From Statement of Robert Pitofsky, Chairman, Federal Trade Commission, Before the Committee on the Judiciary, June 22, 1999
"The bill's stated purpose is to promote the quality of patient care. Collective bargaining by health care professionals, however, does not ensure better care for patients. Two broad-based commissions recently studied changed in the health care system and recommended numerous measures to protect consumers and promote quality. But neither suggested that antitrust immunity was appropriate or desirable."
"The Commission continues to believe that such an exemption would be bad medicine for consumers."
"The bill, while appealing in its apparent simplicity, threatens to cause serious harm to consumers, to employers, and to federal, state, and local governments:
Doctors and other health care professionals could join together to demand substantially higher fees.
Pharmacists could insist on higher payments for filling prescriptions. The bill apparently would permit even large chain pharmacies, such as CVS and Rite Aid, to get together and demand higher prices.
Consumers and employer, including government employers, would face higher insurance premiums.
Consumers would pay more out-of-pocket and could see their benefits reduced.
Medicaid programs that provide services through managed care plans could be forced to increase their budgets or reduce services.
The number of uninsured Americans, and the costs borne by state and local governments in providing for their care, could increase significantly."
"The Commission believes that measures designed to increase the power of consumer choice will serve patients, and our nation as a whole, far better than giving providers the collective power to dictate what choice - and significantly, what prices - will be available in the marketplace."
"The bill also could permit physicians to collectively demand terms from health plans that would disadvantage allied health care providers or other alternatives to prevailing modes of medical practice. The collective judgment of health care professionals concerning what patients should want can differ markedly from what patients themselves are asking for in the marketplace. The Commission has taken enforcement action in cases in which provider groups sought to impede practice by competing alternatives by, for example, denying, delaying, or limiting hospital privileges of non-physician providers or physicians providing services through innovative arrangements, such as the Cleveland Clinic's integrated multi-specialty group practice. Other cases illustrate how groups of professionals have attempted to secure health plan payment policies that disadvantage their competitors."
"The bill continues to permit physicians and others to collectively refuse to deal with a health plan that refuses their demands for higher fees. If a plan failed to accede to those demands, and the group refused to contract, the plan could be forced from the market, or patients would be left to pay their medical bills out of their own pockets. Thus, although providers could not collectively refuse to treat patients, their collective refusal to contract with a plan could impose formidable financial obstacles to patients seeking care."
"Although styled as a labor exemption, the antitrust immunity that H.R. 1304 would confer has little to do with established labor law and policy. The labor exemption already applies to health care professionals under the same standards that apply in other sectors of the economy; that is, physicians who are employees (for example, of hospitals) are already covered by the labor exemption under current law. The labor exemption, however, is limited to the employer-employee context, and it does not protect combinations of independent business people."
"H.R. 1304 is designed to override the distinction Congress drew in the labor laws between employees and independent contractors, and to allow some independent contractors - doctors and other health care professionals operating as independent businesses - to collectively exert economic pressure on health plan to gain higher fees and other, more favorable, terms of dealing. In addition, it grants the exemption without providing for any oversight of the collective bargaining process by the National Labor Relations Board."
"Moreover, this extension of the labor exemption is being offered as a way to remedy matters that collective bargaining was never intended to address. The stated goal of this bill is to promote the quality of patient care. The labor exemption, however, was not created to solve issues regarding the ultimate quality of products or services that consumers receive. Collective bargaining rights are designed to raise the incomes and improve working conditions of union members. The law protects the United Auto Workers' right to bargain for higher wages and better working conditions, but we do not relay on the UAW to bargain for safer cars."
"At last year's hearing, there was much discussion about hypotheticals and theoretically-possible results. The Commission believes, however, that past experience is a more reliable guide to what is likely to happen when health care practitioners collectively bargain with health plans. That experience suggests that the proposed exemption presents substantial risks of harm to consumers, private and governmental purchasers of health care, and taxpayers who ultimately foot the bill for government-sponsored health care programs."
"The effect of the bill, however, would not simply be on the health plans and employers that are forced to pay higher prices to health care practitioners, but can be expected to extend to various parties, and in various ways, throughout the health care system:
Consumers and employers would face higher prices for health insurance coverage.
Consumers also would face higher out-of-pocket expenses as copayments and other unreimbursed expenses increased.
Consumers might face a reduction in benefits as costs increased.
Senior citizens participating in the Medicare HMOs would face reduced benefits, because Medicare pays these HMOs a fixed amount per enrollee. Higher fees for professional services means health plans would have fewer dollars available to pay for prescription drug coverage and other benefits that are not available under traditional Medicare but currently are provided by many Medicare HMOs.
The federal government would pay more for health coverage for its employees through the Federal Employees Health Benefits Program and military health programs.
State and local governments would incur higher costs to provide health benefits to their employees.
State Medicaid programs attempting to use managed care strategies to serve their beneficiaries could have to increase their budgets, cut optional benefits, or reduce the number of beneficiaries covered.
State and local programs providing care for the uninsured would be further strained, because, by making health insurance coverage more costly, the bill threatens to increase the already sizable portion of the population that is uninsured."
"The record of antitrust law enforcement sets forth the impact of collective 'negotiations' on the public . . . Other cases have challenged actions by associations of pharmacists who succeeded in forcing state and local governments to raise reimbursement levels paid under their employee prescription drug plans. In one such case, an administrative law judge found that the collective fee demands of pharmacists cost the State of New York an estimated $7 million."
"By raising health care costs and making health insurance less affordable, the exemption threatens to increase the number of uninsured and thus reduce access to care . . . In a country where 43.4 million people did not have health insurance in 1997 (1.7 million more than in 1996), any development that threatens to increase the proportion of the population that is uninsured is cause for serious concern."
"Arguments that consumers would not be harmed by an antitrust exemption for collective bargaining by independent health care professionals appear to rest on assertions that the bill would balance the bargaining power between health care professionals and health plans. These assertions, however, are incorrect. The bill would permit doctors to create monopolies. On the health plan side of the ledger, the evidence does not support the suggestion that mot (or even many) areas have only one or two health plans."
"Nor does the recent number of highly publicized mergers among commercial health plans suggest that most markets are likely to have only one or two health plans in the future. The Commission and the Department of Justice review these transactions, and we have investigated those that appeared to raise competitive concerns. The Commission is committed to preserving competition in the market for health plans, as in all markets, and if a proposed transaction appeared likely to create market power, we would challenge it."
"In the debate over this proposed exemption, we frequently hear arguments that the antitrust laws prevent physicians from being effective advocates for their patietns. Indeed, it is often suggested that any effort by physicians to talk among themselves or w3ith plans about concerns regarding health plans' practices would violate the antitrust laws. That is simply not the case. Health care professionals can and do engage in collective advocacy, both to promote the interests of their patients and to express their opinions about other issues, such as payment delays, dispute resolution procedures, and other matters."
" . . . the Commission believes the proposed antitrust exemption is the wrong approach to solving concerns about the patient care, and that it threatens serous harm to consumers."
"There are no easy solutions to the problems inherent in the simultaneous pursuit of cost effectiveness, high quality and wider access to health care services. But allowing doctors and other health care practitioners to fix prices and other contract terms is not the answer."