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Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.4417-A (Murphy)/ A.2888-A (Abinanti)

Support

SUBJECT:

Westchester Healthcare Antitrust Exemption

 

DATE:

June 8, 2016

 

The Business Council opposes S.4417-A (Murphy) / A.2888-A (Abinanti), which would exclude the Westchester Health Care Corporation from state antitrust laws in its contracts and arrangements with multiple providers.

State antitrust laws are meant to protect consumers and patients by ensuring greater choices in healthcare, which should in turn result in higher quality services and lower prices. To that end, the law prohibits independent medical organizations from engaging in collective efforts to set prices for services. These laws promote competition and preventing local provider monopolies.

Despite the strength of New York’s laws, the state has seen unprecedented consolidation and acquisitions among hospitals and healthcare groups. Multiple recent studies have concluded that consolidation of medical providers leads to higher prices for patients.

The first study, by the University of California, looked at the total expenditures of 4.5 million Californians covered by a commercial health maintenance organization from 2009 to 2012. It found that the average total expenditures per patient were 10.3% higher for hospital-owned practices and 19.8% higher for health system-owned practices than those at physician-owned practices.

A 2014 Stanford University study examined the costs of 10 types of office visits in 1,058 counties across the United States. Researchers at used the Hirschman Herfindahl Index to determine the level of competition within the counties. They found that in the least-competitive markets, private provider organizations paid 8.3% to 16.1% more for the same service.

Also, in a study published last year by the National Bureau of Economic Research, researchers analyzed health spending across multiple U.S. markets and compared the numbers for Medicare with claims data for 88 million patients with employer-sponsored health insurance. Private insurance prices were 15% higher when hospitals had no competition compared with markets with at least four hospitals.

The findings of these studies are consistent not only in the presence of higher prices but also the range by which the price of health services increases with consolidation.  This legislation, while narrowly focused on one hospital, is still likely to foster the same anticompetitive conduct that will lead to significant increases in health care costs to New York’s consumers.

Unfortunately, this bill would not serve the financial interests of average New Yorkers who need affordable health care nor the businesses who offer employer-sponsored coverage. Allowing any hospital system to operate outside of antitrust laws distracts from addressing the issues driving health care costs and utilization and will provide yet another way for costs to shift to the employers, employees and individuals who are already struggling to maintain health coverage.

For these reasons, The Business Council respectfully opposes S.4417-A (Murphy) / A.2888-A (Abinanti).