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	<title> - COMPETITIVE HEALTH INSURANCE REFORM ACT OF 2017</title>
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	[House Hearing, 115 Congress]
	[From the U.S. Government Publishing Office]









	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


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



	Available via the World Wide Web: http://judiciary.house.gov
	______

	U.S. GOVERNMENT PUBLISHING OFFICE

	24-271 PDF WASHINGTON : 2017
	-----------------------------------------------------------------------
	For sale by the Superintendent of Documents, U.S. Government Publishing
	Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
	DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
	Washington, DC 20402-0001


















	COMMITTEE ON THE JUDICIARY

	BOB GOODLATTE, Virginia, Chairman
	F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan,
	Wisconsin Ranking Member
	LAMAR S. SMITH, Texas JERROLD NADLER, New York
	STEVE CHABOT, Ohio ZOE LOFGREN, California
	DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
	STEVE KING, Iowa STEVE COHEN, Tennessee
	TRENT FRANKS, Arizona HENRY C. ``HANK'' JOHNSON, Jr.,
	LOUIE GOHMERT, Texas Georgia
	JIM JORDAN, Ohio TED DEUTCH, Florida
	TED POE, Texas LUIS V. GUTIERREZ, Illinois
	JASON CHAFFETZ, Utah KAREN BASS, California
	TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
	TREY GOWDY, South Carolina HAKEEM JEFFRIES, New York
	RAUL LABRADOR, Idaho DAVID N. CICILLINE, Rhode Island
	BLAKE FARENTHOLD, Texas ERIC SWALWELL, California
	DOUG COLLINS, Georgia TED LIEU, California
	RON DeSANTIS, Florida JAMIE RASKIN, Maryland
	KEN BUCK, Colorado PRAMILA JAYAPAL, Washington
	JOHN RATCLIFFE, Texas BRADLEY SCHNEIDER, Illinois
	MARTHA ROBY, Alabama
	MATT GAETZ, Florida
	MIKE JOHNSON, Louisiana
	ANDY BIGGS, Arizona

	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 DAVID N. CICILLINE, Rhode Island
	DOUG COLLINS, Georgia HENRY C. ``HANK'' JOHNSON, Jr.,
	KEN BUCK, Colorado Georgia
	JOHN RATCLIFFE, Texas ERIC SWALWELL, California
	MATT GAETZ, Florida PRAMILA JAYAPAL, Washington
	BRADLEY SCHNEIDER, Illinois

	Daniel Flores, Chief Counsel

	Slade Bond, Minority Counsel




















	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
	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


	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
	Aetna-Humana 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.
	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:]

	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



	__________

	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-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.
	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 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 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 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:]

	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


	__________
	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 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 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
	particularly, 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.
	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 market-oriented 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 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 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 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 cost-cutting 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 price-fixing 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/be-all. 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?
	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.
	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 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.
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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 McCarran-Ferguson 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----
	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 pro-competitive. 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.
	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.
	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 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.
	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-or-leave-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.
	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 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.
	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, domicile-based 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.
	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----
	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
	McCarran-Ferguson. But one criticism of the exemption is that
	it doesn't distinguish between procompetitive and
	anticompetitive data sharing.
	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
	McCarran-Ferguson 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 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.
	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
	consumer-directed 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 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 well-woman 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 Affordable 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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