Who Can Rein in Health Care Prices? State and Federal Efforts to Address Health Care Provider Consolidation

Sustainable Health Care Costs Health Care Consolidation

Policy Points

  • Effective oversight of health care market conduct requires collaboration between state and federal policymakers
  • Policymakers are beginning to address the consequences of health care provider concentration through increased price transparency, improved merger review, oversight of anticompetitive conduct, and increased competition through a public option

Abstract

Decades of ineffective antitrust enforcement have left many US health care markets with insufficient competition to control prices. Increasingly, hospitals have merged to form dominant health systems that can exert market power and charge anticompetitive prices. This trend contributes to health care cost growth that exceeds growth in wages or the economy. Effective oversight of market conduct requires collaboration between state and federal policymakers. This brief describes actions taken by federal and state policymakers to address the consequences of health care provider concentration through increased price transparency, improved merger review, oversight of anticompetitive conduct, and increased competition through a public option.

Introduction

Health care is increasingly unaffordable for many Americans. In the middle of the coronavirus pandemic, nearly one in five adults in the United States, about 46 million people, reported that someone in their household skipped necessary medical care because of cost in the past year.1 The lack of affordable health care not only affects individual families, but also stunts wage growth,2 contributes to growing economic inequality,3,4 and may dampen economic growth.5,6

Americans pay higher prices for health care services compared with residents of similar nations, without commensurate increases in quality, which contributes significantly to our overall health care spending.7 The consolidation of health care providers into health systems with substantial market power, which can be leveraged in price negotiations with insurers, has driven American health care prices to new heights.8-12 Unfortunately, a lack of rigorous antitrust enforcement over the past three decades has exacerbated provider consolidation. By 2018, over 95% of metropolitan areas had highly concentrated hospital markets, and nearly 80% had highly concentrated specialist physician markets.13 The coronavirus pandemic may further accelerate consolidation as acquisition by large health systems or private equity firms may offer relief to financially distressed physician practices.14 As Harvard University scholars warn, “the challenges of rising health care costs and market power will still be with us after Covid-19 has passed, and further consolidation will make costs even harder to restrain.”15

This brief describes actions taken by federal and state policymakers to address the consequences of health care provider concentration through increased price transparency, improved merger review, oversight of anticompetitive conduct, and increased competition through a public option (Figure 1). While the Biden administration has demonstrated a commitment to strong antitrust enforcement and Congress is considering sweeping reforms of federal antitrust law, federal responses remain uncertain and time-consuming. As a result, continued state action remains critical to protect consumers against the harms of health care consolidation.

Figure 1. Federal and State Actions to Address Health Care Provider Consolidation

 Federal ActionsState Actions
Price transparency• 2 final rules established in 2019 (hospital transparency rule and transparency in coverage rule)
• No Surprises Act enacted as part of the Consolidated Appropriations Act, 2021
- One-time funding for states to create all-payer claims databases (APCDs)
- Standardized data format for voluntary submission by self-funded payers
• 18 states have APCDs with mandatory reporting for all public and fully funded commercial plans (5 more states are in the process of implementation)
Merger review• New Vertical Merger Guidelines
• Federal Trade Commission retrospective study on physician mergers
• Klobuchar bill would strengthen existing federal merger statutes
• 30 states require pre-transaction notification of hospital mergers to attorney general’s office or other state agency (in 17 states, that notice is limited to nonprofit hospital mergers)
• 3 states (Connecticut, Massachusetts, and Washington) require pre-transaction notification of physician mergers
Anticompetitive conduct• Biden appointments suggest increased focus on monopoly and market power
• Antitrust Law Enforcement Reform Act (S. 225) would prohibit exclusionary conduct by firms with market power
• Sutter Health (California) and Atrium Health (North Carolina) lawsuits alleging anticompetitive use of contracting practices
• 20 states have laws restricting most-
favored-nation provisions
• Massachusetts bans anti-tiering and anti-steering provisions
Increased competition through a public option• Proposed federal public option bills
• Could support state public options through waiver approvals
• Washington starts selling a public option in January 2021
• Nevada will begin selling a public option in 2026 and other states (e.g., Colorado) appear poised to follow.

Need for Increased Price Transparency to Support Other Cost-Control Efforts

A first step toward demonstrating the impact of health care consolidation — and promoting affordability — has been to make more information about health care prices publicly available. Policymakers and regulators need detailed price information from all payers, including self-funded employers, to assess where market interventions may be needed to address consolidated market power. Detailed information about pricing for all payers is critical to assess cost-shifting or other payment inequities.16

One of the biggest hurdles faced by state lawmakers seeking critical price information is the federal Employee Retirement Income Security Act (ERISA) of 1974, which preempts state laws regulating self-funded health plans.17 After the 2016 Supreme Court decision in Gobeille v. Liberty Mutual Insurance Co., states have been unable to require self-funded plans to report claims data, including negotiated prices, to state all-payer claims databases (APCDs).18 In response, the Trump administration issued two final rules — one requiring hospitals to disclose payer-specific negotiated rates19 and one requiring health insurers and most self-funded employers to disclose their negotiated rates with health care providers.20 Since the hospital transparency rule took effect in January 2021, numerous hospitals appear to be choosing to pay the small fine rather than disclose the information, so additional penalties may be needed to ensure compliance.21-23 The final rule on transparency in coverage, which applies to payers, does not require any disclosures until January 2022, so the impact of that rule remains unknown.

In addition to administrative action, Congress included assistance for state APCDs in the No Surprises Act enacted as part of the Consolidated Appropriations Act, 2021.24 This support included one-time financial support for states to establish or improve existing APCDs. In addition, the No Surprises Act requires the Department of Labor to develop a standardized data format and provide guidance to states to obtain data from self-funded and other group plans.

These efforts by the federal government acknowledge that states may be best positioned to collect and use data from an APCD, and more and more states are implementing these databases. But states require resources and federal action to fill in gaps in their authority created by ERISA. Transparency alone, moreover, is unlikely to constrain health care price increases, and state policymakers may need additional support from the federal government to effectively address consolidation and anticompetitive business practices.

Improved Merger Review: Preventing New Types of Anticompetitive Consolidation

Price transparency can uncover the effect of consolidation on prices, but to effectively control costs, policymakers need additional tools to identify and block potentially harmful consolidation before it occurs. The price impact of horizontal consolidation of hospitals is well established,9,10,25-29 but consolidation into large, vertically integrated, national health systems continues largely unopposed. Because these mergers often involve groups that do not directly compete with each other for patients (e.g., hospitals in different geographic markets; insurers with providers; physician groups or clinics with hospitals), they may not initially appear to be anticompetitive. Nonetheless, research shows that these mergers increase prices,11,30,31 so state and federal governments must work to implement policies to better oversee these mergers.

Federal Agencies’ Focus on Vertical Consolidation

Vertical mergers combine companies operating at different stages within a supply chain, such as a hospital or health system acquiring a physician practice or outpatient clinic, and have been largely overlooked by the Federal Trade Commission (FTC) and Department of Justice (DOJ). Specifically, the FTC challenged only two acquisitions of physician practices by a health system between 2012 and 2018,32-34 even though the number of physician practices owned by hospitals more than doubled during that time.35 Recognizing the need to improve and clarify enforcement policies, the FTC and DOJ issued new Vertical Merger Guidelines in 2020 to better assess possible harms from vertical mergers.36 Additionally, the FTC announced in January 2021 that it will conduct a retrospective study of the effects of physician practice acquisitions between 2015 and 2020.37 Similar retrospective studies have helped the FTC hone its approach to hospital merger review by showing that mergers involving nonprofits can result in anticompetitive effects and that its approach to defining geographic markets was flawed.37 The retrospective study of physician acquisitions will allow the FTC to more effectively assess and, when appropriate, challenge future consolidation of physician practices, but these studies cannot turn back the clock on the consummated mergers that have led to highly consolidated markets.

Potential Congressional Reform of Antitrust Law

While federal antitrust enforcers try to increase the effectiveness of existing authority, Congress is considering giving the FTC and DOJ additional oversight tools. In one of the most “sweeping” efforts aimed at “overhauling and modernizing” antitrust enforcement,38 Senator Amy Klobuchar (D-Minn.) introduced the Competition and Antitrust Law Enforcement Reform Act (Figure 2).39 While this bill is not specific to health care, if passed, it would allow antitrust enforcers to more easily challenge health care mergers and anticompetitive conduct.

These actions demonstrate a renewed commitment to regulating anticompetitive health care consolidation, but federal regulators cannot oppose mergers that go unnoticed. Federal law only requires merging entities to report transactions valued above the Hart-Scott-Rodino (HSR) filing threshold to federal antitrust enforcers before consummating the merger.40 For 2021, that threshold is $92 million, leaving nearly all acquisitions of physician groups and even some smaller hospitals unmonitored by federal antitrust agencies.41 The HSR threshold is set by statute and adjusted annually based on the gross national product. While changing the way the HSR threshold is set would require an act of Congress, many states already require pre-merger notification of a broader set of health care transactions.

Figure 2. Key provisions of the competition and antitrust law enforcement reform act (s. 225, the Klobuchar bill)

Revises standard for merger review. Current federal law, the Clayton Act and Section 5 of the FTC Act, prohibits any acquisition that “substantially lessens” competition, or “tends to create a monopoly.” The Klobuchar bill would strengthen this law by prohibiting mergers that “create an appreciable risk of materially lessening competition, or to tend to create a monopoly or a monopsony.”

Shifts burden of proof to merging parties. Current law requires the government to prove that a merger is likely to reduce competition. The Klobuchar bill would shift the burden to the merging parties to demonstrate that a merger will not “create an appreciable risk of materially lessening competition” in certain circumstances, including if the merger would lead to a significant increase in market concentration in any relevant market or if the merger would result in one entity with more than 50% market share.

Prohibits “exclusionary conduct.” The bill provides that any “exclusionary conduct” by an entity with 50% market share, or that “otherwise has significant market power,” violates federal antitrust laws unless the conduct creates “distinct procompetitive benefits” or falls into other narrow exceptions.

Provides additional funding to the FTC and DOJ.

States’ Critical Role in Merger Review

The limitations in federal oversight mean that states must actively review health care mergers. Many state legislatures have passed laws to fill gaps in federal oversight. Specifically, 30 states and the District of Columbia currently require most hospitals to report to a state agency before merging, and three states — Connecticut, Massachusetts, and Washington — require notification of most physician practice mergers.42 As a result, state agencies may be able to monitor and restrict “stealth consolidation,” in which consecutive small transactions that may not raise antitrust concerns individually may significantly impact market power collectively over time.43 Moreover, while federal regulators must go to court to block a transaction,44 14 states have approval requirements that allow regulators to block transactions administratively.40 Many of those states can also impose conditions on mergers without going to court or undergoing a lengthy negotiation process.

States have enhanced local knowledge and, in many cases, authority that is complementary to the FTC and DOJ. However, many state agencies are underfunded, so collaboration with federal antitrust authorities can provide valuable resources and expertise for state merger-review processes. Effective merger review requires cooperation between state and federal agencies to protect remaining competition in health care markets.

Enhanced Antitrust Enforcement of Market Conduct

While antitrust enforcement to protect and promote competition may be ideal, many markets are already so heavily consolidated that preventing future mergers is insufficient to limit supracompetitive price increases. The federal government is likely to increase attention to anticompetitive conduct, but states may be better able to moderate anticompetitive conduct in health care because of broader regulatory and, in some states, statutory authority.

Increased Federal Efforts to Limit Anticompetitive Conduct

The Biden administration has increased attention to mitigating the harms of consolidation. Multiple appointments include those of Tim Wu to the National Economic Council and Lina Khan as FTC Commissioner. In addition, President Biden’s appointment of Secretary of Health and Human Services Xavier Becerra, who oversaw a settlement in a groundbreaking antitrust lawsuit against Sutter Health alleging that its contracting practices violated California’s antitrust law, confirms the administration’s intention to extend this scrutiny to health care markets. Additionally, the Senate Judiciary Committee held a committee meeting on competition policy and health care consolidation,45 and the Klobuchar bill, if passed, would prohibit most “exclusionary conduct” by an entity with 50% market share.39 The congressional attention and administrative appointments demonstrate increased attention to the abuse of market power, but even with increased federal attention, state laws may enable states to more effectively regulate conduct in health care markets.

Regulation of Nonprofits by States and the Department of Justice

While the FTC reviews mergers of health care providers, it is prohibited from enforcing antitrust laws against nonprofit entities, including many hospitals and health systems, for anticompetitive conduct.46 As a result of this limitation on its authority, the FTC cannot use the knowledge gained from its merger review to challenge post-merger anticompetitive behavior of a merged entity. Consequently, according to Acting FTC Chair Rebecca Kelly Slaughter, “all of the healthcare industry expertise that the FTC has worked for decades to, and continues to, develop cannot be deployed alongside the DOJ and state enforcers to stop anticompetitive practices by roughly half of all hospitals nationwide.”47 States have helped bridge this gap in FTC authority and provided local expertise to the DOJ by bringing two major lawsuits against nonprofit entities alleging anticompetitive contracting practices — one against a dominant insurer, in United States v. Blue Cross Blue Shield of Michigan,48 and one against a dominant health system, in United States v. Charlotte-Mecklenburg Hospital Authority (a.k.a. Atrium Health).49

State Antitrust Statues: Broader than Federal Statutes

In addition to providing expertise into anticompetitive conduct, state attorneys general — unlike their federal counterparts — have the advantage of choosing whether to bring a case under state or federal antitrust statutes. In addition, many states have passed antitrust statutes that are broader than federal statutes. For instance, some allow more predatory pricing claims than federal antitrust laws, while others allow indirect purchasers to sue for damages.50-52 By being able to file suit under federal or state antitrust laws, state attorneys general have the freedom to choose the more favorable forum. For example, in lawsuits alleging similar contracting practices, California’s attorney general filed a lawsuit in state court against Sutter Health alleging violation of California’s Cartwright Act,53 whereas the North Carolina attorney general and the DOJ filed a lawsuit in federal court against Atrium Health alleging violation of the Sherman Act.49

State Bans on Specific Health Care Contracting Practices

State legislators have been more successful than Congress at passing laws prohibiting anticompetitive contracting practices between insurers and health care providers.54 Over a decade ago, the Massachusetts legislature banned the use of several contracting practices in health insurance contracts.55 In 2019, Congress failed to pass the Lower Health Care Costs Act, which would have prohibited use of specific contract terms, costing Americans an estimated $1 billion over 10 years.56 This calculation and increasing recognition that dominant health systems may exploit their market power to drive up prices may motivate other state legislatures to pass legislation banning these practices. Nonetheless, ERISA remains an impediment to applying these state efforts to self-funded plans, and congressional action is required to impose uniform restrictions on contracting practices for all health insurance plans.

Injecting Competition by Offering a Public Option

In addition to protecting markets through better merger review and oversight of anticompetitive conduct, lawmakers are also considering increasing competition in health care markets by creating a public option. A public option is a health insurance plan offered by a government agency that competes with private health insurance companies.57 By offering a public option, the government can drive down the cost of both premiums and health services, but only if it limits provider rates or other costs to apply competitive pressure.58

With the federal public option facing what has been called “the biggest health care fight since Obamacare,”59 and without the votes in the Senate to overcome a filibuster, states may find it easier to create a public option plan than the federal government would. While the federal government has fewer legal constraints than state governments face when designing a public option, such as budget neutrality and waiver requirements, states have taken the lead in designing and prototyping public option plans.58 Specifically, Washington started selling a public option plan on its Health Benefit Exchange on January 1, 2021,60 and other states, including Colorado61 and Nevada,62 appear poised to follow Washington’s example.

While the initial premiums for Washington’s public option plan were higher than its proponents hoped,63 Washington may now experiment with lower provider rate caps or additional cost controls.58 The states that choose to offer public option plans may help refine provider caps and network requirements to ensure that public option plans can control costs and provide adequate networks. Lawmakers in the forerunner states recognize that they cannot wait for the federal government to implement new laws and policies and are forging ahead with public options designed to fulfill state goals like covering the remaining uninsured.

Need for State and Federal Government Collaboration to Manage Market Power

Decades of ineffective antitrust enforcement have left many US health care markets with insufficient competition to control prices. Hospitals have merged to form dominant health systems that can exert market power and charge anticompetitive prices that reduce wage growth and burden the economy. Collectively, recent actions by the executive and legislative branches of the federal government demonstrate increased attention to the harms of consolidation and market power, especially in health care, but the feasibility of meaningful change at the federal level remains uncertain, and any changes that do occur will take time to pass and implement. Meanwhile, the consolidation of health care providers into large health systems continues to accelerate,64 and in many geographic markets, competition has eroded to the point where market forces cannot control prices.

States have distinct advantages in addressing the potential harms arising from consolidation in health care markets. While federal efforts are needed to support state transparency efforts, states with functioning APCDs likely have a detailed understanding of existing price disparities due to market power and distortions in negotiating leverage. States with pre-merger notification requirements that are broader than the federal requirements may be better able to track and respond to successive transactions. When reviewing mergers, state policymakers can be more responsive to market conditions, may have deeper knowledge than federal regulators about the local markets and dynamics, and can review and impose conditions on mergers that reflect cost and other priorities, like health care access and job creation. Furthermore, state antitrust enforcers may be able to discover and challenge anticompetitive conduct more easily than their federal counterparts can. Finally, state-level reforms, like a public option, can be tailored to work best for each state. Nonetheless, many state agencies remain resource-constrained and lack the deep expertise in reviewing health care markets that federal agencies have.

Effective oversight of market conduct requires collaboration between state and federal policymakers. The status quo is unsustainable, and elected officials must be willing to enact multiple, reinforcing policies to reinvigorate markets, stimulate competition, and control prices. A comprehensive and multifaceted approach is critical to address health care consolidation and ensure Americans continue to have access to affordable health care. The next two briefs in this series will provide more detail on how state officials can (1) oversee health care consolidation and (2) mitigate the impact of past consolidation.


NOTES

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2 Arnold D, Whaley CM. Who pays for health care costs? the effects of health care prices on wages. RAND. https://www.rand.org/pubs/working_papers/WRA621-2.html. Published July 28, 2020. Accessed March 19, 2021.
3 Burtless G, Milusheva S. Effects of employer-sponsored health insurance costs on Social Security taxable wages. Soc Secur Bull. 2013;73(1). https://www.ssa.gov/policy/docs/ssb/v73n1/v73n1p83.html. Accessed May 28, 2021.
4 Nyce SA, Schieber SJ. How Rising Health Costs Slow Wage Growth. Progressive Policy Institute. Published March 2012. Accessed June 14, 2021.
5 Monaco RM, Phelps JH. Health care prices, the federal budget, and economic growth. Health Aff (Millwood). 1995;14(2):248-259. doi:10.1377/hlthaff.14.2.248.
6 For an alternative viewpoint, see: Pauly MV. Should we be worried about high real medical spending growth in the United States? Health Aff (Millwood). 2003;22(suppl 1):W3-15. doi:10.1377/hlthaff.W3.15.
7 Kurani N, Cox C. What drives health spending in the U.S. compared to other countries. Peterson-KFF Health System Tracker. https://www.healthsystemtracker.org/brief/what-drives-health-spending-in-the-u-s-compared-to-other-countries/. Published September 25, 2020. Accessed May 28, 2021.
8 Austin DR, Baker LC. Less physician practice competition is associated with higher prices paid for common procedures. Health Aff (Millwood). 2015;34(10):1753-1760. doi:10.1377/hlthaff.2015.0412.
9 Capps C, Dranove D. Hospital consolidation and negotiated PPO prices. Health Aff (Millwood). 2004;23(2):175-181. doi:10.1377/hlthaff.23.2.175.
10 Cooper Z, Craig SV, Gaynor M, Van Reenen J. The price ain’t right? hospital prices and health spending on the privately insured. Q J Econ. 2019;134(1):51-107. doi:10.1093/qje/qjy020.
11 Dafny L, Ho K, Lee RS. The price effects of cross-market mergers: theory and evidence from the hospital industry. RAND J Econ. 2019;50(2):286-325. doi:10.1111/1756-2171.12270.
12 Medpac. Report to the Congress: Medicare Payment Policy. http://medpac.gov/docs/default-source/reports/mar20_entirereport_sec.pdf. Published March 2020. Accessed June 14, 2021.
13 King J, Chang S, Montague A, et al. Preventing Anticompetitive Healthcare Consolidation: Lessons from Five States. The Source on Healthcare Price and Competition. https://sourceonhealthcare.org/profile/preventing-anticompetitive-healthcare-consolidation-lessons-from-five-states/. Published June 2020. Accessed June 14, 2021.
14 Gustafsson L, Blumenthal D. The pandemic will fuel consolidation in U.S. health care. Harv Bus Rev. https://hbr.org/2021/03/the-pandemic-will-fuel-consolidation-in-u-s-health-care. Published March 9, 2021. Accessed May 28, 2021.
15 Barnett ML, Mehrotra A, Landon BE. Covid-19 and the upcoming financial crisis in health care. NEJM Catal Innov Care Deliv. https://catalyst.nejm.org/doi/full/10.1056/CAT.20.0153. Published April 29, 2020. Accessed May 28, 2021.
16 See, e.g., Colorado Department of Health Care Policy and Financing. Colorado Hospital Cost Shift Analysis. https://www.colorado.gov/pacific/sites/default/files/Colorado%20Hospital%20Cost%20Shift%20Analysis%20Report-January%202020.pdf. Published January 2020. Accessed May 28, 2021.
17 29 USC § 1144(a).
18 Gobeille v Liberty Mutual Ins. Co., 577 US 312 (2016).
19 Hospital Price Transparency Rule, 45 CFR § 180.40 to 180.60 (2019).
20 Transparency in Coverage Rule, 45 CFR § 156.220 (2019).
21 Barrington A, Boschert J, Gaal M, Lewis DC. Hospital Price Transparency: March 2021 Update. Milliman. https://us.milliman.com/-/media/milliman/pdfs/2021-articles/4-5-21-hospital_price_transparency.ashx. Published March 2021. Accessed June 14, 2021.
22 Henderson M, Morgane C. Mouslim. Low compliance from big hospitals on CMS’s hospital price transparency rule. Health Affairs Blog. https://www.healthaffairs.org/do/10.1377/hblog20210311.899634/full/. Published March 16, 2021. Accessed May 28, 2021.
23 McGinty T, Mathews AW, Evans M. Hospitals hide pricing data from search results. Wall Street Journal. https://www.wsj.com/articles/hospitals-hide-pricing-data-from-search-results-11616405402. Published March 22, 2021. Accessed May 28, 2021.
24 Consolidated Appropriations Act, 2021, HR 133; Division BB – Private Health Insurance and Public Health Provisions, 117th Cong (2021).
25 Dafny L. Estimation and identification of merger effects: an application to hospital mergers. J Law Econ. 2009;52(3):523-550.
26 Gaynor M, Ho K, Town RJ. The industrial organization of health-care markets. J Econ Lit. 2015;53(2):235-284. doi:10.1257/jel.53.2.235.
27 Haas-Wilson D, Garmon C. Hospital mergers and competitive effects: two retrospective analyses. Int J Econ Bus. 2011;18:17-32. doi:10.1080/13571516.2011.542952.
28 Tenn S. The price effects of hospital mergers: a case study of the Sutter–Summit transaction. Int J Econ Bus. 2011;18(1):65-82. doi:10.1080/13571516.2011.542956.
29 Gaynor M, Town RJ. The Impact of Hospital Consolidation. Robert Wood Johnson Foundation. https://www.rwjf.org/en/library/research/2012/06/the-impact-of-hospital-consolidation.html. Published June 1, 2012. Accessed May 28, 2021.
30 Lewis MS, Pflum KE. Diagnosing hospital system bargaining power in managed care networks. Am Econ J Econ Policy. 2015;7(1):243-274. doi:10.1257/pol.20130009.
31 Baker LC, Bundorf MK, Kessler DP. Does multispecialty practice enhance physician market power? Am J Health Econ. 2020;6(3):324-347. doi:10.1086/708942.
32 Health Care Division, Bureau of Competition, Federal Trade Commission. Overview of FTC Actions in Health Care Services and Products. https://www.ftc.gov/system/files/attachments/competition-policy-guidance/overview_health_care_june_2019.pdf. Published June 2019. Accessed June 14, 2021.
33 In the Matter of Renown Health, FTC file No. 111-0101 (2012).
34 Saint Alphonsus Med. Ctr.-Nampa Inc. v St. Luke’s Health Care Sys., Ltd. 778 F3d 775 (9th Cir 2015).
35 Physicians Advocacy Institute. Updated Physician Practice Acquisition Study: National and Regional Changes in Physician Employment 2012-2018. http://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/021919-Avalere-PAI-Physician-Employment-Trends-Study-2018-Update.pdf?ver=2019-02-19-162735-117. Presented February 2019. Accessed May 28, 2021.
36 US Department of Justice, Federal Trade Commission. Vertical Merger Guidelines. https://www.ftc.gov/system/files/documents/reports/us-department-justice-federal-trade-commission-vertical-merger-guidelines/vertical_merger_guidelines_6-30-20.pdf. Published June 30, 2020. Accessed June 14, 2021.
37 FTC to study the impact of physician group and healthcare facility mergers. Federal Trade Commission. https://www.ftc.gov/news-events/press-releases/2021/01/ftc-study-impact-physician-group-healthcare-facility-mergers. Published January 14, 2021. Accessed May 28, 2021.
38 Senator Klobuchar introduces sweeping bill to promote competition and improve antitrust enforcement. Offices of U.S. Senator Amy Klobuchar. https://www.klobuchar.senate.gov/public/index.cfm/2021/2/senator-klobuchar-introduces-sweeping-bill-to-promote-competition-and-improve-antitrust-enforcement. Published February 4, 2021. Accessed May 28, 2021.
39 Competition and Antitrust Law Enforcement Reform Act of 2021, S 225, 117th Cong (2021).
40 15 USC § 18a.
41 HSR threshold adjustments and reportability for 2021. Federal Trade Commission. https://www.ftc.gov/news-events/blogs/competition-matters/2021/02/hsr-threshold-adjustments-reportability-2021. Published February 17, 2021. Accessed May 28, 2021.
42 Market consolidation. The Source on Healthcare Price and Competition. Accessed May 28, 2021. https://sourceonhealthcare.org/market-consolidation/. This report shows that 16 states (Arizona, California, Georgia, Idaho, Louisiana, Maryland, North Dakota, Nebraska, New Hampshire, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Vermont, and Wisconsin) require pre-transaction notification from nonprofit hospitals to the attorney general, and six states (Colorado, Connecticut, Hawaii, Massachusetts, Rhode Island, and Washington) require pre-merger notification from all hospitals to the attorney general. Eight states (Delaware, Illinois, Kentucky, Maine, Michigan, Mississippi, New Jersey, and West Virginia) require notice to another state agency, such as in the form of a Certificate of Need.
43 Wollmann TG. Stealth consolidation: evidence from an amendment to the Hart-Scott-Rodino Act. Am Econ Rev Insights. 2019;1(1):77-94. doi:10.1257/aeri.20180137.
44 Premerger notification program. Federal Trade Commission. https://www.ftc.gov/enforcement/premerger-notification-program. Published July 23, 2013. Accessed May 28, 2021.
45 Antitrust applied: hospital consolidation concerns and solutions. Hearing before the US Senate Committee on the Judiciary, Subcommittee on Competition Policy, Antitrust, and Consumer Rights. https://www.judiciary.senate.gov/meetings/antitrust-applied-hospital-consolidation-concerns-and-solutions. May 19, 2021. Accessed May 28, 2021.
46 Community Blood Bank of the Kansas City Area, Inc. v. F.T.C., 405 F2d 1011, 1022 (8th Cir 1969), holding that “the Commission lacks jurisdiction over nonprofit corporations without shares of capital, which are organized for, and actually engaged in business for only charitable purposes.”
47 Federal Trade Commission. Remarks of Commissioner Rebecca Kelly Slaughter to the Center for American Progress. https://www.ftc.gov/system/files/documents/public_statements/1520570/slaughter_-_hospital_speech_5-14-19.pdf. Presented May 14, 2019. Accessed June 14, 2021.
48 United States v. Blue Cross Blue Shield of Michigan, 665 F Supp 2d 809 (ED Mich 2011).
49 United States v. Charlotte-Mecklenburg Hospital Authority, 720 F Supp 3d 248 (WD NC 2017).
50 Antitrust federalism, preemption, and judge-made law. Harv Law Rev. 2020;133:2557.
51 Hovenkamp H. State antitrust in the federal scheme. Indiana Rev. 1983;58:375.
52 Flexner DL, Racanelli MA. State and federal antitrust enforcement in the United States: collision or harmony? Conn J Int’l. 1994;9:501-511.
53 People of the State of California ex rel Xavier Becerra v Sutter Health, CGC 18-565398 (Cal Sup Ct 2019).
54 Gudiksen KL, Montague AD, King JS, Gu AY, Fulton BD, Greaney TL. Preventing Anticompetitive Contracting Practices in Healthcare Markets. The Source on Healthcare Price and Competition. https://2zele1bn0sl2i91io41niae1-wpengine.netdna-ssl.com/wp-content/uploads/2020/09/Preventing-Anticompetitive-Contracting-Practices-in-Healthcare-Markets-FINAL.pdf. Published September 2020. Accessed June 14, 2021.
55 Mass Gen Laws 176O, § 9A.
56 Congressional Budget Office. Cost Estimate, S 1895, Lower Health Care Costs Act. https://www.cbo.gov/system/files/2019-07/s1895_0.pdf. Published July 16, 2019. Accessed June 14, 2021.
57 Sparer M. Redefining the “public option”: lessons from Washington State and New Mexico. Milbank Q. 2020;98:260. doi:10.1111/1468-0009.12454.
58 King JS, Gudiksen K, Fuse Brown EC. Harvard Journal on Legislation v. 59 (2022, Forthcoming).
59 Jones S. The fight over the public option is already here. N Y Mag. https://nymag.com/intelligencer/2021/03/the-fight-over-the-public-option-is-already-here.html. Published March 17, 2021. Accessed May 28, 2021.
60 Washington State Health Care Authority. Cascade Care. https://www.hca.wa.gov/about-hca/cascade-care. Published 2021. Accessed May 28, 2021.
61 HB 21-1232, 73rd Gen Assemb (Colo 2021).
62 SB 490, 81st (2021) Reg Sess (Nev 2021).
63 Hansard S. First government-run health plan portends rocky start for Biden. Bloomberg Law. https://news.bloomberglaw.com/health-law-and-business/public-option-health-plan-in-washington-state-a-caution-to-biden. Published November 18, 2020. Accessed May 28, 2021.
64 Herschman GW, Patel AD, Kocot L, Torres HM. Insight: health-care consolidation strong in 2019—expect even stronger 2020. Bloomberg Law. https://news.bloomberglaw.com/health-law-and-business/insight-health-care-consolidation-strong-in-2019-expect-even-stronger-2020. Published January 27, 2020. Accessed May 28, 2021.


Citation:
Gudiksen KL, Montague AD, King JS. Who Can Rein in Health Care Prices? State and Federal Efforts to Address Health Care Provider Consolidation. The Milbank Memorial Fund. Published June 24, 2021.



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