Friday, May 09, 2003

The FTC and me

Today, I am researching the 1998 congressional testimony of former FTC Chairman Robert Pitofsky. Pitofsky testified before the House Committee of the Judiciary in opposition to a bill that would give physicians an antitrust exemption so they could negotiate on-par with HMO's.

Reading through this testimony is like watching the Sunday morning talk shows--you just want to scream. According to Pitofsky:

The Commonwealth of Puerto Rico developed a program for providing health care coverage for the uninsured, known as the Reform, which currently covers about 30% of the population. In late 1996, the College of Physicians and Surgeons decided to take collective action in an attempt to raise their reimbursement level under the Reform, which would have raised the costs of health care to the citizens of Puerto Rico. The College ultimately called an eight-day strike, with physicians closing their offices and, in some cases, canceling elective surgery without notice. The potentially serious impact on patients of such anticompetitive behavior is obvious. The FTC and the Commonwealth of Puerto Rico jointly filed a complaint and obtained a consent agreement, under which the College and three large medical groups that contracted with the government paid $300,000 in restitution and agreed not to engage in future boycotts or unintegrated collective price fixing.

We believe that sound antitrust enforcement in situations like the one in Puerto Rico has been a major factor in permitting the emergence of alternative health care arrangements that today vie for the patronage of consumers, private employers, and government purchasers. Although health care markets have changed dramatically over time, and continue to evolve, collective action by health care providers to block innovation and interfere with cost-conscious purchasing remains a significant threat to consumers. The prospect of effective antitrust enforcement therefore continues to be a crucial, positive influence on the marketplace which encourages better responses to consumer demands for high-quality and cost-effective health care.
The FTC's antitrust enforcement is a positive influence on the marketplace if you believe that doctors have no right to barter a better deal with those who pay them.

Let's look at it this way: a group of doctors, professionals committed to medical excellence, decided to walk out of their jobs rather than carry on with the status quo. They exercised the principle that their work belongs to them and they have the right to control their financial destiny. For that crime, they were sacked with a $300,000 fine and ordered never to exercise their interest collectively again.

How does this help consumers? Myopically, it leads to artificially lower prices, but long term, it leads to the destruction of the healthcare profession. You can not consistently pay the members of a profession less than what they are worth and expect them to continue to work or for new talent to come into the profession. Antitrust enforcers continuously prattle on about how they enforce low prices and innovation in the name of consumers. By definition, they can not. Antitrust enforcers only have the power to use force, and force does not treat a single patient or develop a single cure.

Antitrust is nothing more than nonsense on stilts, but what amazes me is that some people say we must negotiate with the FTC and that we can't go in demanding up front that they respect the businessman's right to his work. I freely accuse the FTC of being ignorant and shortsighted, but maybe that judgment deserves to be directed toward other targets.

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