The White House and Congressional Democrats are continuing their efforts this week to reach consensus on a merged health care bill. Just yesterday afternoon, the New York Times reported that officials struck a deal on the proposed excise tax on "Cadillac" insurance plans, one major point of divergence between the two bills. More details on the changes, which should appease unions and some House Democrats, are available here.

But just as one dispute is resolved, another pops up. Following a National Journal report that insurance giants directed as much as $20 million to the U.S. Chamber of Commerce to fund anti-reform fund advertisements, a group of 19 Senate Democrats -- including Illinois' Sen. Roland Burris -- sent a letter to President Obama, Senate Majority Leader Harry Reid (D-NV), and House Speaker Nancy Pelosi (D-CA) urging them to include language in the final legislation that repeals the federal anti-trust exemption for health and medical malpractice insurers. From the letter:

“For nearly 65 years, the insurance industry has been exempt from Federal antitrust laws,” the Senators wrote.  “Regulation of the insurance industry has been left with the states, which often lack the time and resources to effectively investigate antitrust conspiracies.  Thus, the competitive activities of health insurers and medical malpractice insurers remain effectively unchecked.  While there are divergent views on the best way to introduce choice and competition into health insurance market, we can surely agree that health and medical malpractice insurers should not be allowed to collude to set prices and allocate markets.”

Since the 1945 McCarran-Ferguson Act, insurance providers have been exempt from federal anti-trust laws. States, instead, have taken the lead on investigating charges of collusion. Unfortunately, they have done so poorly, refusing in most cases to bring up actions against anti-competitive conduct or violations of consumer protections. As a result, watchdogs like Center for American Progress fellow David Balto say that many health insurance markets -- unlike industries subject to standard anti-trust laws -- have become "concentrated, opaque and complex." After Senate negotiators decided against including such a provision in bill this fall, Leahy filed a similarly-worded amendment in early December, arguing that such a change would create greater competition and lower premium costs. It was ultimately not offered for debate. The House health bill does contain an anti-trust exemption repeal provision.

Would eliminating the exemption immediately reform the industry? It would certainly help inject some much-needed competition into the insurance markets. A recent Government Accountability Office study found that the top five insurers represent more than 90 percent of the market in at least 23 states. And subjecting those companies to anti-competitive laws now -- especially considering that insurance itself is increasingly becoming more national in scope -- would empower the Federal Trade Commission or the Justice Department to fight future market consolidation or coordinated price-fixing and coverage reductions.

On the question of reducing insurance costs in the short-term, the jury is still out. Since so many insurance markets are virtual monopolies, those companies with dominant market share have little reason to collude with their competitors. In that sense, losing the exemption won't change the general pricing practices of the very largest insurers right away. (Some health economists also worry that increasing market power of insurers actually increases the power held by hospitals and provider groups.) That being said, giving more regulatory authority to the federal government so they can investigate and prosecure deceptive and egregious conduct is a very good thing. Sen. Burris and his colleagues should continue to fight for it.