Anti-Trust Law May Not Prevent Health Industry From Reducing Health Care Costs

Several weeks ago, the health care industry visited the White House and pledged to “work together” with President Obama and Congress “to provide quality, affordable coverage and access for every American” and lower health care spending by $2 trillion. But New York Times’ Robert Pear is reporting that the nation’s anti antitrust laws may prevent the health care industry from voluntarily reducing costs:

Anti-trust lawyers say doctors, hospitals, insurance companies and drug makers will be running huge legal risks if they get together and agree on a strategy to hold down prices and reduce the growth of health spending. Robert F. Leibenluft, a former official at the Federal Trade Commission, said, “Any agreement among competitors with regard to prices or price increases — even if they set a maximum — would raise legal concerns.’”

Some anti-trust lawyers argue that this interpretation may be relying on antiquated view of anti-trust law. In fact, they suggest that the industry’s ‘voluntary effort’ to reduce health care spending is predicated on an interpretation that prohibits “any agreement among competitors.” In other words, while the pledge casts the industry in the glowing light of cooperating with a popular President, anti-trust law serves a cover, legally protecting the industry from having to implement their pledge.

In an interview with The Wonk Room, David Balto, a Senior Fellow at the Center for American Progress explained, “The antitrust laws permit a broad range of collaboration to cut costs and bring lower prices to consumers. Firms have been able to adopt standards and share information that have led to improved cost control. These companies would like to pretend that they want to collaborate to reduce costs, but antitrust is the obstacle. They are simply wrong.”


What’s more alarming is the growing concentration of today’s health insurance markets. “There have been over 400 health care mergers in the last 10 years”; 1 in 6 metropolitan areas is dominated by a single health insurer that controls at least 70% of consumers. As Balto recently pointed out, “In the seven years of the Bush administration, all non-merger enforcement actions have involved health care providers, with no enforcement involving health insurers,” Balto said. This approach has contributed to greater insurer concentration, “more anticonsumer insurance provisions, greater payment delays, less coverage and poorer service.”