Healthcare Legislation and Economic Competition

Antitrust Legislation and Healthcare
The Sherman Anti-Trust Act (1890) was designed to promote competitive practices in the marketplace and protect consumers from price gouging and other egregious practices generated from a lack of competition in monopolistic markets. It was not originally designed to impact the healthcare market but over the years its protections have been extended to do so
Strengths
Antitrust and anticompetitive laws were not always applied to physician and healthcare conduct. But in Goldfarb v. Virginia State Bar (1975), the “Supreme Court made it clear that professional conduct that interfered with normal market processes would face a heavy burden of justification and might even be unlawful per se” (Sage, Hyman, & Greenberg, 2003, par. 18). This ensured that collusion between healthcare providers, including withholding information, was illegal. It also meant that it was illegal to limit the actions of consumer ratings agencies which graded physicians and other healthcare providers. This was deemed to be necessary to the free flow of information needed for commercial activity. Antitrust laws are thus designed to promote transparency as well as consumer choice, given that transparency is necessary for a competitive economic system to flourish.
Weaknesses
Perhaps unsurprisingly, physicians have been largely opposed to any type of regulatory control, particularly antitrust legislation, in their field. Physicians believe that collaboration between providers, healthcare agencies, and other regulatory organizations will improve rather than inhibit delivery of quality services. “Suppose a payer approaches you and several of your colleagues, who are competitors. The payer gives you a contract and fee schedule that you review with your colleagues’ (Cohen, 2003, par. 5). Physicians state that as professionals, reviewing such contracts between themselves could facilitate rather than inhibit better patient care.
On the other hand, critics of the Sherman Antitrust Act state that it has not done enough to protect consumers. In many healthcare markets, there are relatively few providers, which substantially limits consumer choice. Also, under current law, consumers cannot purchase healthcare policies across state lines and even the healthcare exchanges under the Affordable Care Act (ACA) are limited by state. Also, the limits upon government regulation to merely curtail a lack of competition does not address issues such as spiraling drug price costs, given that the federal government cannot cap drug prices (Chamseddine, 2015).
Opportunities
Given the recent passage of the Affordable Care Act (ACA) and calls for reform, there are hopes the legislative climate is right to reform antitrust laws to better promote consumer welfare. Additionally, the FTC has promised that antitrust legislation will be enforced solely to honor the objectives of the ACA, for example, the “agency would not block a merger of hospitals or physician-owned practice groups that improves quality with a slight price increase” but rather “focus on actions which deliver no economical benefit to consumers” (Chamseddine, 2015, par. 4).
Threats
There are concerns from both proponents of and opponents to the law in the future. Proponents are concerned that more lax enforcement may mean that a blind eye may be turned to anticompetitive practices from a consumer’s standpoint. Physicians’ groups still continue to oppose the enforcement of the Act, alleging that the government has been overly aggressive in opposing hospital mergers they say will improve quality of patient care (Chamseddine 2015).
References
Chamseddine, J. (2015). Obamacare, antitrust laws can coexist, says FTC official.
Washington Health Policy Week in Review. Retrieved from: http://www.commonwealthfund.org/publications/newsletters/washington-health-policy- in-review/2015/dec/dec-21-2015/obamacare-antitrust-laws-can-coexist
Cohen, J. (2012). How antitrust laws hinder the goals of healthcare reform. Medical Economics.
Retrieved from: http://medicaleconomics.modernmedicine.com/medical- economics/news/modernmedicine/modern-medicine-now/how-antitrust-laws-hinder- goals-healthcare?page=full
Sage, W., Hyman, D. & Greenberg, W. (2003). Why competition law matters to healthcare
quality. Health Affairs, 22(2) 31-44. Retrieved from:
http://content.healthaffairs.org/content/22/2/31.full