Friday, January 24, 2003

Capitol Hill Watch

To Address Malpractice Issue, Sen. Leahy To Introduce Bill That Would Reverse Insurers' Exemption from Antitrust Laws

      Sen. Patrick Leahy (D-Vt.) plans to introduce a bill to address rising medical malpractice insurance premiums by requiring the insurance industry to comply with federal antitrust laws, the New York Times reports. The insurance industry currently is exempt from such laws. Leahy's legislation would mandate that insurers offering malpractice coverage could not collude when they establish premium rates or engage in "price fixing, bid rigging or market allocations." According to Leahy and other Democrats, the bill "would be an important step" in reducing malpractice insurance premiums and would counter a proposal by President Bush (Oppel, New York Times, 1/24). Last week, Bush, who believes that unlimited jury awards in malpractice lawsuits are behind rising premium costs, called for legislation that would cap noneconomic damage awards in such suits at $250,000 and would limit the number of suits consumers could file (Kaiser Daily Health Policy Report, 1/17). Many experts and some insurance industry members attribute increased malpractice insurance premiums to factors other than lawsuits, including insurers' stock market losses and "shakeout from a severe price war" in the 1990s, the Times reports. In a letter to senators on Jan. 23, Leahy and Sens. Richard Durbin (D-Ill.), John Edwards (D-N.C.) and Edward Kennedy (D-Mass.), said, "Most of the legislative proposals being bandied about seem likely to reduce health care accountability without lowering malpractice premiums." They added that the antitrust exemption allows insurers to "collude to set rates, resulting in higher premiums than true competition would achieve -- and because of the exemption, enforcement officials cannot investigate any such collusion." Insurers denied that they have used the exemption to engage in price collusion and said that Leahy's bill could adversely affect competition, the Times reports. Robert Hartwig, chief economist at the Insurance Information Institute, an industry trade group, said that the exemption "increases the ease of entry into the market." He added, "If you remove the information available today to insurers, you would have a situation that in the long run could act to decrease competition." A senior Senate Republican aide said Leahy's proposal "sounds like an attempt to change the subject, rather than address the real issue of exorbitant lawsuits" (New York Times, 1/24).

Baucus Considers Malpractice Liability Caps
In related news, Sen. Max Baucus (D-Mont.) yesterday said he would consider supporting caps on malpractice lawsuits that Bush and Republicans have proposed. However, he also asked Congress to consider reinsurance, or government guarantees for insurers. "Tort reform is not a panacea," he said yesterday at the National Health Policy Conference (Fulton, CongressDaily, 1/23).

A Web cast of Baucus' speech is available online at kaisernetwork.org.