FTC Staff Says Proposed New York Legislation Likely to Lead to Higher Health Care Costs and Decreased Access to Health Care Services for Consumers

Federal Trade Commission staff, in response to a request from New York State Senator John J. Bonacic, stated that New York consumers would likely face higher health care costs and decreased access to health care services under proposed legislation that would allow coordinated activity among competing health care providers, beyond what the antitrust laws permit. FTC staff recommended that the bill be rejected by the New York State Assembly.

New York Senate Bill 3186-A, if enacted, would authorize independent health care providers to collectively negotiate a variety of contract provisions with certain health plans, including fees and other non-fee-related matters. Competing health care providers would be allowed to share competitively sensitive information with each other regarding the contractual terms and conditions to be negotiated with health plans.

FTC staff stated that the Bill poses a substantial risk of consumer harm in the form of increased costs, reduced innovation, and decreased access to health care services. Health plans would effectively be required to negotiate with providers acting collectively, thereby decreasing the incentives of independent providers to compete on price and quality and threatening the ability of health plans to selectively contract, a key mechanism for containing costs and promoting quality. FTC staff believe the proposed legislation is unnecessary because the antitrust laws already permit procompetitive collaborations among health care providers if they are likely to benefit consumers. FTC staff also stated that the Bill would impose substantial oversight requirements on the New York Attorney General's office, yet it is unclear whether the Attorney General would have sufficient time or resources necessary to carry out these responsibilities.

The Commission vote approving the staff comment was 4-0. It was sent to State Senator Bonacic on October 21, 2011. A copy of the letter can be found on the FTC's website and as a link to this press release. (FTC File No. V110015; the staff contact is Stephanie Wilkinson, on detail to the Office of Policy Planning, 202-326-2084.)

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