How Much of Health Care Antitrust Is Really Antitrust?

Abstract

This is article about antitrust exceptionalism. The antitrust laws are intended as laws of general applicability subject to any legislative exemptions and immunities. They are intended to be transubstantive, applying to all parties in all disputes in all sectors unless Congress has spoken to the contrary. The Supreme Court has gone so far as to refer to the antitrust laws as “the magna carta of the free enterprise system.”

It is increasingly hard to say with a straight face that these general principles apply when the antitrust laws have been applied to the health care sector. The health care sector has long maintained it is special and that application of traditional antitrust principles will produce bad results for society. Unlike most industries where variations of this argument have been quickly rejected by the courts since the earliest days of the Sherman Act, health care antitrust cases often come out differently.

While I do not argue that this is true in every case on all issues, I seek to document how this has come to pass in critical areas of antitrust law over the past four decades and distorted the law for health care providers and in some cases infected other areas of antitrust law as well. I suggest that the law in action differs greatly for this sector from the law on the books. This in turn raises important rule of law and policy questions as the health care sector continues to grow and evolve and deal with non-antitrust regulatory changes imposed by the Affordable Care Act. In short we have reached a fork in the road, and must confront either returning to the application of traditional antitrust principles in the health care sector or creating a more conscious and well thought out comprehensive scheme of sectoral regulation that clearly lays out when competition rules are secondary to other policy goals.

This essay proceeds as follows: Part I briefly outlines the general antitrust law framework that is supposed to apply to all market participants and the defenses and arguments that traditionally fail to persuade courts when faced with arguments that antitrust law produces bad results for society. Part II discusses how things often work differently in key health care antitrust issues where the lower courts have often conducted a guerilla campaign against accepted Supreme Court precedent. Part II specifically examines how lower courts have carved out their own peculiar body of health care antitrust law in four key areas, both creating outlier results from generally accepted antitrust policy and occasionally having these results influence or distort accepted antitrust doctrine more generally. Part III analyzes how similar arguments about antitrust exceptionalism are currently playing out against the background of continuing health care industry consolidation and the changes encouraged by the ACA. Part IV proposes the two paths going forward that we must choose between in order to have a consistent and meaningful law of health care antitrust rather than a series of ad hoc choices that deviate from general antitrust law and policy for the economy as a whole. Part V concludes.

Keywords: health care, antitrust, competition, regulation, interstate commerce, group boycotts, cartels, mergers, hospitals, peer review, ACA, affordable care organizations

JEL Classification: L1, L10, L11, L13, L18, D40, D42, K2, K21, K32, K41, K42, L12, L38, L4, L5