A strange announcement from the Justice Department:
Blue Cross Blue Shield of Michigan’s (Blue Cross-Michigan) subsidiary, Blue Care Networks of Michigan, abandoned its attempt to purchase Physicians Health Plan of Mid-Michigan (PHP) after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the acquisition. The department said that, had the acquisition gone forward, it would have given Blue Cross-Michigan control of nearly 90 percent of the commercial health insurance market in the Lansing, Mich., area, which would have resulted in higher prices, fewer choices, and a reduction in the quality of commercial health insurance plans purchased by Lansing area residents and their employers. The acquisition also would have given Blue Cross-Michigan the ability to control physician reimbursement rates in a manner that could harm the quality of health care delivered to consumers.
Here’s why I think this is strange: The DOJ is complaining that the merger would allow the combined insurers “to control physician reimbursement rates…” But that’s exactly what the DOJ and the Federal Trade Commission want — at least that’s what they say when they prosecute physician groups. If a physician group “jointly negotiates” with an insurer, that’s illegal because it deprives the insurer of the ability to unilaterally set reimbursement levels. So what gives?
Obviously, what the DOJ means is that it’s bad when insurers “control” reimbursement rates, but good when federal antitrust regulators control them, because regulators act in the name of “consumers,” rather then greedy corporate executives and physicians.
Incidentally, wouldn’t today’s DOJ action undermine the argument for repealing the insurance industry’s limited antitrust exemption, as a recently-passed House bill would do? Clearly, the DOJ doesn’t need congressional permission to control the health insurance industry.