TESTIMONY PRESENTED BY
SUSAN J. MONTGOMERY
DIRECTOR OF ENVIRONMENT AND HEALTH CARE POLICY
OHIO CHAMBER OF COMMERCE

ON HOUSE BILL 325
BEFORE THE HOUSE INSURANCE COMMITTEE
FEBRUARY 12, 2002

Mr. Chairman and members of the House Insurance Committee, I am Susan Montgomery, Director of Environment and Health Care Policy for the Ohio Chamber of Commerce.

The Ohio Chamber of Commerce is the largest and most diverse statewide business association in Ohio. We represent over 5,000 businesses. Our members are both small and large businesses, from every geographical area of our state and from every major industrial, commercial and service sector of the business community.

As our state’s leading business advocate, the Ohio Chamber aggressively champions free enterprise, economic competitiveness and growth for the benefit of all Ohioans. It is within the parameters of that mission, that I am here, today, to urge defeat of HB 325.

HB 325 would put the members of the Ohio General Assembly on record as supporting legislation that will exempt physicians and other health care providers from our country’s antitrust laws.

Like all of you, the members of the Ohio Chamber of Commerce are very concerned about our country’s health care system and its ability to continue to provide high quality, affordable health care for our citizens. Today’s managed care system isn’t perfect, I’m sure we would all agree. But it has reined in costs and, as most studies show, has maintained the same quality of care experienced under traditional indemnity plans. Nonetheless, today’s managed care system is a system that is forcing change – on the part of health care consumers, providers, insurers, the purchasers of health insurance and even government. As with any system in the thrust of change, its challenges often receive heightened attention and radical reforms are frequently advanced as necessary corrections. We believe HB 325 is just such a radical reform.

HB 325 would exempt physicians from our antitrust laws, allowing two or more health care providers to “jointly negotiate” with health plans over cost and reimbursement rates. The Ohio Chamber believes this is a potentially dangerous, precedent-setting action that could undermine competition and drive up health care costs with no guarantee of improved quality.

In his testimony, Rep. Seitz took great pains to say that this was not a doctors’ collective bargaining bill. He said neither the terms “union” nor “collective bargaining” appear in the bill. We have also heard from proponents objecting to the notion that the bill authorizes the “unionization” of physicians. Fair enough. But we also see explanations of the bill using terms such as “collective negotiation” and “cartelizing.” For those of us not as well schooled in the intricacies of antitrust law, none of those terms sounds too much different to us. But we’ll leave it to you, as members of the General Assembly, to determine the public policy distinctions among them.

But one thing certainly not being refuted by either side is, that if HB 325 were to pass, higher costs will be incurred by purchasers of health care in this state.

Our country’s antitrust statutes are an important cornerstone of our free-market economy. They have proven to be a necessary guardian of robust competition. In the health care market, our antitrust laws have enabled innovative health care delivery systems to form and compete in the market. They have prevented providers from boycotting those systems or jointly agreeing to increase their fees above competitive levels and pass unjustified increases on to consumers. They have also prevented anti-competitive mergers that would result in diminished services, decreased quality and increased prices. But at the same time, our antitrust laws have not prevented joint conduct that is likely to enhance efficiency or lead to improved quality, increased services and lower prices.

In addition, the injection of competition into health care markets over the past decade has helped hold down increases in health care costs. There is no assurance in HB 325 that physicians will direct their joint negotiation efforts toward improving the quality of care.

In conclusion, I am here today to, once again, say the governmental action you are being asked to support will greatly increase the cost of our health care system. Such cost increases will likely take our health care system in the opposite direction we want it to go -- resulting in fewer Ohioans able to afford quality health care and fewer employers able to provide health insurance for their employees. But, perhaps more importantly, I am here today to say HB 325 is the wrong approach to the challenges raised by managed care.

I urge you not to support HB 325 and work instead with all of the interested parties in this room to craft reasonable remedies to the challenges that have and will continue to emerge in the changing health care market.

Thank you very much for allowing me to testify. I would be pleased to answer any questions.