	Introduction and Statutory Background

The federal antitrust laws are directed at insuring that markets remain competitive, with the ultimate goal of securing consumer welfare. Antitrust is a means of governing market behavior that is, in essence, the flip side of market regulation accomplished via regulatory oversight. Any proposed health care reform scheme, therefore, is likely to contain latent conflicts with existing federal law. The consolidation or integration of health care entities, or other behavior by them (collusive and/or unilateral), even if prompted by or taken in furtherance of achieving some level of joint functioning deemed necessary to achieve the stated goals of health care legislation, could create cause for antitrust concern; and any of the named statutes might, depending on the circumstances of the behavior, be deemed applicable. [On the other hand,] providers also have a less legitimate incentive to engage in collective action that will increase their income." Two Minnesota bills to authorize collective bargaining by Minnesota health care cooperatives became law despite the Commission's negative assessment of their likely antitrust or consumer-related consequences, as did a New York measure to mandate or prohibit certain behavior by pharmacy benefit managers (PBMs). Nevertheless, as the discussion on pages 4-5 and accompanying notes indicate, the antitrust agencies are aware that certain activities which at first glance would appear to violate the antitrust laws may be saved by the fact that they are consumer-friendly as necessary to achieve either improvement in health care delivery or reduced cost and/or greater availability of health insurance, or all of them. , predatory) behavior, as opposed to, e.g. For example, in the 1996 version of their Statements of Antitrust Enforcement Policy in Health Care , the antitrust agencies noted that "[n]ew arrangements and variations on existing arrangements involving joint activity by health care providers continue to emerge to meet consumers', purchasers', and payers' desire for more efficient delivery of high quality health care services." And, pursuant to its Advisory Opinion policy, the Commission will consider a request for advice concerning "a course of action which the requesting party proposes to pursue," including such requests from health care providers; and make its responses publicly available after it has responded to the requester. Under this precedent, it appears that McCarran-Ferguson generally would not prohibit the application of the antitrust laws or the FTC Act to many of the activities of an organization or a group of private companies acting at the behest of the federal government; an organization, however, deemed "an agency or establishment of the United States Government" or a private entity operating with the specific approval or authorization of the federal government, would likely remain exempt from antitrust challenge for even activities that could not be characterized the "business of insurance." Discussion

		Applicability of the Antitrust Statutes; "State Action" Doctrine

The antitrust statutes are neither generally applicable to the federal government, nor, pursuant to the "state action" doctrine as articulated by the Supreme Court, to the states when they are acting as states (as opposed to acting as market participants in competition with private entities). Those holdings were interspersed with others that indicated that actions taken with a state's approval (pursuant to authorization but not compelled by a state) could likely still violate the federal antitrust laws. Moreover, although there may be antitrust concerns with government participation in the market as a competitor of private enterprise; or with the antitrust legality of actions taken by private entities, either in cooperation with, or at the behest of the federal government, we are not aware of any decision that directly addresses those issues. , what may decide at least some issues is the way in which Congress chooses to style whatever entity is designated as a competitor to existing health plans or health insurers. To the extent the legislative intent is to assure the antitrust immunization of either, it would seem prudent to correctly characterize and/or specifically immunize the entities deemed integral to the operation of a health care system.
The federal antitrust laws are directed at insuring that markets remain competitive, with the ultimate goal of securing consumer welfare. Antitrust is a means of governing market behavior that is, in essence, the flip side of market regulation accomplished via regulatory oversight. Accordingly, any scheme that affects the functioning of a segment of the market by prescribing or proscribing the behavior of entities that participate in that segment may impact and be impacted by the antitrust laws. That is no less a given in the health care arena than in any other. This report will set out the antitrust laws that might be of concern in efforts to reform health care markets, to indicate some of the ways in which those laws might be applicable to health care market participants, and to raise questions about the laws' applicability to market participants who act in cooperation with or at the behest of the federal government.
Restraint of trade, monopolization (as distinct from monopoly), predatory pricing, and price discrimination are among the behaviors considered unlawful under the antitrust laws; some joint activity by health care providers, therefore, could violate the antitrust statutes, especially if it impacts the prices to be paid for services—whether by purchasers (e.g., health plans, health insurers) or consumers. But the federal antitrust laws are not applicable to either the federal government or, pursuant to the antitrust "state action" doctrine, to the states qua states; there is not, therefore, likely to be much if any antitrust consequence to actions taken by federally or state-controlled or operated entities. On the other hand, applicability of the antitrust laws to entities established by either federal or state government, but not themselves designated as government bodies, however, is more nuanced: although there is ample case law prescribing the necessary prerequisites for "state-action" immunity to be conferred on private actors at the state level, there is practically none providing guidance concerning the extent to which (or whether), and the circumstances under which, the federal government can convey its antitrust immunity to private actors absent a specific grant of such immunity.
Although the antitrust laws themselves are very brief and lacking in detail, there are literally hundreds of pages of case-law annotation to provide the detail lacking in the statutes. Moreover, the Department of Justice and the Federal Trade Commission have jointly issued Statements of Antitrust Enforcement Policy in Health Care, a document that provides specifics about the agencies' likely treatment of nine forms of collaboration by health care providers. Further, the Federal Trade Commission has responded to several queries about health care entities' plans to achieve "clinical integration," indicating that it would not prosecute the models presented to it unless the assumptions noted by the advocates (efficiency-enhancing potential likely resulting in lowered health care costs and improved health care outcomes) did not occur.
The Commission has also asserted, however, in comments requested by state legislators on then-pending state legislation, that at least two of them (Mississippi's attempt to permit collective bargaining by health care cooperatives with health plans and New York's planned legislation to mandate/forbid certain activities by pharmacy benefit managers) would likely result in increased health care costs to consumers and/or decreased access to services.
The report will be updated as necessary as the specifics of health care reform legislation become more concrete and it becomes possible to discuss the general principles provided here in the context of specific legislative language.