This has potentially huge ramifications on the insurance industry. Time will tell if it does any good . . . or anything at all.

By Patrick Yoest
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–The White House on Tuesday publicly backed legislation to repeal the health insurance industry’s antitrust exemption, a small part of the Obama administration’s still-uncertain strategy to pass broader health overhaul legislation.

The bill, which the U.S. House of Representatives will vote on Wednesday, would remove insurers’ long-time exemption to competition laws, which Democrats hope will lower premiums in insurance markets by giving consumers more choices. The exemption for insurance companies was enacted in the McCarran-Ferguson Act of 1945.

Specifically, the bill would strip the exemption for egregious violations such as price fixing, bid rigging and market allocation. The White House Office of Management and Budget in a statement announced its support for the legislation, saying that “this bill will benefit the American health-care consumer by ensuring that competition has a prominent role in reforming health insurance markets throughout the nation.”

House Rules Committee Chairwoman Louise Slaughter, (D., N.Y.), a leading proponent of the bill, suggested that it is a matter of fairness that the industry is subject to the same rules as other companies.

“This industry has enjoyed a big giveaway for far too long, and it’s about time that it plays by the same rules as everyone else,” Slaughter said.

America’s Health Insurance Plans, an industry trade group, said in a statement Tuesday that the health insurance industry is already highly regulated and that mergers and other business practices are already subject to federal antitrust laws. Further, it cited “legal uncertainty” that would be created by the new law, which it said would chill developments in the industry.

Leading insurers in AHIP include Aetna Inc. (AET), Humana Inc. (HUM), Cigna Corp. (CI) and UnitedHealth Group Inc. (UNH).

It’s uncertain how Republicans will come down on the bill. A spokesman for House Minority Leader John Boehner (R., Ohio) said Boehner had not announced how he would vote.

Congressional Democrats are still trying to find their footing on health care, even though the White House introduced an 11-page document intended to act as a road map for blending House and Senate-passed versions of the legislation.

House Speaker Nancy Pelosi (D., Calif.) said she is “very pleased” with the White House proposal and that it is “getting a good reception” with House Democrats. But Rep. Peter DeFazio (D., Ore.), who appeared with Pelosi as part of a push for the anti-trust legislation, cited his own concerns about the omission from the plan of a government-run health insurance plan and a nationwide exchange for buying insurance.

DeFazio suggested the White House plan has not been presented as a take-it-or-leave-it proposition.

“We’re really beginning the process in the caucus over again,” DeFazio said. “There’s no fait accompli. There’s been no whipping, there’s been no pushing.”

-By Patrick Yoest, Dow Jones Newswires; 202-862-3554; patrick.yoest@dowjones.com

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