Bill Exempting Ohio Doctors from Anti-Trust Laws Could Raise Health Care Costs by $3.3 Billion, Study Warns

2/12/2002

From: Randy Clerihue of the Health Insurance Association of America, 202-824-1787; e-mail: rclerihue@hiaa.org

WASHINGTON, Feb. 12 -- The Ohio legislature is considering a bill that would raise the state's total health care costs between $957 million and $3.3 billion a year, according to a new study. The bill, which would exempt Ohio doctors and health care professionals from anti-trust laws, also would raise the cost of health insurance premiums paid by Ohioans between 4.1 percent and 11.9 percent a year.

Anti-trust laws were enacted in the United States to prevent collusion, price fixing and other anti-competitive activities. The Ohio Physician Antitrust Waiver Legislation (H.B. 325), sponsored by Rep. James Trakas, R-Independence, would drive up health costs by allowing doctors to negotiate for higher fees and for weaker cost-control efforts by health plans, the study says.

The study was conducted for the Health Insurance Association of America by Monica G. Noether, Ph.D., former deputy assistant director and staff economist for the Federal Trade Commission's antitrust office and currently head of the Competition Practice at Charles River Associates, an economic consulting firm based in Cambridge, Mass. According to Noether, who will present her findings in testimony today before the Ohio House of Representative's Insurance Committee, the cost estimates "represent a permanent increase in the level of expenditures beyond what is already predicted from normal inflation."

"Given the competitive nature of the private health insurance market, it is likely that increases in costs would have to be passed on to employers and, in turn, to their employees in the form of higher premiums," Noether says. "The legislation being considered in Ohio to grant antitrust immunity to physicians and other health care professionals could significantly increase consumer health costs."

The study attributes these higher costs to two main factors: an increase in the prices physicians and other health care providers would be able to negotiate, and a reduction in the ability of health plans to manage the utilization of services by their enrollees.

"H.B. 325 will likely take our health care system in the opposite direction we want it to go, resulting in fewer Ohioans able to afford quality health care and fewer employers able to provide health insurance for their employees," says Susan J. Montgomery, director of environment and health care policy for the Ohio Chamber of Commerce.

According to David J. Hansen, managing director of public policy services for the Ohio Manufacturers' Association, "Many employers-the source for most Americans' health insurance-would respond to higher costs in one of three ways: by offering less generous benefits, asking employees to pay more, or dropping coverage altogether."

------ About the author: Monica G. Noether is vice president and head of the Competition Practice at Charles River Associates, where she specializes in antitrust analysis. An expert in the economics of the health care industry, she has analyzed the competitive effects of mergers among hospitals, health plans, medical device and equipment makers, and physicians. She also has examined economic questions related to liability and damages in allegations of attempted monopolization and collusion by participants in the health care industry, in intellectual property disputes, and in fraud and abuse and kickback concerns. A former deputy assistant director at the Federal Trade Commission, which oversees antitrust enforcement, Dr. Noether has provided expert testimony in antitrust and reimbursement litigation and has presented her policy research to Congress and government agencies. Dr. Noether is a member of the American Bar Association, American Economic Association, and the National Health Lawyers Association. She is a referee for the American Economic Review, Journal of the American Medical Association, among other professional journals. She earned her doctorate in economics and master's degree in business administration from the University of Chicago's Graduate School of Business; her master's degree in economics from George Washington University; and her bachelor's degree from Wesleyan University.

Note: The study is available through the electronic version of this release on the HIAA Web site at www.hiaa.org