Obama backs repeal of insurer antitrust exemption

WASHINGTON (Reuters) - The Obama administration on Tuesday threw its weight behind a bid to repeal an anti-trust exemption protecting health insurers, keeping the industry in its crosshairs as it prepares to host a bipartisan summit on revamping healthcare.

"Today the president announced the administration's strong support for repealing the anti-trust exemption currently enjoyed by health insurers," White House spokesman Robert Gibbs said at a daily news briefing.

On Thursday, President Barack Obama will host a healthcare summit, the latest step in his uphill battle to break an impasse in Congress over a sweeping overhaul of the $2.5 trillion industry, one of Obama's domestic policy priorities.

"At its core, health reform is all about ensuring that American families and businesses have more choices, benefit from more competition and have greater control over their own healthcare. Repealing this exemption is an important part of that effort," Gibbs said.

Health insurers for about 65 years have been exempt from federal antitrust laws, which are designed to protect consumers from price fixing and other anti-competitive acts.

The insurance industry said the exemption is narrow in scope and warranted and that its repeal would not lower health care costs.

"Health insurance is one of the most regulated industries in America at both the federal and the state levels," said Karen Ignani, president and chief executive of the industry trade group America's Health Insurance Plans.

"The real focus should be on addressing the rising cost of medical care, which is putting an unsustainable burden on families, employers, and the federal budget," she said.

Gibbs said he expected the House of Representatives to vote on legislation to revoke the exemption over the next few days. Obama's support was transmitted to Congress as a statement of administration policy.

INSURANCE INDUSTRY IN THE CROSSHAIRS

The Obama administration has stepped up its rhetorical attacks on health insurers as it fights to push through the healthcare overhaul. New regulation of health insurers was a key part of the overhaul plan Obama announced on Monday, and administration officials have pointed repeatedly to a premium increases of up to 39 percent set by WellPoint Inc.'s Anthem Blue Cross unit in California as evidence of the need for a healthcare overhaul.

A number of House Democrats have said repealing the antitrust exemption is a high priority.

"We want to open up competition. This bill is about making sure that anyone in America who wants to offer health insurance will do so in a free and open market," House Democratic Leader Steny Hoyer said.

"I surely hope it will pass with a significant bipartisan vote."

Democrats said revoking the exemption would prevent health insurance price-fixing or other anti-competitive practices, but did not offer evidence of any. The industry said state laws already forbid such practices.

The American Medical Association released a study on Tuesday showing that many U.S. insurance markets are dominated by just one or two insurance companies. In 24 of the 43 states covered in the report, the two largest insurers had a combined market share of 70 percent or more, up from 18 of 42 states in last year's report.

The House version of the healthcare revamp bills that have stalled in Congress included a repeal of the exemption. The Senate version did not. Obama's proposal in general more closely resembled the Senate plan, and did not address the antitrust exemption.

A number of consumer groups support repeal, saying states often lack the resources to effectively regulate insurers.

(Additional reporting by John Whitesides; Editing by Philip Barbara)