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White House: Obama backs repeal of health insurer antitrust exemption

President Obama is set to highlight his health care plan at a televised health care summit Thursday.
President Obama is set to highlight his health care plan at a televised health care summit Thursday.
  • Liberal Democrats wanted repeal in order to bring new competition to industry
  • "Repealing this exemption is an important part" of increasing competition, Gibbs says
  • Advocates of repeal say insurance companies have local monopolies
  • Defenders say insurers still subject to state regulations

Washington (CNN) -- President Obama strongly supports a repeal of the antitrust exemption currently granted to health insurance companies, White House Press Secretary Robert Gibbs said Tuesday.

Liberal Democrats in particular have pushed for a repeal of the exemption, which has been in place since the end of World War II, in order to inject new competition into the health care industry while lowering consumer costs.

The announcement came as the White House sought to rally key Democrats around Obama's new compromise reform plan before a high-stakes televised health care summit with congressional Republicans on Thursday.

"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 health care," Gibbs said.

"Repealing this exemption is an important part of that effort. Today, there are no rules outlawing bid rigging, price fixing and other insurance company practices that will drive up health care costs and often drive up their own profits as well."

Gibbs said the president is not seeking repeal of the exemption in lieu of broader changes to the insurance market. "This is a complementary step along the way," he said.

The more expansive House version of the health care bill passed last year would have removed the antitrust exemption, but the Senate's version would not.

Advocates of an exemption repeal say that the exemption has allowed health insurance companies to essentially divide the country into geographic zones. They argue that the companies benefit from what amounts to local monopolies.

Industry defenders, in turn, point out that insurers are still subject to state regulations. They claim that the impact of an exemption repeal is overblown.

Administration officials and their allies in Congress have taken an increasingly tough stance against the unpopular insurance industry. Among other things, Obama's compromise proposal would give the federal government new authority to block excessive rate hikes by health insurers.

Specifically, Obama's plan calls for the secretary of Health and Human Services to work with a seven-member board made up of doctors, economists and consumer and insurance representatives to review premium hikes.

The board, known as the Health Insurance Rate Authority, would provide an annual report to recommend to states whether certain rate increases should be approved, although the secretary could overrule state insurance regulators.