Improving Value

Antitrust Laws

Competition in healthcare, while increasingly rare, helps keep prices in check, encourages the delivery of high-quality products and services and promotes consumer choice. Antitrust laws aim to preserve the benefits of competition in healthcare markets by prohibiting certain anticompetitive behaviors.

Federal antitrust laws prohibit three categories of conduct that undermine competition:

  • agreements by two or more businesses not to compete, or to limit competition;
  • efforts by one or more companies to undercut competition by others in order to secure a monopoly; and
  • mergers (or acquisitions of business assets) that would significantly reduce competition.

Each of these categories has specific requirements and limitations as the law has been interpreted by the courts. These laws can be enforced at the federal level, by the Department of Justice and the Federal Trade Commission, and also by a state’s attorney general. Most states also have their own versions of antitrust law, enforced by the state attorney general.

Previous studies have found that antitrust laws are underenforced.1For a variety of reasons, many mergers and acquisitions with anti-competitive effects are allowed to move forward, forcing regulators to attempt to change the behavior of the entities once they have consolidated.2 Strategies include strengthening requirements for nonprofit healthcare providers (as a condition of tax exemption) and “any willing insurer” mandatory insurance contracting, among other remedies.

 

Notes

1. Scott Morton, Fiona, "Modern U.S. Antitrust Theory and Evidence Amid Rising Concerns of Market Power and Its Effects," Washington Center for Equitable Growth (May 29, 2019). 

2. O'Hanlon, Claire E., "What Can State Regulators and Lawmakers Do When Federal Antitrust Enforcement Fails to Prevent Health Care Consolidation," Health Affairs Blog (March 26, 2019). 

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