The Role of Competition in the Market for Health Care (Panel Transcript)

• Pages: 281-313

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CHAPTER XI

THE ROLE OF COMPETITION IN THE MARKET

FOR HEALTH CARE (PANEL TRANSCRIPT)

Moderator

Toby G. Singer

Jones Day, Washington, DC

Panelists

Judith Feder

Georgetown University, Washington, DC

Thomas Greaney

St. Louis University, St. Louis, MO

David Hyman

University of Illinois, Champaign, IL

G. Mike Mikan

UnitedHealth Group, Minnetonka, MN

MR. WILSON: Toby Singer is our moderator for the panel on health

care. Toby is a partner at Jones Day and one of the leading health care

antitrust lawyers in the c ountry. She has chaired our Section‘s H ealth

Care Committee and is currently chairing the Antitrust Practice Group of

the American Health Lawyers Association.

MS. SINGER: I will start by introducing the panelists. Our first

speaker is Mike Mikan. Mike is the Executive Vice President and Chief

Financial Officer of UnitedHealth Group. Mike comes to us with a

broad range of practical experience and expertise in health care issues.

He is responsible for mergers and acquisitions at United, as well as

overall responsibility for provider contracting. He has been with United

since 1998 and has a degree from the University of St. Thomas in St.

Paul, Minnesota.

After Mike, Tim Greaney will speak. Tim is the Chester A. Myers

Professor of Law and Director of the Center for Health Law Studies at

the St. Louis University School of Law. He is the co-author of the

nation‘s leading health la w casebook and is one of the country‘s l eading

experts in health care antitrust. Before he went into academia, Tim was

at the Department of Justice, where he was Assistant Chief of the section

that was responsible for supervising the health care antitrust work.

282 Competition as Public Policy

David Hyman will speak next. David is the Maria L. Corman

Professor of Law and Professor of Medicine at the University of Illinois.

He directs the Epstein Program in Health Law and Policy and focuses on

health care policy and law issues in his teaching and his writings. Like

Tim, he is an alumnus of the antitrust agencies. He was Special Counsel

at the Federal Trade Commission (FTC), where he was responsible in

large part for the report on health care competition issues that the FTC

and the Department of Justice (DOJ) issued in 2004.

Our final speaker is Judy Feder. Judy is Professor and Dean of the

Georgetown Public Policy Institute and was a Democratic nominee for

Congress in Virginia several years ago. Judy brings a lot of expertise to

health care policy issues. She is a widely published scholar and has been

with a number of organizations, including the Brookings Institution.

Judy is an elected member of the Institute of Medicine, the National

Academy of Public Administration, and the National Academy of Social

Insurance. She is a political scientist by training, and therefore brings a

somewhat different policy bent to this discussion than the other speakers.

MR. MIKAN: Good afternoon.

I woke up this morning and I was getting my daughter ready for

school, who‘s a first grader. She said, ―Dad, what are you going to do

today?‖ I said, ―I‘m going to go speak to a bunch of lawyers.‖ She said,

―Are they going to be nice to you?‖ I immediately was taken aback and I

was wondering: ―Why would my daughter say ‗are they going to be nice

to me?‘‖ I quickly realized she has witnessed s ome stress in our

household over the last three years, having taken over as the Chief

Financial Officer of UnitedHealth Group just after a large governance

scandal related to stock option matters. I‘ve had the opportunity to speak

in front of many attorneys -state attorneys general, the SEC, and a lot of

plaintiff‘s attorneys - and I guess she has probably seen some stress on

my face. So I thought it‘s probably a bona fide question.

But then, I also r eflected on this and quickly realized that this

probably is the friendliest crowd of attorneys I have spoken t o in the last

three years. So I concluded and said, ―Relatively speaking, I am sure

they will be nice.‖

I really do appreciate the opportunity to speak here this afternoon. In

February 2006, the Robert Wood Johnson Foundation issued a report

based on a study they did that demonstrated that the last wave of hospital

mergers increased prices by some 40 percent. Recently, the American

Hospital Association (AHA) wrote a letter to the Assistant Attorney

General for the Antitrust Division, Ms. Varney, indicating that health

plan mergers over the last ten years are the reason premiums are

Role of Competition in the Market for Health Care (Pa nel Transcript) 283

increasing at the alarming levels that they are today. Both sides argue

that most urban markets are highly concentrated.

There is no question there is a debate here and I have a very strong

opinion about it. But given all of the things that are happening right now

in the marketplace, I will focus my remarks on what I consider to be the

real debate in health care today.

The argument I‘m going to try to make this afternoon is quite simple.

We believe that competition drives innovation, and innovation will

ultimately be the critical element in successfully reforming and

modernizing the health care system. Private sector innovation

continually creates sustainable health care solutions that improve access,

quality, affordability, and simplicity in the health care system.

For just a moment, let us consider what health care might look like

without private sector competition. Our experience suggests that without

competition, there would be significantly higher costs than there are

today, as unbelievable as that might sound; limited transparency on costs

and quality of care; minimal patient choice or consumer participation; no

consumer-directed benefits; significantly less research; fewer new

treatments, drugs, and devices; and significantly less technology to

support operations and information connectivity than there is today.

Obviously, those are all debatable, but not entirely speculative.

The 40-plus-year history of Medicare is an instructive and concrete

example. Arguably, there have been only three fundamental innovations

on the benefit side of Medicare since Congress enacted it in 1965. Those

three innovations were the introduction of Medicare supplement plans,

Medicare Advantage plans, and the Part D drug benefit. And all three of

these innovations depended on partnership with the private sector to

execute.

Over the same time period, private enterprises like UnitedHealth

Group have continued to evolve and innovate, driven by the forces of

competition to deliver ever-increasing levels of value to the health care

system, our customers, and consumers. Let me give you a few examples

of competition-driven innovation from our enterprise.

Through our premium designation program, we identify as many as

100,000 physicians who consistently produce superior overall clinical

care for patients at up to 20 percent lower cost levels overall. We guide

people to these providers and reward these physicians and other health

care professionals and facilities for their effectiveness and efficiency.

Our premium networks integrate evidence-based care management

programs across 20 medical specialties and report on care quality and