Hospitals and health plans: government-protected and favored


Hospitals and health plans are government-protected and favored businesses, and as Americans increasingly suffer from high costs and other problems, the effects of government intervention are under scrutiny, writes Lawrence Huntoon, M.D., Ph.D, in the summer issue of the Journal of American Physicians and Surgeons.

“Government intervention in medicine has led to higher costs, shortages, and harmful anti-competitive conduct. Monopoly thrives, as does monopsony, in which a larger buyer controls the market and drives prices down,” Dr. Huntoon writes. “Simultaneously, freedom, choice, and any semblance of a free market are destroyed.”

In 1945, the McCarran Ferguson Act exempted the business of insurance from antitrust law. “With the exemption in place, monopolistic insurers have no incentive to lower premiums,” he notes. The merger frenzy in recent years further increases their monopoly power.

Government strongly favors hospitals over independent physicians and facilities through discriminatory price fixing. “Although the cost of providing outpatient care in a hospital-owned facility is comparable to that in an independent physician-owned facility, government allows hospitals to charge a facility fee in addition to a professional fee,” Dr. Huntoon explains. “The combined professional and hospital facility fee is often double or more what a physician is allowed to charge for providing the very same service in a physician-owned office. This is driving independent physicians out of business and forcing many into hospital-employed positions.”

Certificate of Need laws and “safe harbors” that protect group purchasing organizations (GPOs) and pharmacy benefits managers (PBMs) from the Anti-Kickback Statute also crush competition and allow prices to escalate, he states. The Healthcare Quality Improvement Act (HCQIA) gives hospitals virtually complete immunity if they destroy a physician’s career with trumped-up accusations in a sham peer review. Physicians are thus reluctant to challenge hospital policy or report quality problems.

“Our U.S. Constitution does not provide any role for the federal government in medicine, let alone for the specific welfare and favoritism of hospitals, insurers, and their co-participants in government-protected kickback schemes,” Dr. Huntoon concludes. “It is not the role of government to create monopolies, and pick winners and losers.”

The Journal of American Physicians and Surgeons is published by the Association of American Physicians and Surgeons (AAPS), a national organization representing physicians in all specialties since 1943.

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