Leveling the Playing Field for the American Consumer

Empowering the American consumer is a top priority this Congress and efforts to enact pro-consumer policies were on prime display this week, first with the implementation of the Credit CARD Act, and next with the introduction of a measure to repeal the anti-trust exemption for the health insurance industry.

On Monday, regulations aimed at stopping the abusive practices of credit card companies went into effect. The Credit CARD Act, which I helped pass and the President signed into law last year, is a giant step forward in the struggle to end unfair industry practices and protect consumers from retroactive rate increases, misleading late fee charges, over-limit fee traps, and other abusive tactics.

The new law bans retroactive interest rate hikes on existing balances (except when payments are more than 60 days late), double-cycle billing and due-date gimmicks, and stops companies from charging over-the-limit fees unless the consumer opts in. Consumers will save at least $10 billion a year from curbs on interest rate increases alone, according to the Pew Charitable Trust.

Companies must provide 45 days notice of any rate hike going forward and constrain any heightened interest rate to new purchases (as opposed to accrued balance). It requires that card companies fairly credit and allocate payments, and it prohibits charging fees just to pay a bill by phone. It also protects young consumers by requiring that before cards can be issued to anyone under 21, a parent must co-sign or an ability to pay must be demonstrated.

This law to reign in credit card companies is part of a larger campaign to rebuild the economy in a way that works for middle-class families and promotes responsibility and hard work, as opposed to risky spending and nebulous financing schemes.

On Wednesday, the House considered another powerful, pro-consumer bill that would prohibit the health insurance industry from colluding on the prices they charge and the choices they offer.

Under the 1945 McCarran-Ferguson Act, insurance companies are shielded from federal prosecution for bid rigging, price fixing, and dividing up market territories. Today, the health insurance industry remains one of only two sectors (the other one being Major League Baseball) that is exempted from America’s anti-monopoly laws. This has left consumers with few choices and less competition. Health insurance premiums have more than doubled since 2000, while the health insurance industry has had over 400 mergers in the last 14 years. Today, 95 percent of health insurance markets are “highly concentrated,” leaving consumers with little or no choice between insurers.

Led by Representative Tom Perriello (D-VA), the House will vote on his bill which ends monopoly protections for the insurance industry and restores competition among insurance companies, requiring them to play by the same rules as other industries and every business in the Commonwealth. The result would be increased competition among insurers leading to lower health insurance premiums for all Americans.

To successfully navigate these rough economic waters, America needs an empowered middle class and a marketplace infused with choice and competition. Health insurance and credit card companies should not be able to run free, while hard-working Americans are forced to struggle under artificially inflated premiums and abusive credit card policies. As this week has shown, bit-by-bit, Congress is working to level the playing field for the American consumer.

Rep. James Moran (D) is Virginia’s 8th Congressional District Representative in the U.S. House of Representatives.