FTC Staff Opposes Ohio Bill To Allow Physician Collective Bargaining

According to the staff of the Federal Trade Commission, a bill pending before the Ohio legislature that seeks to authorize competing physicians to engage in collective bargaining with health plans over fees and other contract terms likely would increase health care costs and reduce access to care, without ensuring better care for patients. The Commission has opposed federal legislation that would create an antitrust exemption for physician collective bargaining, and the Commission staff has expressed concerns about similar bills before state legislatures.

In response to a request for comment on House Bill 325 by Representative Dennis Stapleton, Chairman of the Insurance Committee of the Ohio House of Representatives, the FTC staff state that the bill "on its face authorizes collective physicians conduct that would constitute per se price fixing under the federal antitrust laws." The comment, prepared by the Bureau of Competition and the Office of Policy Planning of the FTC, further notes that "it is unlikely that House Bill 325 would immunize health care providers from liability for conduct that violates the federal antitrust laws."

The opposition of the Commission to antitrust exemptions for physician collective bargaining is based on two core concerns. First, an antitrust exemption would authorize physician price fixing, which is likely to raise costs and reduce consumer access to care. Second, an antitrust exemption is not likely to improve the quality of care. As Joe Simons, Director of the FTC's Bureau of Competition, observed, "An antitrust exemption simply is not needed, as other approaches are available that would improve quality and protect consumers."

Citing earlier Commission testimony before Congress opposing a federal exemption for physician collective bargaining, the FTC staff comment reiterated that "without antitrust enforcement to block price fixing and boycotts designed to increase health plan payments to health care professionals, we can expect prices for health care services to rise substantially.

Health plans would have few alternatives to accepting the collective demands of health care providers for higher fees. The effect of the bill . . . can be expected to extend to various parties, and in various ways, throughout the health care system."

"In short, price fixing by doctors likely would drive up costs for patients and reduce health insurance coverage in the state of Ohio," explained Ted Cruz, Director of the FTC's Office of Policy Planning.

In addition, the FTC staff concluded that the proposed regulatory structure to be established by the bill does not satisfy the U.S. Supreme Court's requirements under the "state action" doctrine, which allows a state to override the national policy favoring competition only when it expressly decides to govern aspects of its economy by state regulation rather than market forces. Under that judicially created doctrine, a state may not simply authorize private parties to violate the antitrust laws; instead, the state must actually substitute its own active control for the discipline that competition would otherwise provide. To that end, the state legislature must clearly articulate a policy to displace competition with regulation, and state officials must actively supervise the private anticompetitive conduct. House Bill 325, the FTC staff comment concludes, falls far short of the "active supervision" required by Supreme Court case law.

"In summary," the FTC staff comment concludes, "House Bill 325 poses a substantial risk of harm to Ohio citizens. By authorizing price fixing by health care providers, the bill is likely to increase costs and reduce access to care, without any assurance that the state's interest in promoting quality health care would be furthered. Moreover, the bill is unlikely to achieve its stated purpose of conferring state action immunity on provider collective bargaining, because the regulatory oversight provided is insufficient."

The Commission authorized submission of the comment by a vote of 5-0.