Effort To Control Health Costs Sparks Concerns on Antitrust Violations
U.S. antitrust laws could affect health care industry groups' efforts to work together to rein in health care costs, the New York Times reports (Pear, New York Times, 5/27).
In a letter sent to President Obama on May 10, a coalition of health care industry groups wrote, "We will do our part to achieve your administration's goal of decreasing by 1.5 percentage points the annual health care spending growth rate. ... This represents more than a 20% reduction in the projected rate of growth."
The letter did not elaborate on what specific measures the groups would take to achieve such reductions. It was signed by the:
- American Medical Association;
- American Hospital Association;
- Pharmaceutical Research and Manufacturers of America;
- Advanced Medical Technology Association;
- America's Health Insurance Plans; and
- Service Employees International Union.
The Obama administration requested specifics on the coalition's cost-cutting plans by June 1 (California Healthline, 5/26).
According to the Times, many of the plans being considered by the health care industry would require greater cooperation across health care providers.
Robert Leibenluft, a former Federal Trade Commission official, said, "Any agreement among competitors with regard to prices or price increases -- even if they set a maximum -- would raise legal concerns."
In addition, while Obama is asking for specific plans from the health care industry, the administration has not offered any relief from antitrust laws, the Times reports. Furthermore, during his campaign Obama pledged to increase enforcement of antitrust laws, according to the Times.
Antitrust laws have had a negative effect on previous health reform efforts, the Times reports.
In 1993, the drug industry established a voluntary cost control plan that limited each drug company's annual increase in the average price of prescription drugs to the increase in the Consumer Price Index, but the Department of Justice ruled that the proposal would violate antitrust laws.
DOJ officials said that the U.S. Supreme Court made it clear that setting price maximums was akin to setting price minimums, which is illegal.
In a letter to the Senate Finance Committee, AHA wrote that uncertainty regarding the enforcement of antitrust laws "makes it difficult for a hospital and doctors to collaborate to improve care" and reduce costs.
AMA has asked Congress to amend antitrust laws to allow physicians to collectively negotiate with insurers over fees and other concerns, but FTC repeatedly has designated the practice illegal price-fixing, according to the Times.
FTC officials said that consumers could benefit from cooperation among health care industry groups but that cooperation also could lead to increased bargaining power for physicians and hospitals, making it easier for them to set prices and eliminate competition (New York Times, 5/27).
Sales Tax
Elsewhere in the health care reform sphere, a controversial proposal to enact a national sales tax, also known as a value-added tax, is beginning to gain traction as a means of reducing the national budget deficit and funding health reform, the Washington Post reports.
Senate Budget Committee Chair Kent Conrad (D-N.D.) said, "There is a growing awareness of the need for fundamental tax reform," adding, "I think a VAT and a high-end income tax have got to be on the table."
Kenneth Baer, a spokesperson for White House Office of Management and Budget Director Peter Orszag, said that a VAT is "unlikely to be in the mix" as a means for financing health care reform, adding that it is "popular with academics," including White House health care adviser Ezekiel Emanuel, "but highly controversial with policymakers."
The Post examined several studies that indicate how a VAT could help pay for health reform and changes to Medicare and Medicaid (Montgomery, Washington Post, 5/27). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.