Issues

Antitrust Waivers for Physicians Talking Points

• I am very concerned that the House Judiciary Committee may consider allowing physicians to bargain collectively to win higher fees.

• As an agent, I know how employers struggle to provide high quality, affordable health coverage to their employees. Giving doctors new power to band together to negotiate higher rates will only mean higher costs for my clients and their employees.

• At a time when the number of uninsured is growing, and health insurers are handing out double-digit rate increases, it is outrageous that the House would consider a move to increase doctors' incomes.

• Giving doctors special treatment and unprecedented power flies in the face of the free market system, and is bad for employers, consumers, and the economy as a whole. I urge you to oppose HR 1304.

• I would appreciate hearing your views on this important issue.

Summary of HR 1304

The bill would grant to health care professionals who are engaged in negotiations with a health plan (including group health plans, health insurance issuers, and Medicare+Choice and Medicaid managed care plans) an exemption under the antitrust laws similar to that granted to bargaining units recognized under the National Labor Relations Act ("NLRA").

The bill undermines efforts to control health care costs for consumers and to provide consumers with a wide range of choices among health care plans. The bill does not protect patients' rights or assure that the legitimate concerns of health care professionals will be addressed. Instead, it provides incentives for health care professionals, such as doctors and pharmacists, to engage in price-fixing, boycotts and market allocation agreements that would otherwise be illegal under the antitrust laws. Such conduct will result in higher health care costs for patients, employers, and the Medicare and Medicaid programs. Also, it will permit such cartels to negotiate unfair and exclusionary agreements with health plans that could put non-physician providers, in particular, at an unfair competitive disadvantage.

Reason for opposing H. R. 1304

1. The bill would increase health care costs and put some providers at an unfair competitive disadvantage: Competition keeps health care costs down in the private sector, as well as in the Medicare and Medicaid programs. The bill would eliminate competition among health care professionals by permitting them to engage in price-fixing, boycotts and market allocation agreements that would otherwise be illegal under the antitrust laws. Under the bill, for example, nothing would prevent all the doctors in a market from combining into a single cartel and demanding exorbitant fee increases at the expense of their patients and taxpayers who fund the Medicare and Medicaid programs. Non-physician providers, in particular, could be unfairly disadvantaged if cartels of physicians were permitted to negotiate unfair and exclusionary agreements with health plans that made it difficult or impossible for them to fully participate.

2. No exemption is needed to permit physicians to organize in ways that will benefit consumers or to discuss legitimate quality of care issues: The 1996 DOJ/FTC Health Care Antitrust Guidelines explain how providers can organize networks and joint ventures to contract, or compete directly, with health plans. Through such ventures, providers can work together to offer better care or their own alternatives to health plans. H.R. 1304 undermines that approach by allowing providers to form cartels that will limit choices and not benefit consumers, and whose only tangible result may be to increase provider incomes at the expense of patient' access to care. Moreover, H.R. 1304 is not needed to enable providers to discuss collectively with health plans issues involving legitimate quality of care concerns or to bring such issues to the attention of the public. The 1996 DOJ/FTC Guidelines explain that such discussions are lawful under the antitrust laws as long as they do not involve boycotts or other collective activity that could limit the choices available to consumers.

3. The bill is inconsistent with the labor antitrust exemption granted to other workers: The antitrust labor exemption seeks to balance the importance of competition with our national labor policy. Although they enjoy an antitrust exemption, labor negotiations are subject to strict rules under the NLRA governing the rights and responsibilities of both workers and employers, and are overseen by the National Labor Relations Board ("NLRB"). Physicians and other health care professionals, to the extent they are employees, are covered by the existing antitrust labor exemption. The special treatment afforded by H.R. 1304 would go much further than the existing labor antitrust exemption. It would cover much more than simply wages and similar terms, and would extend to anything that might be the subject of health plan negotiations. Moreover, it imposes no obligations whatever on negotiating cartels and provides for no regulatory oversight.

4. The bill is not needed to counter health plans' market power or to challenge the antitrust exemption for the business of insurance: The bill rests on the faulty premises that health care professionals need an antitrust exemption to balance the market power of large health plans and that such plans are protected from scrutiny under the McCarran-Ferguson Act, which provides an antitrust exemption for the business of insurance to the extent it is regulated by state law. Health care markets vary greatly across the country, and are subject to rapid change. The exemption in H.R. 1304, however, would apply across the board, including areas where health plans have little leverage or where there is little managed care. Moreover, the McCarran-Ferguson Act antitrust exemption does not protect health plans from scrutiny under the antitrust laws for their agreements with third parties who provide services to their members. And, the federal antitrust agencies (FTC/DOJ) have frequently asserted jurisdiction over the conduct of health plans—such as mergers—when the agencies determined that it could pose a risk to competition among plans or market power over providers.

For all of these reasons, HR 1304 should be defeated.