AMA Antitrust Cost Analysis Riddled With Errors, Contains No Valid Conclusions

Apr 10, 2000

FOR IMMEDIATE RELEASE

CONTACT: Richard Coorsh

April 10, 2000

(202) 824-1787

e-mail: rcoorsh@hiaa.org

WASHINGTON, D.C. – A cost analysis sponsored by the American Medical Association (AMA) of legislation that would give physicians unprecedented power to raise their fees ignores critical information, mishandles data, makes faulty economic assumptions, and therefore contains no valid conclusions, according to a new report released today by the Health Insurance Association of America (HIAA).

The legislation – H.R. 1304, the "Quality Health-Care Coalition Act of 1999" – would allow doctors and other health care professionals to collude and engage in price-fixing because it would immunize them from the nation’s antitrust laws.

According to the new HIAA report – prepared by Charles River Associates, a Cambridge, Massachusetts-based economic consulting firm – the AMA-sponsored report’s "simplistic effort to estimate the effect of managed care on physician expenditures . . ." ignores factors that are critical to estimating the effects of managed care. "All of these errors serve to reduce estimates of the impact of managed care on health spending."

"Clearly, the AMA analysis guarantees from the get-go their claim that federal antitrust waiver legislation would have ‘little or no cost to society’ because it ignores 40 years worth of factors affecting health care spending," remarked Chip Kahn, President of the Health Insurance Association of America (HIAA). "On the other hand, HIAA’s estimates, and those of the Congressional Budget Office, show that these antitrust exemptions would increase physicians’ incomes at consumers’ expense, and wreak havoc on government’s ability to provide coverage to seniors, children, and to the poor."

Mr. Kahn also observed that the AMA analysis suggests uninsured Americans may receive more care if doctors can use antitrust exemptions to charge higher fees. However, this suggestion conflicts with consensus research findings that show that high health care costs, including high physician fees, are the primary reason why more than 44 million Americans are uninsured, he added.

The AMA’s cost analysis of H.R. 1304, released on March 15, 2000, critiqued a Charles River Associates study released in June 1999 by HIAA. The HIAA/Charles River Associates study, updated in March 2000, now estimates that antitrust exemptions contained in H.R. 1304 would raise consumers’ annual health insurance premiums as much as 13 percent, and annual national health care spending from $29.2 billion to $95 billion. Each one percent increase in health insurance premiums causes approximately 300,000 people to lose or not obtain health coverage, according to independent economists.

The Health Insurance Association of America (HIAA) is the nation’s most prominent trade association representing the private health care system. Its 294 members provide health, long-term care, dental, disability, and supplemental coverage to more than 123 million Americans.

###

PLEASE NOTE: The HIAA/CRA analysis of the AMA critique is available at http://membership.hiaa.org/pdfs/000406amaresponse.pdf