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House Subcommittee Considers Obamacare's Impact on Competition

 |  By John Commins  
   September 20, 2013

Witnesses representing payers and providers agree that healthcare industry consolidation predates the Patient Protection and Affordable Care Act by at least two decades, but blame each other for rising healthcare costs.

A U.S. House Subcommittee heard a range of perspectives on Thursday from a panel of lobbyists and policy wonks who were asked if the Patient Protection and Affordable Care Act is hurting competition in the healthcare marketplace. The consensus from the panel was maybe, maybe not, and we're not really sure yet.

There was a general agreement from the witnesses that healthcare industry consolidation predates the PPACA by at least two decades. The questions then became whether or not "Obamacare" was accelerating that consolidation and whether that consolidation is driving up healthcare costs.

For the most part, the testimony from lobbyists for the American Hospital Association and America's Health Insurance Plans, covered little new ground but reaffirmed each side's contention that the other was to blame for rising healthcare costs.

"Officials at the antitrust agencies have stated repeatedly that they have been and will remain focused on competition in the healthcare sector. Transactions that these authorities deem to be anticompetitive, in fact, have been challenged," AHA lobbyist Sharis A. Pozen told the Subcommittee on Regulatory Reform, Commercial and Antitrust Law.

"However, despite these activities hospitals' price growth is at a historic low and is not the main driver of higher health insurance premiums," Pozen said.

"The growth in health insurance premiums from 2010-2011 was more than double that of the underlying health costs, including the costs of hospital services. The antitrust authorities should continue to pay as much attention to the health insurance industry as it does to the hospital field and there is no question that the health insurance industry is highly concentrated and is now acquiring hospitals and providers in an effort to replicate the continuum that hospitals are now providing."

AHIP lobbyist Joseph Miller cited several studies showing that hospital consolidations mean higher costs for consumers. He called on the federal government to continue to review hospital mergers that have the potential to harm consumers by consolidating market power and diminishing competition.

"Through the ACA implementation process, AHIP has emphasized that affordability must be a central goal in health reform and that addressing provider market issues is an important part of achieving this goal," Miller said. "Promoting competition and halting harmful consolidation in provider markets are critically important steps toward increasing affordability."

The back-and-forth between the representatives of AHIP and AHA prompted another panelist, Duke University Law professor Barak D. Richman, to note that "both providers and insurers alike seek to exploit different loopholes in the reimbursement system."

"What's funny about the conversation you hear out of AHA and AHIP is sometimes you're hearing both sides of what is really the same coin," Richman told the subcommittee during the question-and-answer period.

"The insurers often lament consolidation among the providers and use that as a justification to consolidate themselves. Providers lament big insurance companies and use that as a justification for their own consolidation. This kabuki dance has gotten us to a large degree in this mess we are in."

Richmond also noted that the market model for providers is "one designed to capture a market and extract maximum dollars from payers."

"There is an alternative business model which really has not been pursued a whole lot among providers and that is to pursue efficiency or value-based models," he said. "It is one reason why business education is so critical to encourage both providers and administrators to really pursue. It involves a very different kind of economic model."

The subcommittee also heard from Thomas P. Miller, resident fellow at the American Enterprise Institute; Thomas L. Greaney, at law professor at St. Louis University School of Law; and consumer rights lobbyist David A. Balto, a former federal antitrust lawyer.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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