The "Quality Health Care Coalition Act": can antitrust law improve patient care?

• Author: Berman, Micah

INTRODUCTION

In March 1999, Rep. Tom Campbell (R-CA) introduced H.R. 1304, the "Quality Health-Care Coalition Act."(1) At a press conference announcing the bill's introduction, Rep. Campbell--joined by a Democratic co-sponsor, Rep. John Conyers (D-MI)--explained that H.R. 1304 would attempt to "level the playing field between HMOs and health care providers and return medical [decisionmaking] from insurance administrators to individual physicians ... and their patients."(2) This legislation, he declared, is "the best way to let the market deal with the complaints so many health care professionals have raised with HMOs."(3)

The premise of H.R. 1304 is simple: Doctors should be allowed to engage in collective bargaining with health plans.(4) As discussed below, such collective action is generally barred at present by antitrust laws. By overriding these antitrust laws and providing health care providers with collective bargaining rights, the bill would, according to its sponsors, "level the playing field" between providers and HMOs.(5) As the American Medical Association (AMA)--a powerful proponent of the Campbell Bill--argues, collective bargaining powers would provide "a counterbalance to the growing power of insurers" who would otherwise "choose profits over patients."(6)

The premise of H.R. 1304 is not only simple; it is politically popular as well. After its introduction, the Campbell Bill quickly attracted support from across the political spectrum,(7) building a bipartisan list of co-sponsors that eventually included more than half the members of the House of Representatives.(8) Although it took more than fifteen months to bring the bill to the House floor, H.R. 1304 passed the House by an overwhelming 276-136 margin on June 30, 2000, when it finally came up for a vote.(9) Due to opposition from Senate Majority Leader Trent Lott and other Senate Republican leaders, the Campbell Bill remained bottled up in a Senate committee for the remainder of the 106th Congress.(10) However, the bill will certainly be reintroduced in the Senate during the upcoming term.(11) In short, H.R. 1304 stands a substantial chance of becoming law within the next couple of years.

Notwithstanding its chances of passage, the Campbell Bill also touches on some of the most fundamental questions currently facing the health care industry: Does the distribution of power between HMOs and physicians need to be "balanced"? If so, what is the best way to achieve the proper equilibrium? Who should be responsible for making final decisions about patient care? The Campbell Bill offers one set of answers to these questions, but other legislators and commentators offer competing recommendations and solutions. Whether or not H.R. 1304 becomes law, the debate over these questions will be central to American political dialogue for years to come. The decisions ultimately made in the political realm--through votes on H.R. 1304 and other related measures--will play a major role in defining the character of the U.S. health care system.

For these reasons--because H.R. 1304 stands a substantial chance of becoming law and because the questions it raises are fundamental to the future of American health care--it is important to analyze both the need for such legislation and the impact that H.R. 1304 would have upon the health care industry if enacted. In attempting to address these issues, this note will proceed in four Parts. First, Part I will set the scene by discussing the major criticisms that doctors have leveled at HMOs. Rep. Campbell has made doctor complaints about HMOs a major justification for his legislation. Part II will then explain the existing legal framework within which the debate takes place. H.R. 1304 straddles two significant legal disciplines, antitrust law and labor law, and this Part will review the application of these legal regimes to doctors and HMOs. Next, Part III will present the Campbell Bill itself and outline its major features. Finally, Part IV will analyze the possible effects that H.R. 1304 would have on the American health care system were it to become law. This last Part will examine questions of health care quality, bargaining power between HMOs and doctors, and cost.

1. DOCTOR COMPLAINTS ABOUT HMOS

   According to M. Kathleen Kenyon, general counsel to a physicians' association, "Physicians want two things: [t]o practice high quality medicine [and to] be successful financially."(12) As both statistical studies and a large number of anecdotal accounts have revealed, doctors increasingly feel that managed care organizations compromise their ability to achieve both of these goals.

   Recent survey data indicates that doctors believe managed care arrangements can reduce the quality of patient services.(13) For example, one 1996 survey found that a majority of doctors responding felt that cost-cutting measures imposed by managed care organizations--including limitations on patient choice of specialists, frequency of specialist visits, and length of hospital stays--were having a negative impact on the quality of patient care.(14) Survey data has also shown that physicians working under financial pressure to reduce the amount of care they provide are more likely to be professionally dissatisfied.(15)

   While taking its toll on professional satisfaction, managed care also appears to be exerting some downward pressure on physician incomes. The evidence on this point, however, is somewhat ambiguous. In 1994, average physician income dropped almost 4% from the previous year, the first time that nominal earnings went down since annual income statistics were first collected.(16) There is some indication that this drop is at least partially a result of the proliferation of managed care arrangements. A study linking managed care penetration to the decline in physician earnings found a "direct, although weak, association."(17) A more recent study, however, found a bifurcation: the effect of managed care has been to raise the incomes of primary care physicians, while putting downward pressures on the earnings of hospital-based specialists such as radiologists and pathologists.(18)

   Whether or not managed care is slowing the growth rate of physicians' incomes, it is worth noting that physician salaries have been rising for some time and are still relatively high compared with other professions. Between 1982 and 1994, median physician income rose by an average annual rate of 5.9% in nominal terms, and 2.1% when adjusted for inflation.(19) As of 1997, the mean average annual income for physicians and surgeons was $102,020.(20) while the median income was approximately $164,000.(21) As the American Coalition for Consumer Choice in Health Care--an alliance of health plans, business groups, and others that have joined forces to oppose H.R. 1304(22)--points out, the gap between the incomes of the average physician and the average American worker increased significantly from the mid-1980s to the mid-1990s.(23)

   While the statistical impact of managed care on physicians' incomes may be unclear, there have been many newspaper articles citing stories of doctors' frustrations with managed care organizations. For example, the New York Times reported the following story:

   In the last five years, Dr. [Anthony] Tonzola, a general surgeon, has seen the payment for mastectomies drop from $2,500 to $900. His personal income as gone down by two-thirds. But even beyond the financial consequences, he has seen his authority as a physician undercut by having to get on the phone every time he wants to make a medical judgment. "We no longer make decisions," he says. "The mood in the doctor's lounge is one of frustration, depression and anger."(24) Similarly, the Chicago Tribune profiled a local doctor's frustration with the medical policies of HMOs:

   HMOs dictate to us how to write our chart notes ... how much time you will spend with the patient ... how much insurance you'll carry and in what form, what specialists you will refer your patients to ... what drugs you can and can't use to treat a particular patient's disease, when patients have to leave the hospital, [and] how much you will be paid...."(25) Interviews with other doctors yielded similar statements printed in newspapers all over the country.(26)

   It is not surprising that doctors are upset with some of the practices of HMOs. For one, there is no question that most HMOs do exert control over the medical decisions of individual providers. As the associate general counsel to the Health Law Division of the AMA has noted, "Typically, a health plan will consult with a limited number of physicians drawn from outside of the plan to make its medical management decisions, but the managers of the health plans, who are often non-physicians, make the ultimate decisions about medical policy matters."(27) This has left doctors feeling disenchanted. As Grace Budrys summarizes, "Health sector organizations are becoming increasingly larger, more centralized, and hierarchical; the doctors who interact with them perceive themselves to be more and more divorced from the centers of power where decisions are made without their input and, for that matter, over their objections."(28)

   In addition, many doctors feel powerless to combat the market power of HMOs. More than ninety percent of the nation's physicians now have at least one contract with a managed care company, and eighty percent of recent medical school graduates are taking salaried positions with HMOs, clinics, or hospitals.(29) As greater numbers of people join managed care plans--179 million people belonged to HMOs or PPOs in 1997(30)--doctors are finding it harder and harder to avoid dealing with HMOs whose policies they dislike.(31)

   According to the AMA, the market power of HMOs can be measured indirectly by examining the contract terms doctors have been willing to accept. The CEO of the AMA, Dr. E. Ratcliffe Anderson, Jr., testified before Congress:

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