medical claim costs.’’ 

So it seems like you argue against your own position. You say, 

‘‘The primary reason for this is a sharing of information, which is 

much more present in the property casualty insurance market,’’ to 

Mr. Woody’s point, but you acknowledge it actually doesn’t implicate the health insurance market. So the primary argument that’s 

advanced is actually an argument that you don’t think is credible. 

Mr. MILLER. There’s a larger argument involved in the overall 

testimony. 

Mr. CICILLINE. No, I understand. Your other argument—— 

Mr. MILLER. That’s one slice of it. 

Mr. CICILLINE. Okay. But that’s the primary, and you say it’s not 

a good one. And then you say—— 

Mr. MILLER. Historically, that’s been the primary argument. 

That’s correct. 

Mr. CICILLINE [continuing]. It’s disruptive and you think the 

Committee and Congress should look at other things. That’s the, 

sort of, gist of the argument. 

Mr. MILLER. We are in the midst of re-sorting how we are approaching regulation in health care and health insurance. I would 

not change one thing in isolation without looking at the larger context. 

We have just gone through over the last 5 years a massive increase in regulation of health insurance. I could tick them off in my 

testimony. 

Mr. CICILLINE. No, no. 

Mr. MILLER. What could possibly have gone wrong? 

Mr. CICILLINE. That’s a different—— 

Mr. MILLER. Maybe lack of insurers in markets? Rising prices 

and problems in concentration? 

Mr. CICILLINE. Right. That’s a different question—— 

Mr. MILLER. We need to rethink it in a larger context. 

Mr. CICILLINE.—Mr. Miller. That’s a different question. What I’m 

asking you is—— 

Mr. MILLER. It’s a more important question. 

Mr. CICILLINE. No, what I’m asking you, though, is, if the presumption is—and I think the organization you work for has advanced this presumption many times over—that competition is advantageous to consumers, to choice, to spurring innovation, that 

this is an exemption which exists in this industry and no other, 

that there ought to be a justification. And fear of what it might 
99 

bring, it seems to me—and we’ll disagree—is not sufficient justification. 

But I’ll turn now to Mr. Slover. 

Professor Herbert Hovenkamp, who is widely regarded as the 

dean of American antitrust law, has written that under the 

McCarran-Ferguson Act the presence of even minimal State regulation, even on an issue unrelated to the antitrust law, is generally 

sufficient to preserve the immunity. 

Can you respond to that? 

Mr. SLOVER. Yes, that’s how the language has been interpreted. 

About the same time as the McCarran-Ferguson Act was enacted, 

the Supreme Court was deciding Parker v. Brown and establishing 

how State regulation and the antitrust laws work hand-in-hand. 

And there was a looking at the State regulation. This was later 

fleshed out, that there had to be a clear State regulation and there 

had to be active supervision in order to displace the antitrust laws. 

What you have, unfortunately, under the McCarran-Ferguson 

Act is a minimal requirement, where there doesn’t have to be any 

State regulation; there just has to be the sense of regulation. And 

so it doesn’t have to pass any grade. And so you have a situation 

in which there isn’t a natural incentive to make State regulation 

effective, and you don’t have either one. 

Mr. CICILLINE. So there’s been a lot of discussion, both in this 

hearing already but throughout the country, about this notion of allowing competition across State lines. There is nothing that prohibits that today in the ACA. In fact, it is expressly authorized, is 

it not? 

Mr. SLOVER. That’s correct; it is expressly authorized in interstate compacts. It is also perfectly legal for an insurance company 

to sell in any State it wants to, as long as it abides by the rules 

of that State. 

The distinction here I think that’s important is not can they, but 

will they? And there are natural impediments to the insurance 

companies wanting, having the incentive to enter into each other’s 

territory that this would help fix. 

Mr. CICILLINE. I think that’s a very important point, because 

there’s been a lot of discussion of, if only we would allow this to 

happen, this will solve the problem. There is nothing that prohibits 

this from happening, and I think you’re exactly right. 

And I’d ask unanimous consent to introduce an article dated October 13 entitled ‘‘Insurers Not Interested in Selling ObamaCare 

Across State Lines,’’ which recounts that for the last 12 months 

States have been legally allowed to let insurers sell plans outside 

their borders. Despite the idea’s enduring popularity, no States 

have signaled an interest in the policy. 

And I think this is really the question of whether or not insurance companies are interested in doing that, but there is no legal 

prohibition. And so we just sort of should view this issue in the 

context of the facts. And I’d ask unanimous consent that be included in the record. 

Mr. FARENTHOLD. Without objection, so ordered. 

[The information referred to follows:] 
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Mr. CICILLINE. And I yield back. 

Mr. FARENTHOLD. Thank you very much. 

We’ll now recognize the Chairman of the full Committee, the gentleman from Virginia, Mr. Bob Goodlatte. 

Mr. GOODLATTE. Well, Mr. Chairman, thank you. And thank you 

for holding this hearing. 

And I want to commend all the witnesses. This has been an excellent discussion. I think it’s very helpful. 

A couple of things that I think are a reality here that we all 

ought to focus on. One is that similar legislation passed a few years 

ago by 406 to 19. So the odds are we’re going to pass it again. The 

question is what should it look like, so I’d like to get some of you 

to focus on that. 

But before I do that, I’d like to pick up where the Chairman left 

off, on the issue of what is causing this problem in terms of regulation. 

I happen to believe that competition is good. That’s our objective. 

It will help to hold down costs. And McCarran-Ferguson may be an 

impediment to some of that competition. I will say that I think the 

largest problem here we have with choice and healthcare costs is 

related to overregulation by, first, the States—and this problem existed prior to the Affordable Care Act coming into being—and then, 

to some extent, the Federal Government stepped in and expanded 

upon that by dictating to virtually every insurance company in 

America what should be in every health insurance plan in America. 

So that’s, in my opinion, why there’s not a lot of competition 

across State lines, because there isn’t any incentive to have that 

competition. If have you to go in and comply with the States’ regulations and you have a homogenized Federal regulation, the net effect of that is that only the big guys are going to be able to succeed 

and continue in the marketplace. 

But here’s my question for you, Mr. Woody. I think Mr. Balto 

gave an example for Virginia about Blue Cross Blue Shield, which 

I was very interested in since I represent Virginia. I don’t represent the parts of Virginia that are affected here, so I feel very 

comfortable asking the question. 

But he said that Blue Shield Blue Shield has an agreement that 

they don’t compete with each other, separate Blue Cross entities 

don’t compete with each other. So the Blue Cross in Richmond 

doesn’t do business in northern Virginia; the one in northern Virginia doesn’t do business in Richmond. 

Wouldn’t the elimination of McCarran-Ferguson enable State and 

Federal Governments to step in and say, why aren’t you competing 

in these two separate marketplaces and providing at least some 

more choice for consumers? 

Mr. WOODY. Well, I have a disadvantage over Mr. Balto in that 

I’m not an antitrust lawyer, and I’m certainly not an expert in the 

blues. But I’ll tell you what I do think I know about it, and that 

is that the antitrust law has developed such that market allocation 

cases, instances where defendants have tried to assert a McCarranFerguson defense have generally not been very successful. And I 

understand that even in a recent case involving Blue Cross it 

wasn’t successful. 

I saw a Law Review article just the other day that said that—— 
104 

Mr. GOODLATTE. So do you think it’s just Virginia’s choice that 

they’re not going to try to encourage this competition within their 

State? 

Mr. WOODY. I don’t know what Virginia’s choice is, but what I 

do know is that McCarran-Ferguson does not, I think, present a 

barrier to going after these market allocation issues. 

Mr. GOODLATTE. Let me ask Mr. Balto to respond. 

Mr. BALTO. Well, you know, we could have a lengthy discussion 

of, you know, the nature—— 

Mr. GOODLATTE. Not too lengthy, because I’ve only got a minute 

and a half left. 

Mr. BALTO. Yeah. So, no, the defense has applied in certain circumstances. The fact that there are some district court decisions 

that have narrowed the defense just shows the problem of the defense. Courts work actively to try to narrow it, whereas it should 

just be eliminated because it’s not serving any purpose. There is, 

as my testimony documents, harmful conduct that does come about 

because—— 

Mr. GOODLATTE. Okay. Let’s see what we can agree upon in 

terms of what we should preserve. If we are going to do this, we’ve 

talked about keeping the ability for loss histories to be preserved. 

Are we all in agreement that we should allow insurance companies 

to have that, or should it just be smaller insurance companies? If 

you’re above a certain size, should you not be able to share that 

information, or should everybody share that information? 

Mr. BALTO. The caselaw and the statements of the antitrust enforcement agencies are crystal-clear on this. That conduct is legal 

so long as it’s properly structured. There is no antitrust risk from 

that kind of conduct. 

Mr. MILLER. There’s a line between the assembly of the historical 

loss data and then you get into trending and beginning to move toward signaling rates. And that’s where I think there’s a little bit 

of a barrier to it. 

Mr. GOODLATTE. So build on that, Mr. Miller. And let me ask Mr. 

Woody, as well. Assuming we are going to take action here, what 

kind of things should be looked for to make sure we have in this 

measure that changes or repeals McCarran-Ferguson? 

Mr. MILLER. Well, I’m not a fanatic about this in terms of the 

exemption is so wonderful you have to keep it. I’m saying—and 

you’re only a Subcommittee of particular jurisdiction, but you need 

to see this in the larger context. Not all antitrust regulation is procompetitive. It depends on the eye of the beholder and who’s there. 

And so you’re opening up a toolbox which could be used for other 

purposes as well. 

Mr. GOODLATTE. I get that. But what kind of—you may want to 

write to us afterwards, but what kind of things—what kind of precautionary—— 

Mr. MILLER. I’m generally comfortable with the type of safe harbors—there’s elements beyond historical loss data. There are some 

elements of building common forms, if they are not coercive, where 

they’re put as options out on the table, where coordinated activity, 

whether it’s advisory organizations, has some validity as well. 

Mr. GOODLATTE. All right. 
105 

Mr. MILLER. There could be joint underwriting activities for high 

risks, which are a valid—and that’s generally accepted under rule 

of reason. If you want to legislate it, you can do it, although the 

courts have handled that fairly well thus far. 

Mr. GOODLATTE. Mr. Chairman, my time has expired. I just want 

to make one last point. 

And I think that when we talk about the difference between the 

disparate effect of McCarran-Ferguson that I think Mr. Woody 

pointed to in property and casualty insurance and in health insurance, I would say that the biggest explanation there is again going 

back to the regulations. While States do regulate property and casualty insurance, they don’t get into the minute details of telling insurance companies what they have to cover and under what circumstances they have to cover. And I think that has both driven 

up cost and driven down competition and driven down choice for 

consumers, and we’ve got to find a way around that. 

I’m very interested in anything you submit to us following this 

in terms of how to frame this legislation as the Committee considers it. 

Mr. FARENTHOLD. Thanks, Chairman Goodlatte. 

We’ll now recognize the Ranking Member of the full Committee. 

Mr. CONYERS. Thank you so much. 

George Slover, Consumers Union. Your testimony, to me, captured what I think is key here, and I’ve got a couple questions for 

you. 

Mr. Miller’s testified that current enforcement tools and regulatory policies already address competition issues at the State and 

Federal level. How do you respond to that? 

Mr. SLOVER. Well, the health insurance marketplace is very complex, and there is a regulatory framework that has developed over 

many years to try to deal with some of that. It’s developed in the 

absence of the antitrust laws being applicable. And there are parts 

of it that seek to set baselines to protect consumers. There are also 

some States who choose to enforce their competition laws, even 

though the Federal antitrust enforcement agencies can’t do that. 

But there is no substitute for having the Federal antitrust laws 

apply, and for the industry and the people in the industry to take 

heed of that when they’re making decisions about how they’re 

going to structure their relationships with their competitors. 

Mr. CONYERS. So we need a Federal involvement in this whole 

consideration? 

Mr. SLOVER. I believe that would be very helpful, yes, sir. 

Mr. CONYERS. Uh-huh. 

Now, what about the suggestion that State insurance commissioners are in the best position to promote competition and other 

issues in the health insurance costs? How do you feel about that? 

Mr. SLOVER. Well, they are regulators; they are not competition 

enforcers. And they just come from a different background and 

have different goals. And I think you want to put the competition 

policy enforcers in charge of enforcing competition policy. 

Mr. CONYERS. So you don’t agree with this position. 

Mr. SLOVER. I think State regulation definitely has a role to play, 

and they can play that role alongside Federal antitrust enforcement. 
106 

Mr. CONYERS. Uh-huh. 

Now, do you think that McCarran-Ferguson’s exemption no 

longer serves a legitimate purpose? I mean, that was back in 1945. 

Have things developed since then that don’t make this as important a consideration as it once was? 

Mr. SLOVER. I don’t think it was really needed, even back in 

1945. I think the practices that the insurance industry wanted to 

engage in that were legitimate, and didn’t harm competition, they 

would’ve been able to engage anyway. I also think State regulatory 

authority was going to be fine. I think that’s become clearer as the 

antitrust laws have evolved and the caselaw has evolved over the 

70 years since then. But I don’t think it was necessary then, and 

I certainly don’t think it’s necessary now. 

Mr. CONYERS. Uh-huh. Well, thank you very much for your position as a leader in Consumers Union. 

And I yield back my time if there’s any left. 

Mr. FARENTHOLD. Thank you very much. 

We’ll now recognize the gentleman from Georgia, Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

I think one of the more telling points here—and I think it was 

a good point—is a concern here, but also from the Chairman just 

a few moments ago, that, you know, this is an idea that has seen 

in this Congress a very, I guess, positive vote, depending on which 

way you’re going to look at it. And so the question is a little bit 

more of how do we make sure that this is, you know, properly done 

if this is the way we’re continuing. 

So one of the questions I have—and just a few questions here. 

Because I think what we have seen—and I’m going to bring this 

up again in a moment. But I think one of the things we have seen 

in the healthcare market, especially in the pharmacy benefit manager perspective, is we have seen how monopolistic, terroristic kind 

of organizations can do to an independent community healthcare 

field. 

So, Mr. Miller, let me just—just a couple of quick things. With 

the exception of per se violations, would you agree that the Sherman Act only prohibits anticompetitive conduct that unreasonably 

restrains trade? 

Mr. MILLER. That’s how it’s written. That’s not always how it’s 

enforced. Give me a period of time, and I’ll give you different 

versions of antitrust. 

Mr. COLLINS. We’ll give you who’s interpreting on the Court. 

Great. I love that. 

Would you agree that the FTC Act only bans that and not all 

methods? It only bans that quote part but not all methods of competition, correct? 

Mr. MILLER. All right, all right. I’ll play along. Yeah. 

Mr. COLLINS. You’ll play along with that one? Okay. Then why, 

then, would health insurers need to be able to engage in unreasonable restraints on trade or unfair competition? 

Mr. MILLER. I’m not in favor of them doing that. We have other 

tools to handle that. 

Look, part of this argument, if you really want to boil it down 

politically, is a disagreement over whether—you know, different 

States may have different views as to the type of competition and 
107 

type of regulation they want. There’s an impulse to say, let’s do it 

all at the Federal level and let’s make it uniform, and let’s go hunting for things and we’ll figure out kind of what it is. 

So the question is whether there might be different political preferences and different degrees of regulation in different States. That 

goes back to the interstate proposal. It’s not to enshrine the Affordable Care Act’s menu in every State in the same way under a different wrapper. In a world in which you might have different 

brands of State insurance regulation, consumers could choose 

which regulation they want as part of their insurance package. We 

can’t do that today because the marketplace has changed. That’s 

the original concept and—— 

Mr. COLLINS. And, you know, reclaiming my time, I think that’s 

a great argument to have at another hearing, and I think that’s 

a—— 

Mr. MILLER. Well, it came up at this hearing. 

Mr. COLLINS. And I agree with you. But I think that is one of 

the problems that we are dealing with. You’re very right in that 

regard. I’m not—this, I think, is one of the—just before I move on, 

real quick, will the sky fall down if McCarran-Ferguson is repealed? 

Mr. MILLER. I think I said in my written testimony the sky 

wouldn’t fall down, but the sun, when it rises, is going to be 

clouded by a lot of other problems. 

Mr. COLLINS. Oh, okay. We can go on that. 

Mr. Balto, there is clearly a lack of competition in health insurance markets throughout the country. We’re seeing that right now. 

One-third is basically represented by one or less, actually. Would 

eliminating this exemption make that worse? 

Mr. BALTO. No. In fact, it would potentially lead to improvements 

here. Right now, dominant insurance companies can engage in 

anticompetitive practices to keep new entrants from the market, 

and they can claim that that’s protected by the McCarran-Ferguson 

Act—— 

Mr. COLLINS. Okay. 

Mr. BALTO [continuing]. Or they can deliver inferior services to 

consumers. 

Mr. COLLINS. Well, and one of the things—and, again, not necessarily projected by the McCarran-Ferguson Act—is I think—and 

it’s what I mentioned here just a minute ago—I think we’re seeing 

how a monopolistic look at a health care—from a regulation standpoint or unregulated, however we look at it. And we’re particularly 

dealing in the pharmacy benefit manager perspective—which is, 

you know, doing nothing but terroristic raids on independent community pharmacists. They’re hijacking the price setup. They’re trying to claim, you know, rebates and passing on the savings to others, which has been proved false on many occasions. 

And right now I do realize that there is a large generated money 

machine ready to try to rebuke everything that I’ve said over the 

past 2-1/2 years on this issue. The problem is you can, you know, 

smear all the makeup you want on that pig but it ain’t going to 

look good. 

And so I think this is an area where we need to continue to look 

at, and I appreciate your concern on this. 
108 

Mr. BALTO. Yeah. If I could just reply to that, there is a fundamental problem in lax regulation of payors, such as PBMs and insurance companies. And the people who are on the front lines—the 

doctors, hospitals, and pharmacists—are being given take-it-orleave-it reimbursement terms that ultimately result in poor health 

care for consumers. 

Mr. COLLINS. Exactly. And I think—and that’s the one part of 

that. It’s why I bring it up here, but I think that’s one of the issues 

that we do need to address. But it shows what happens in this kind 

of a constricted market. 

So, again, with that, Mr. Chairman, I thank you, and I yield 

back. 

Mr. FARENTHOLD. Thank you very much. 

And we’ll stay with the great State of Georgia and recognize Mr. 

Johnson for 5 minutes. 

Mr. JOHNSON. Thank you, sir. 

Mr. Miller, would you agree that the insurance marketplace 

should be left free of government regulation? 

Mr. MILLER. No. That’s a little extreme. Left free of regulation? 

I mean, I like the First Amendment that says there should be no 

law, but we do go beyond that and suggest that maybe occasionally 

we should have a few other things—enforce fraud and property 

rights, steady rule of law. There’s plenty of role for government 

regulation. It’s not a, you know, absolutist, night watchman alternative. 

Mr. JOHNSON. But, basically, you would want the laws of the free 

market economy, so in other words supply and demand, to be able 

to dictate prices within the insurance marketplace. 

Mr. MILLER. Well, generally, the role of government is to say it’s 

our job to restrain competition rather than private parties to do it. 

And it’s done a pretty good job of it in the healthcare space. 

Mr. JOHNSON. Yeah, but you would agree, though, that the 

health insurance marketplace should largely be free of government 

regulations so that the law of supply and demand is what determines prices. 

Mr. MILLER. That’s a simple construct and a starting point. Obviously, it’s much more complicated than that alone. 

Mr. JOHNSON. I understand. Well, do you agree that monopolistic 

behavior distorts the free market force of supply and demand? 

Mr. MILLER. There are practices that move toward monopoly 

which need to be policed. 

Mr. JOHNSON. Well, let me ask you—— 

Mr. MILLER. There are also monopolies that arise because someone else does a better job. 

Mr. JOHNSON. Let me ask you the question this way and ask you 

for a yes-or-no answer. Do you agree that monopolistic behavior 

distorts the free market force of supply and demand, yes or no? 

Mr. MILLER. Yes, in those simple terms. 

Mr. JOHNSON. Now, would you agree that the antitrust laws protect against monopolistic behavior? 

Mr. MILLER. I think they are written to do that. They have not 

always done that in practice. 
109 

Mr. JOHNSON. Well, if we did not have any antitrust laws, do you 

believe that monopolistic behavior would go away, or would it predominate? 

Mr. MILLER. We’ve had lots of monopolies supported by government policy. That’s the historical record. 

Mr. JOHNSON. Well, are you saying that we don’t need 

antimonopolistic legislation? 

Mr. MILLER. We need better antitrust policy. Just enacting a law 

isn’t the same as carrying it out in a market-competitive manner. 

Mr. JOHNSON. Well, let me ask you this. Is it your position that 

applying antitrust laws to the health insurance marketplace will 

result in higher insurance costs to consumers? 

Mr. MILLER. It’s an open question. 

Mr. JOHNSON. Well, shouldn’t we try—after 70 years of exemptions from antimonopolistic conduct, shouldn’t we try at this point 

to bring a little less monopolistic behavior into the healthcare marketplace? 

Mr. MILLER. My testimony has indicated that we’ve already been 

applying a lot of antitrust and procompetitive—— 

Mr. JOHNSON. How? 

Mr. MILLER [continuing]. Policies. 

Mr. JOHNSON. How? 

Mr. MILLER. States have a wide latitude to apply all of this. 

Merger enforcement activity goes on. There are a range of activities 

which are not within this exemption whatsoever—— 

Mr. JOHNSON. Well, let me ask you this. 

Mr. MILLER [continuing]. And they’ve been doing enforcement actions as a result of it. 

Mr. JOHNSON. Isn’t it a fact that States have not done any antitrust enforcement solely on their own, without taking the lead from 

Federal enforcers over the years? 

Mr. MILLER. Well, that’s what Mr. Balto’s testimony wants you 

to believe. I think that’s a judgment from time to time depending 

on who the personnel are in place. They allocate the resources. 

There are different views as to what a particular State, you know, 

should or should not do. That’s part of the diversity across 50 

States, rather than saying, here’s one single policy. 

Mr. JOHNSON. Well, let me ask you this question, Mr. Miller. The 

American Medical Association has studied the health insurance 

marketplace for the past 15 years, and they have found that there 

is ‘‘a near-total collapse of competition among health insurers.’’ Do 

you—— 

Mr. MILLER. I think that’s overstated. Their methodology has 

been criticized by some people, including myself. There are ways in 

which you can draw lines. They have their particular point of view, 

and they want to magnify that. It’s not that stark a situation. 

There are problems in doing statewide levels. Now, there are different ways to break it up in terms of metropolitan areas, but you 

can play a lot of games with statistics on that. 

Mr. JOHNSON. Gosh, Mr. Balto, you’ve got 6 seconds to respond 

to anything that has come before you. 

Mr. BALTO. I disagree with everything Tom says. 

But, look, just on the higher cost issue, years ago we eliminated 

antitrust exemptions like in the airline industry and railroads, and 
110 

there were tremendous cost savings. But the question here, is do 

you want to have private regulation, you know, private parties, 

competitors determining the terms of competition, or do you want 

to have the forces of the free market. 

Thurgood Marshall said that the antitrust laws are the Magna 

Carta of our free market system. Why should we cut them short 

when it comes to health insurance? 

Mr. JOHNSON. Thank you. 

Mr. Slover, it’s good to see you. 

Thank you for coming, Mr. Woody. 

And, with that, I yield back. 

Mr. FARENTHOLD. Thank you very much, Mr. Johnson. 

We’ll now recognize the gentleman from Florida for 5 minutes. 

Mr. GAETZ. Thank you, Mr. Chairman. 

My question is a simple one, Mr. Balto. And as I’ve spoken with 

a number of my Republican colleagues, they answer the question 

in almost diametrically different ways. 

Today, under current law, are health insurers allowed to functionally collude on price? 

Mr. BALTO. That technically would not be exempt under—the exemption would not apply to that. 

Mr. GAETZ. When you say ‘‘technically,’’ so does that mean that 

the type of information that health insurers are allowed to share 

with one another facilitates outcomes that walk and quack like collusion? 

Mr. BALTO. No. First of all, if they engaged in naked price fixing, 

that would be illegal under the Act. If they want to engage in the 

kinds of things that, you know, Mr. Woody is talking about, the 

black letter law at this point is that sharing information is legal 

under the law. 

Mr. GAETZ. So does the consequence of the sharing of that information result in monopolistic tendencies in the price space? 

Mr. BALTO. No, I think everybody—in terms of sharing historical 

information, I think everybody sees that as being procompetitive. 

But Mr. Miller says that they don’t even need to do that and they 

don’t really do that in the health insurance industry. 

Mr. GAETZ. I guess my next question relates to the extent to 

which—— 

Mr. MILLER. Well, they do it in different ways. And the question 

would be whether—— 

Mr. GAETZ. Right. I’m on to a different question. 

Mr. MILLER. Okay. 

Mr. GAETZ. So, as we look at a potential for ACA reforms and 

replacement that would allow people to purchase insurance across 

State lines, in the absence of dealing with this McCarran-Ferguson 

question, would we see the choice impact of those reforms impaired? 

Mr. BALTO. You might not, because the exemption provides a 

dominant insurance company to engage in anticompetitive conduct 

to keep new rivals from entering their markets. So the goals of 

ACA reform might be stifled if you permit this exemption to continue. 
111 

Mr. GAETZ. Mr. Miller, would you agree that the goals of those 

reforms to enhance consumer choice would be stifled in that context? 

Mr. MILLER. It’s not going to have much of an effect, this particular reform. There’s a lot of other reforms that would. 

Just in terms of the interstate thing, one of the biggest barriers 

to having interstate competition is individual State insurance commissioners who believe that their approach to regulation is perfect—— 

Mr. GAETZ. Well, sure, but we’re contemplating—— 

Mr. MILLER [continuing]. Anyone else. 

Mr. GAETZ. Right. I think it’s pretty out there that we’re contemplating some functional preemption of that, where we would not 

allow States to be able to bar people from being able to cross State 

lines for the purpose of purchasing insurance. 

The question is, if we do not enact reforms that Mr. Gosar and 

Mr. Scott were advocating this morning, do we limit the effect of 

those choice protocols? 

Mr. MILLER. You can legislate right around it. Look, there’s older 

bills, and you know a number of them, which have set up a template of primary State insurer and the secondary State, domicilebased choice by the insurer as to where they’re going to be regulated. There are models for doing that which don’t in any way get 

to the particulars of the antitrust exemption. 

Mr. GAETZ. Mr. Balto, I served in the Florida legislature, and, 

you know, I saw the interaction that we had between health insurers in our State. 

Do you have a fear that there are circumstances around the 

country where States have sort of wrapped their legislative apparatus around the business models of various health insurers, leading to anticompetitive outcomes? 

Mr. BALTO. Yes. Oftentimes, there are relationships between the 

legislatures and the insurance commissioners and insurance commissioners doesn’t effectively police the market. 

In your State, unfortunately, for example, in the Aetna-Humana 

merger, the insurance commissioner did a very cursory review of 

the merger. Ultimately, the Justice Department sued and blocked 

the merger because of the substantial harm to Florida consumers. 

Mr. GAETZ. Thank you, Mr. Chairman. I yield back. 

Mr. FARENTHOLD. Thank you very much. 

We’ll now recognize the gentlewoman from Washington, Ms. 

Jayapal. 

Ms. JAYAPAL. Thank you very much, Mr. Chair. 

Thank you for your testimony. 

And, Mr. Slover, thank you for all of your work at Consumers 

Union. 

I come from the State of Washington, and I want to direct a few 

questions to you so I can understand what the impacts of this 

would be on a State that, frankly, has embraced the Affordable 

Care Act, and has put in place a relatively strong insurance commissioner. We do have a fairly robust insurance set of plans and 

insurers in the State. And we also have had, I think, decent oversight on many of our plans to make sure that we have small insurers that are able to participate. 
112 

Part of our success also is that we, in our strong market, is that 

we moved very early to expand access to the State’s Apple Health 

Care Medicaid program and chose to run our own State exchange. 

At the same time, our premiums are still too high. They are 

much lower than they are for the midlevel plans compared to the 

Federal increases and premiums, but we have had two insurers 

drop out and two more that potentially might drop out in 2017. I’m 

trying to understand how a repeal would affect a State like Washington, where we’ve actually embraced regulation at the State level 

in a way that benefits consumers. 

Could you speak a little bit to those issues of a repeal and how 

we put in place protections so that we don’t have a race to the bottom as we open up the marketplace but we actually protect the 

strong regulation that we already have in place in the State and 

strengthen it further? 

Mr. SLOVER. Sure. Well, we are supporters of the Affordable Care 

Act, and whatever happens in the future, there are a lot of specific 

protections that are in that Act that we think are very important. 

What this legislation that’s before us does is to add a dose of 

competition to the mix, that’s lacking right now. We don’t want everything that we want an insurance company to do to have to be 

regulated, to have to be a regulatory requirement. We would like 

the free market incentives of competition to also come into play, so 

that whatever a State decides is a minimum floor that needs to be 

set for some protection doesn’t become the ceiling because the insurance companies all agree, ‘‘Well, we’ve got to follow whatever 

the State’s telling us to do, but that’s all we’re going to do, right, 

guys? We’re not going to see if we can cut consumers a better deal. 

We’re going to stick together on this so the consumers don’t take 

advantage of us.’’ 

We don’t want businesses with that instinct. We want businesses 

with the instinct to say, ‘‘Okay, we’ve got this requirement. What 

else can we do? We have a certain market share now. We’d like to 

get more consumers buying from us, so we’re going to look for ways 

to make our service better.’’ 

Ms. JAYAPAL. If we did repeal this, are there particular protections that you would want to see put in place in the manner in 

which we repeal it? 

Mr. SLOVER. I don’t think allowing competition to be added to the 

current mix is going to create any uncertainties or dangers that 

would need to be separately addressed. I think those still need to 

be considered, as they have been. And whatever those decisions 

are, they will be augmented, the benefits to consumers will be augmented by having competition. 

Ms. JAYAPAL. I did have a question for Mr. Miller. 

Mr. Slover had stated that regulation and competition both work 

best when they can work hand-in-hand. What is your response to 

that? 

Mr. MILLER. I think if we had less health insurance regulation 

we might be able to accommodate more antitrust regulation as a 

backup move. And I signaled that in my testimony. I’d like to see 

that mix put on the table. 

Ms. JAYAPAL. So you would support strong regulation in conjunction with—— 
113 

Mr. MILLER. A balanced regulation. 

Ms. JAYAPAL. And what does that—— 

Mr. MILLER. It’s a matter of degree. What I’m saying we are regulating this space so heavily through so many tools that adding 

more on top of it is piling more on, not just redundancy, but actually adding to it. 

If instead you had freer competition at the baseline level in other 

areas of regulation of health insurance, then there is an argument 

that could be made, as a backup policing move, that the normal operations of better versions of antitrust may be more appropriate in 

that regard. 

Ms. JAYAPAL. I have just 20 seconds left, but can I push you a 

little bit on that? Just tell me, what balanced regulation would you 

support? 

Mr. MILLER. Well, depends which Administration you’re talking 

about. We improved antitrust regulation quite a bit in the late 

1970’s and the 1980’s. It slipped backwards over the last decade in 

general. 

Ms. JAYAPAL. So no specific—go ahead. 

Mr. MILLER. I can elaborate in some followup testimony. You 

asked for a quick answer. 

Ms. JAYAPAL. Go ahead. You’ve got a couple more seconds. 

Mr. BALTO. Yeah, I can’t think of anything worse than suggesting that we slip backwards in antitrust enforcement. In the 

Bush administration, there were over 400 health insurance mergers; they didn’t challenge any. When they’ve gone back and done 

econometric studies, they found that consumers are paying a lot 

more for their health insurance. The Obama administration reversed that, and I hope those gains are retained in the new Administration. 

Ms. JAYAPAL. Thank you. 

I yield back. 

Mr. FARENTHOLD. Thank you very much. 

We’ll now recognize my colleague from Texas, Mr. Ratcliffe. 

Mr. RATCLIFFE. Thank you, Mr. Chairman. 

Mr. Woody, I want to start with you because you’ve staked out 

kind of an interesting middle ground, it seems to me, as a property 

casualty insurer. 

The group that you represent doesn’t appear to be directly impacted by the current legislation. I guess, first of all, am I correct 

with respect to that? And if that’s the case, do you have a concern 

regarding the repeal of McCarran-Ferguson? 

Mr. WOODY. It is correct that the bill as it’s currently drafted 

does not apply to property casualty insurers. Our concern is that 

we rely on the McCarran exemption, though, I think, much more 

than the health insurance industry does. So we’re looking down the 

road and saying, well, if they repeal it for the health industry, we 

might very well be next. And I think we have a bigger stake in it, 

actually, than the health insurers do. 

Mr. RATCLIFFE. Okay. 

Well, so let me ask you a followup question. Data sharing is one 

of the key activities that insurers cite for maintaining McCarranFerguson. But one criticism of the exemption is that it doesn’t distinguish between procompetitive and anticompetitive data sharing. 
114 

Do you think that’s a valid criticism? 

Mr. WOODY. I don’t. I actually think that the data sharing that 

goes on in the industry is largely procompetitive. And I think there 

may be some agreement on the panel about that. I think it’s working fairly well, the State system is working fairly well to police activity, anticompetitive activity that shouldn’t be allowed, and yet 

allow the procompetitive activities that are good for consumers. 

Mr. RATCLIFFE. Well, I’m guessing maybe Mr. Miller agrees with 

that. 

Mr. MILLER. Sure. I mean, that’s pretty well-established. 

There’s a little bit of an odd contradiction in some of the arguments here, which is that all these things antitrust currently would 

say is okay, that’s why it’s so vital that it be restored in order to 

police these things, which is already waving it ahead and saying 

is all right. 

Mr. RATCLIFFE. I noted in your written testimony you said that 

we’ve seen a shift in tighter Federal regulation following the passage of ObamaCare. What impact has that increased regulation 

had on the current marketplace with respect to competition, pricing, product offerings? 

Mr. MILLER. If you’re asking me, a more narrow range of policies 

that people can choose from. That’s why a number of people are 

upset in the outside market that they had to either change provider networks or the policies they previously had—well, there’s 

been some grandmothering to paper that over. 

In addition, we’ve had in many areas—it’s done more on a county 

basis than a population basis, that’s a different measure, in terms 

of a single insurer in a lot of the marketplace exchanges, as the 

early rush in has been followed by an exit out as insurers find out 

it’s not a good business to keep losing money based upon the prescribed formulas in which they have to operate. 

Mr. RATCLIFFE. So how would repealing McCarran-Ferguson impact that further? 

Mr. MILLER. No, what I’ve said is that it’s not really an issue of 

repealing McCarran-Ferguson really helping it or not. It’s reconsidering those policies as part of the broader regulatory mix. 

Mr. RATCLIFFE. Okay. 

Mr. Balto, I want to give you an opportunity here. Your position 

was very clearly stated when you said you think that McCarranFerguson does nothing but bring uncertainty and confusion to the 

market. 

You’ve said that State insurance commissioners don’t necessarily 

have the capacity to fully understand or to fully address the problems that their State residents are experiencing. But the National 

Association of Insurance Commissioners has submitted a letter, in 

this case, opposing repeal. So where do you see the lack of capacity 

playing out? 

Mr. BALTO. So when we’ve studied this issue—and we went back 

and studied it again and will continue to study it—you’ve seen very 

sporadic actions by State insurance commissioners. And if you were 

to contrast that, Congressman, with other industries where we 

have a Federal consumer protection enforcer, the Federal Trade 

Commission, it’s dramatically different. You have one enforcer 
115 

which has sophistication, the resources to bring the kinds of nationwide cases we’re looking for. 

By the way, going to a point you were making before, this whole 

debate about the regulations to protect consumers, one way 

McCarran causes harm is it keeps the FTC out of the game. And 

because we don’t really have an effective Federal enforcer, we have 

to look more toward Federal regulation to protect consumers, 

whereas if you eliminate McCarran and the FTC becomes the Federal consumer protection enforcer here, you might not have to rely 

on regulations quite as much. 

Mr. RATCLIFFE. I want to thank all the witnesses for being here. 

Mr. Slover, I’m sorry, my time’s expired, but I appreciate you all 

being here. 

I yield back, Mr. Chairman. 

Mr. FARENTHOLD. Thank you, Mr. Ratcliffe. 

We’ll now recognize the gentleman from Illinois for 5 minutes. 

Mr. SCHNEIDER. Thank you, Mr. Chairman. 

And I want to also thank the witnesses for being here, for sharing your perspectives on a debate that, as you have all touched on, 

has been going on since McCarran-Ferguson was introduced, let 

alone passed. 

I’d like to start with Mr. Slover, please. 

One school of thought holds that repeal of McCarran-Ferguson 

won’t necessarily achieve the desired objectives of providing affordable, accessible, high-quality health care. How would you respond 

to that? And why do you get a sense that they’re arguing it won’t 

move the needle? 

Mr. SLOVER. Well, I think competition is always a good thing. I 

think this marketplace also needs regulation. And they work in 

tandem, or that’s how they ought to work, is in tandem, and that 

competition will spur businesses to want to—the insurance companies here, the health insurance companies—to find a way to give 

consumers a better deal because their business will thrive as a result of that. 

So in all kinds of ways the whole principle behind antitrust is 

that you don’t want competitors getting together and saying, you 

know, ‘‘We’re feeling a lot of pressure from competition now. If we 

all sit down and talk together, we can figure out a way to take 

some of this pressure off so that consumers won’t be taking such 

advantage of us, and we’ll be able to get a better deal for ourselves 

in the marketplace.’’ 

You don’t want that kind of an instinct to develop as a way of 

doing business. And, in general, having the antitrust laws there, 

you don’t have to bring an enforcement action every day. Just the 

fact that they’re there is going to change business instincts for the 

better. 

Mr. SCHNEIDER. Mr. Balto, do you want to expand on that? 

Mr. BALTO. That was a great answer. I can’t do better than that. 

Mr. SCHNEIDER. Fair enough. 

One of the debates happening in Congress right now is whether 

or not to repeal the Affordable Care Act, whether we repeal the Affordable Care Act without a replacement. 
116 

What impact would a repeal of McCarran-Ferguson, repeal of the 

Affordable Care Act without replacement, what sense would you 

have that would have on the marketplace? 

Mr. Balto? 

Mr. BALTO. First, at the end of our testimony, it builds on 

George’s point that you need a mix of antitrust enforcement and 

smart regulation to make these markets work effectively. And I 

think it’s worth everybody taking a look at it to sort of see how regulation does really improve the nature of competition. 

I think eliminating this just provides greater opportunity for 

competition to fully break out, and that’s something that’s necessary to make health insurance markets work. And if that happens, then, you know, we may need to rely somewhat less on regulation as we go forward. 

Mr. SCHNEIDER. Mr. Miller? 

Mr. MILLER. Well, what I usually hear is the addition key and 

not the subtraction key or the balancing key—more, more, more. If 

there’s a window to think about a better balance, that’s a more 

promising avenue in which to follow. 

Mr. SCHNEIDER. But is it a fair question—you look at the Affordable Care Act that has tried to increase competition. Overall, I 

think the assessment is, over the last number of years, the rate of 

increase in healthcare costs have come down, but we’re seeing that 

health insurance costs and the competition in States like Illinois 

isn’t what we had hoped it would be. 

How would repeal of McCarran-Ferguson address—— 

Mr. MILLER. I think it’s really somewhat to the side of it, and 

that’s the reason why you had the Congressional Budget Office 

view in 2009 on similar legislation that it really wouldn’t have 

much impact in either direction. 

However, we have to be careful of what we call competition. 

What the Affordable Care Act wanted was a particular type of 

highly managed, highly regulated ‘‘competition’’ in quotation 

marks, which was to achieve certain results. They haven’t worked 

out as materialized, but it was not the same thing as a consumerdirected level of procompetitive activity. 

Mr. SCHNEIDER. And Mr. Balto? 

Mr. BALTO. And my testimony directly addresses that and shows 

that there have been savings because of some of those regulatory 

provisions. But just to give one concrete example, when you talk 

about the market division in Virginia affecting Mr. Goodlatte’s constituents, there’s clearly added costs that might come about because of the McCarran-Ferguson Act. It dampens the type of competition that would otherwise occur. 

Mr. SCHNEIDER. Okay. 

Again, I’ll thank the witnesses for your testimony and your input 

and thank the Chairman for calling this hearing. Thank you very 

much. I yield back. 

Mr. FARENTHOLD. Thank you. 

We’ll now recognize the gentleman from California for 5 minutes. 

Mr. SWALWELL. Thank you, Chair. 

Mr. Slover, you’ve expressed your support for the Affordable Care 

Act and its important provisions that have extended health insurance coverage to millions of Americans. This landmark legislation 
117 

has even saved the lives of people like Terri, one of my constituents 

from Dublin, California. 

Before the Affordable Care Act, Terri did not have access to proper medical care. After the Affordable Care Act was passed, Terri 

got covered and was able to get preventive care. During a wellwoman exam, it was revealed that Terri had early-stage breast 

cancer. By catching her cancer early, she was able to undergo surgery and is now cancer-free. Without the Affordable Care Act, Terri 

tells us she would never have received the preventive care that she 

credits for saving her life. 

While I’ve heard countless stories like Terri’s, House Republicans 

are looking to dismantle the hard-fought protections of the Affordable Care Act. How do you think Congress should be working to 

strengthen the Affordable Care Act and ensure people like Terri 

from Dublin, California, can keep their coverage? 

Mr. SLOVER. Well, we’re strong supporters of the Act, and we 

want to see whatever is changed to continue the essential protections that are in the Affordable Care Act, to build on those, rather 

than to undermine them. 

And I could take some time to tell you some of the key things 

that we think are benefits of the Affordable Care Act that we think 

need to be preserved. 

It should cover as many or more Americans as currently—not 

just make coverage ‘‘available’’ in some sense, but actually be as affordable or more affordable to those who are now covered. 

Preexisting conditions should not be excluded or charged at a 

higher rate. Families are now protected against being frozen into 

keeping the same insurance company, or keeping the same job because that’s where they get their insurance, or being devastated 

when circumstances force them to switch insurance companies or 

jobs. 

A family should all be able to stay on the same health plan until 

the kids are grown and out of the house and have their own jobs. 

A basic package of health benefits should be as good or better 

than what’s available now. 

There should be no caps on coverage, not annual and not lifetime. They would’ve probably affected your constituent that you’re 

talking about. We don’t want consumers to be hit with devastating 

illness and then find that they don’t have insurance any longer to 

cover that. 

There should be strong, clear provider network standards. 

The choices of available plans must be clear and understandable. 

And then there’s a lot in the Affordable Care Act that doesn’t 

make the headlines but that has been critically important for 

bringing down the cost of providing health care while also improving patient safety and quality of care, and those programs should 

continue. 

And that’s just a short list. You know, we could spend all day 

talking about what the benefits are. Our point is just there’s a lot 

of good stuff there, and we want to see it kept. 

Mr. SWALWELL. Mr. Slover, I was talking to a small-business 

owner in the East Bay area of California over the weekend, and he 

told me something that I don’t think gets enough attention. He 

said, look, I’m a small-business owner. I’m exempted from the Af-
118 

fordable Care Act because I have 50 or fewer employees, so I don’t 

have to provide healthcare coverage to my employees. 

But he said, what I appreciate about the Affordable Care Act is 

that, each year, before the Affordable Care Act, my team, management team, would have to sit down and look at how astronomically 

high the coverage costs have been, and then we’d have to figure out 

how to cover the difference, and sometimes that meant, you know, 

increasing the deductible amounts so that our employees could afford it. 

And he said, what I’ve noticed since the Affordable Care Act is 

that we don’t have to have those pressure-point decisions anymore, 

meaning that he hasn’t seen the costs of health care go up as much 

or at the same rate that it was going up before the Affordable Care 

Act went in place. 

So what he is saying is he doesn’t even fall under the Affordable 

Care Act as far as now having coverage and didn’t have coverage 

before, but because so many other people have coverage, he’s noticed that the cost of healthcare coverage for his company and providing for his employees has gone down. Have you seen that? 

Mr. SLOVER. Yes. I think a rising tide lifts all boats. And California has been particularly good in implementing the Affordable 

Care Act. One of our offices is in San Francisco, so we’re very well 

aware of how things have improved in California, and we hope that 

will stay. 

Mr. SWALWELL. Great. Thank you. 

Mr. Chair, I yield back. 

Mr. FARENTHOLD. Thank you very much. 

Seeing as we have no other Members with questions, I want to 

take this opportunity to once again thank our panel of witnesses 

and welcome Mr. Cicilline. This is his first day as the Ranking 

Member of the Committee. I’m the Vice-Chairman of this Subcommittee. You will usually see Mr. Marino sitting up here. 

But I hope I made your first day a pleasant one. 

Mr. CICILLINE. You did. You did. 

Mr. FARENTHOLD. And I would also remind our panelists that the 

Chairman of the full Committee, Mr. Goodlatte, did indicate that 

the political climate is such that the repeal of McCarran-Ferguson 

is likely, and if you all have concerns about how it’s done, now is 

the time to let the Committee know about it. And we would welcome any followup you have in writing. 

So thank you all again very much. 

And, with that, this Subcommittee is adjourned. 

[Whereupon, at 11:59 a.m., the Subcommittee was adjourned.] 

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