Physician Group Asks for Updates to Federal Health Care Antitrust Enforcement

In a response to a Department of Justice (DOJ) and Federal Trade Commission joint request for information on merger enforcement policy, the American Medical Association (AMA) “asked the agencies to develop a policy that protects against mergers that create or augment health insurer buyer power in physician markets.”

The AMA’s letter points out that health insurer markets are mostly highly concentrated and therefore have “market power in both the markets where they sell health insurance and where they purchase physician services.” Health insurers typically justify mergers by arguing that increasing their size will enable them to negotiate lower provider charges. They likewise claim that those savings will be passed on to consumers. However, when looking at past actions, insurers instead pocket their negotiated savings, leaving consumers to pay higher prices and physicians to negotiate contracts under noncompetitive conditions.

As stated in a recent AMA National Advocacy Update, “The AMA’s letter asks that the Agencies review health insurer mergers not just for their competitive effects in consumer markets for health insurance, but also for their so-called ‘monopsony’ or buyer effects in the markets where health insurers buy physician services. Thus far, antitrust enforcement to protect physicians from health insurer mergers raising monopsony concerns has been largely (and incorrectly) absent. AMA’s letter says it’s time for the Agencies to strengthen merger enforcement by bringing monopsony challenges to health insurer mergers. As grounds for encouragement, AMA points to DOJ’s success, with the amicus support of AMA, challenging the Anthem/Cigna merger in 2017, partly based on buyer power/monopsony concerns. Also there has recently emerged substantial antitrust scholarship calling for antitrust enforcement to protect labor markets. This new scholarship provides a powerful foundation for federal antitrust enforcement protecting physicians from health insurer’s acquiring monopsony power in mergers.”

To read the AMA letter, see here: Letter