FTC Staff: Proposed Texas Legislation Likely to Lead to Dramatically Increased Costs and Decreased Access to Health Care for Texas Consumers

Federal Trade Commission staff, in response to a request from Texas State Representative Elliott Naishtat, stated that Texas health care consumers are likely to be harmed by a proposal in the Texas State Legislature that would exempt state-certified health care collaboratives, which are organizations composed of hospitals, physicians and other health care providers, from state and federal antitrust laws. The FTC staff comment letter expressed concern that Texas Senate Bill 8, if enacted, would likely lead to dramatically increased costs and decreased access to health care for Texas patients.

The FTC recognizes that collaboration may generate opportunities for health care providers to innovate to achieve cost savings when they are clinically integrated. At the same time, however, the FTC also understands that collaborations among competitors, as will occur through the formation of health care collaboratives, may raise concerns about competition. The FTC staff comment explained that Texas Senate Bill 8 would deprive health care consumers of the benefits of competition because it would immunize health care collaboratives from the antitrust laws. Antitrust standards already distinguish between effective clinical integration among health care providers that have the potential to achieve cost savings and improve health outcomes and anticompetitive collaboration and price fixing by health care providers, which are likely to increase health care costs. Because antitrust laws already allow procompetitive collaborations among competitors, an antitrust exemption is unnecessary to achieve cost savings or promote improved quality and access to health care. Exempting the coordinated activities of health care providers, especially when the collaboration of these organizations involves negotiating reimbursement contracts with insurance companies, would eliminate price competition. This would likely lead to increased costs and decreased access to health care that may not be prevented by the review provisions in the Bill.

The Commission vote approving the staff comment was 5-0. It was sent to Rep. Naishtat on May 18, 2011. A copy of the letter can be found on the FTC’s website and as a link to this press release. (FTC File No. V110009; the staff contact is Jessica Hoke, Office of Policy Planning, 202-326-2409.)

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