Testimony presented before the House Commerce & Labor Committee on Tuesday, May 16, 2000 by Linda Woggon, Ohio Chamber vice president of governmental affairs.

Mr. Chairman and members of the House Commerce & Labor Committee, I am Linda Woggon, Vice President of Governmental Affairs for the Ohio Chamber of Commerce.

As many of you know, the Ohio Chamber of Commerce is the largest and most diverse state-wide 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 acutely within the parameters of that mission, that I am here, today, to urge defeat of HCR 65.

HCR 65 would put the members of the Ohio General Assembly on record urging the U.S. Congress to pass H.R. 1304, 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. It wasn't that long ago, if you think back, that spiraling Medicare expenses and runaway costs for private health insurance led us all to agree that our health care system was broken and in desperate need of reform.

Employers began to demand that insurers and providers manage costs better, so they could continue to provide affordable health insurance for their employees. Together, we strove to recreate a system that would put greater emphasis on preventative care, retain the high-quality treatment American's depend on, and build cost accountability into health care decisions. We strove to build a system based on competition and the lower costs and innovation a competitive market manifests. From those goals "managed care" emerged.

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 still faces many challenges. It 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 the federal legislation, supported by HCR 65, is just such a radical reform.

H.R. 1304 would exempt physicians from our antitrust laws, so they can collectively bargain with health plans over cost and reimbursement rates. Some will argue that such a radical step is necessary to level the playing field on which physicians negotiate with health plans. Others will suggest this is necessary to improve the quality of our health care system.

The Ohio Chamber believes this is a dangerous, precedent-setting action that will undermine competition, drive up health care costs, and do little if anything to improve quality. There is no justification for according special status to physicians and other health care professionals under our antitrust laws. Why should they be treated differently from other professionals and independent contractors such as architects, engineers or lawyers. We believe it would be unwise and harmful to grant them an antitrust exemption.

Our country's antitrust statutes are the cornerstone of our free-market economy. They have proven to be a necessary guardian of robust competition. Their enforcement prevents all participants in a market from obtaining or exercising market power through anticompetitive means.

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.

Enforcement of our antitrust statutes in the health care area has taken into account not only indications of possible competitive harm but also the potential created by enhanced competition for increases in efficiency, lowered administrative and other costs, improvements in quality, greater innovation and other factors important to the cost-effective delivery and quality of health care services. Only those activities that would harm health care markets and consumers by raising prices, decreasing the availability or quality of services, or discouraging innovation face potential antitrust challenge.

The injection of competition into health care markets over the past decade has helped hold down increases in health care costs. Exempting physicians, now, from our antitrust laws will not further decrease the cost of health care or increase the quality of patient care. There is no assurance in H.R. 1304 that physicians will direct their collective bargaining efforts toward improving the quality of care rather than their own financial interests. On the other hand, there is ample evidence to show that costs will go up. In testifying against H.R. 1304 before the U.S House Judiciary Committee, Joel I. Klein, Assistant Attorney General of the Antitrust Division of the U.S. Department of Justice said:

"Our investigations reveal that when health care professionals jointly negotiate with health insurers, without regard to antitrust laws, they typically seek to significantly increase their fees, sometimes by as much as 20-40%. Exempting such joint activity through enactment of H.R. 1304 would permit health care professionals to negotiate and effectuate such increases in countless markets throughout the country."

But, perhaps more importantly, I am here today to say H.R. 1304, and consequently HCR 65, is the wrong approach to the challenges raised by managed care. In the long run, this legislation will harm consumers and undermine the competitive structure of our health care industry. I urge you to vote against HCR 65 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 from managed care and our changing health care market.

Thank you very much for allowing me to present this testimony. I would be pleased to entertain any questions you might have.