Obamacare has Federal Trade Commissioner John Thomas Rosch worried — about his own power to dictate how healthcare markets should function. The New York Times reports the unelected Rosch, a Republican appointed by the previous president, is upset that Barack Obama and his appointees want to encourage physician “alliances” that Rosch feels should never exist:
[Rosch] said that without “vigorous antitrust enforcement,” the new alliances of health care providers could reduce competition and increase costs to consumers.
Mr. Rosch set forth his concerns in private letters to the White House and the federal Medicare agency. The letters, obtained by The New York Times, reveal a struggle between the Justice Department and the commission over who should police the market.
The internal debate creates uncertainty about antitrust enforcement policy at a moment when scores of hospitals, clinics and doctor groups are eager to band together and test innovative ways of delivering care. That uncertainty threatens to slow collaboration by health care providers. President Obama and other proponents say such cooperation could cut costs and improve care for millions of people.
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The new health care law encourages joint ventures, known as accountable care organizations, in which doctors and hospitals take collective responsibility for the care of Medicare beneficiaries.
“The creation and operation of accountable care organizations potentially conflict with the antitrust laws,” Mr. Rosch wrote. “The Supreme Court long ago prohibited competing providers from jointly contracting to provide their services, except in specified circumstances.”
Mr. Rosch, an antitrust lawyer for more than 35 years, said he was speaking only for himself. But his views on antitrust policy in the health care industry generally reflect the views of the commission’s nonpartisan professional staff, based on numerous advisory opinions issued to health care providers over the last 15 years.
First off, Mr. Rosch overstates the role of the Supreme Court here. In 1982, four justices issued an opinion in Arizona v. Maricopa County Medical Society that held a physician group could not establish a maximum fee schedule (that is, a ceiling on prices) consistent with the Sherman Act’s prohibition of “restraints of trade.” The Court did little more than say physicians are no different than any other group of “independent competing entrepreneurs.”
About 15 years later, the FTC and DOJ got together on their own — without the consent of Congress — and issued a series of “statements” about what type of joint ventures they would allow. This act had nothing to do with the Supreme Court’s earlier decision. To the contrary, rather than simply apply the law as written, the FTC-DOJ joint venture established an entire legislative regime that dictated specific business models that would escape antitrust challenge. Of course, the FTC and DOJ weren’t bound by any of this, and several dozen physician groups proceeded to get sued, primarily by the FTC, when they tried to comply with what they thought the statements allowed.
The entire thing was a bait-and-switch designed by the antitrust agencies to drum up business. There’s now an entire sub-industry for healthcare antitrust lawyers who do little more then steer clients into signing one-sided “consent” orders with the FTC and DOJ. Rosch and his colleagues took the thin veneer of Maricopa and built a huge, expensive regulatory regime out of it.
Now we have a second problem. In the late 2000s the FTC, largely spearheaded by Rosch, has moved to declare full-fledged independence from the rest of the US government. The FTC already does not obey any provision of the Constitution. Rosch himself violated just about every clause of the Bill of Rights when he orchestrated an illegal attack against a nonprofit hospital in Virginia, an act that by any objective definition constitutes tyranny. And despite his claims that he’s only about protecting free markets and competition, the New York Times exposed him as the price-control worshipping socialist that he is:
Mr. Rosch said the government must set clear goals for Medicare savings and measure the performance of accountable care organizations with respect to both Medicare and the private insurance market.
“Otherwise,” Mr. Rosch said, “there will be a real risk that the savings accruing to Medicare will just come at the expense of private insurers.” In other words, he suggested, a network of doctors and hospitals could offset a loss of Medicare revenue by charging more to privately insured patients.
In recent years, the Federal Trade Commission has taken the lead in analyzing joint ventures by health care providers. Citing this experience, Mr. Rosch said his agency should also be responsible for policing compliance with the antitrust laws by accountable care organizations. This approach, he said, would “avoid time-consuming turf battles” with the Justice Department.
Rosch will protect insurance company profits — and Medicare price controls — at all costs, even if it means allowing insurers to violate existing contracts with physicians, as the FTC required in a case several years ago. Rosch’s views reflect the FTC’s longstanding hostility to physicians. Thomas Leary, one of Rosch’s predecessors, said his goal was to prevent any act by physicians that might improve their “bargaining position” with insurance companies. Former FTC Chairman Robert Pitofsky once denounced physicians as greedy, anti-consumer malcontents who only wanted higher prices so they could buy a better luxury car and send their kids to top-flight colleges. (A bit of projection there, eh, Bob?)
As for Rosch’s warning about “turf battles,” the only reason for such battles is that Rosch himself has initiated them. The FTC has done nothing but agitate since Rosch joined the Commission. A few years ago, the FTC refused to join a DOJ report on how to enforce Section of the Sherman Act. The FTC publicly declared that any company that followed the DOJ’s views would still be subject to FTC retaliation. In several cases, the DOJ refused to represent the FTC before appellate courts because the agency engaged in aggressive, illegal behavior that was ultimately repudiated by the judiciary.
The best way to prevent a turf battle now is for Obama to fire Rosch for misconduct. And that’s just for starters. There’s also the matter of Chairman Jon Leibowitz, who remains in office nearly five months after his term expired.
But changing personnel won’t solve anything in the long term. The FTC must be abolished. And no person who claims to support constitutional government can continue to argue otherwise.
(HT: Paul Hsieh, M.D.)
Postscript: An attorney who is currently doing combat with the FTC reminded me of a speech Rosch recently gave that was titled — by his office — “So I Serve as Both a Prosecutor and a Judge – What’s the Big Deal?“