Dear Neighbors,
Once again, our elected Republican representatives are about to betray us. This time, it’s our healthcare (yes, that again).
First, some background. (Apologies for the technical details, but they matter).
Federal anti-trust laws were enacted over 100 years ago to curb extreme abuses of economic power by the ultra-wealthy. This economic power was known as “monopoly” power, and the ultra-wealthy of the time were known as “Robber Barons.”
Monopoly power is bad for the public because it interferes with the competition that motivates businesses to provide the best products at attractive and reasonable prices. Monopoly power hurts the public when it enables a business to raise prices unreasonably, to limit wages, and to exclude competing businesses from the marketplace. Businesses acquire monopoly power when they grow so big that they dominate a market, or when competing businesses agree to stop competing and instead conspire to control prices, wages, or other aspects of a market.
In a 1943 case involving California’s state regulation of the raisin market, the U.S. Supreme Court carved a “state-action” exemption from federal antitrust regulation. The court reasoned that federal anti-trust law was intended to control the bad behavior of private businesses, and did not apply when states regulated commerce as an act of government or when the state actively supervised private businesses. Private utilities that supply water to homes and businesses are a classic example of a state-regulated monopoly that is permitted under the state-action antitrust exemption. The Supreme Court assumed that an elected government was ultimately accountable to the people, and that the voters would act as a check and balance on any such government-authorized monopoly. Unfortunately, recent events detailed below suggest that the Supreme Court’s belief that the government is responsive and responsible to the people may no longer be valid in East Tennessee.
Fast forward to the present. Huge healthcare corporations have persuaded some state legislatures to allow formation of healthcare monopolies. This occurs through a scheme built around the Supreme Court’s anti-trust exemption for “active state supervision.” These schemes require that the state issue a “Certificate of Public Advantage” (“COPA”) that sets out terms under which the state will supervise the proposed healthcare monopoly.
The COPA process has been controversial. For example, after issuing only one certificate in 20 years, North Carolina’s legislature moved to repeal its COPA statute in 2015. A source quoted in The Carolina Journal put it this way:
COPA is highly novel state policy instituted to circumvent antitrust laws on the theory that so doing would make it easier for health professionals and hospitals to work together under the watchful eyes of state regulators to serve patients more easily and at less cost.
If this experiment has instead created a health behemoth able to circumvent the regulators, leverage its protection from competition into driving remaining competitors out and forcing health professionals to do business with it or else, and increase prices on patients, then it would be time to pull the plug. A “kingdom” established under state policy would be a quintessence of cronyism….
Referencing North Carolina’s experience with the COPA it issued in 1995 to Asheville’s Mission Hospital for a monopolistic merger, The Carolina Journal continues:
Critics complain that the state has allowed Mission to engage in “empire building,” “predatory” practices, and threatening competing providers of services either to partner with Mission or be driven out of business (or “crushed”) by Mission duplicating those services.
A 2013 Asheville Tribune report on “The Kingdom of Mission” noted that “physicians and consumer advocates have complained that Mission mostly self-reports its COPA compliance, with little oversight from the state agencies that are supposed to police it.” It described COPA as the “hunting license” Mission uses in what critics termed a “manifest destiny-like cherrypicking of different private specialist practices so as to capture an entire spectrum of medical services under its umbrella.” …
With this background in place, now let’s turn to the current situation in East Tennessee.
Tennessee’s first-ever COPA was recently approved for the merger of Mountain States Health Alliance and the Wellmont system. The combined organization is now known as “Ballad Health” and serves most if not all of the First Congressional District.
There is no question that the Ballad Health merger results in a monopoly. If a monopoly wasn’t the result, then a COPA wouldn’t have been legally necessary. Indeed, Rep. Phil Roe admitted even before the Ballad application was submitted that the result would be a monopoly. However, despite claiming to be a “free market guy,” Roe did not speak against the merger, although the Federal Trade Commission openly opposed it as against public interest. Interestingly, per the Federal Election Commission, Roe has received substantial campaign donations from both of the health systems involved in the Ballad Health merger.
Before the Ballad Health COPA application was even submitted, the healthcare systems secured unbelievable legal protection from any citizen challenge. This was done through an extraordinary bill submitted by a local legislator. This bill, supposedly a mere “update” to the COPA law, imposed an impossible burden on any citizen intervenor. Per the so-called “update,” any citizen or group that petitioned a court to challenge the correctness of the state’s determination on a COPA application would have to post a bond and, if the court action was unsuccessful, the citizen intervenor would have to pay the legal fees of the COPA applicants.
Think about this carefully — a citizen may use the courts to challenge an action of the government, such as the issuance of a COPA. The ability of a citizen to challenge government action is proper and right in a democracy. But, per this outrageous law, if the citizen loses in court, the citizen must pay the legal fees of a private multi-billion dollar health care corporation. (??!!) Should a citizen who challenges an action of the government have to risk paying the legal fees of a private party? This law makes both the health system and the government less accountable by imposing an absurd financial risk on anyone who seeks court review of government action. Unsurprisingly, there were no legal challenges when the state announced it would approve the Ballad Health COPA.
Now the same legislator is back, apparently at the request of the health systems, with a proposal to give the Ballad Health monopoly an additional and even more outrageous layer of legal protection. Tennessee Senate Bill 2048, if passed, will eliminate direct accountability to the citizens by making confidential many details of the ongoing state supervision of the COPA. Citizens will be kept in the dark, unable to independently judge for themselves whether the COPA is working as promised, or whether it is being abused or corrupted.
Such secrecy places the self-interest of a government-sponsored monopoly over our interest as citizens in knowing what our government is doing. The usual government reasons for secrecy are absent. This is about government regulation of health care. It is not a matter of national security. No state secrets are involved. No sensitive matters of personal privacy or safety are implicated.
Such COPA secrecy may well be unprecedented. For example, North Carolina’s legislature requested that an independent economist perform an expert evaluation and review of the Mission Hospital COPA. The resulting report was openly published. mountainx.com/… In contrast, under Tennessee’s proposed legislation, a similar expert report on Ballad Health would be treated as a secret not open to public inspection.
A state confidentiality law is likely to also impede any future federal antitrust monitoring. Keep in mind that state-action immunity only applies if the state actively supervises the monopoly. If the Ballad Health COPA is corrupted or mis-used, then immunity from federal intervention may be lost. In November 2017, the Federal Trade Commission issued a call for public comments and empirical research on the COPA process. Of course, if underlying information is kept secret from citizens, then the ability of the public to comment to the FTC will be gutted and the ability of independent researchers to study the COPA and report to the FTC will likewise be impaired.
Fortunately, some pushback has begun. The Kingsport Times-News editorial board recently condemned the proposed legislation as an attempt to “shroud Ballad Health in secrecy.” In the newspaper’s words:
If Crowe’s bill is approved by the General Assembly, however, citizens of this state would not have access to documents, papers, letters and other materials evaluating how well Ballad complies with the COPA. That means disclosure on operating budgets, strategic plans and facility closings is off the table. Instead, the public will be asked to take the state’s word when it comes to Ballad living up to its promises...The public should not have to be that trusting.
I have heard that Dr. Marty Olsen, First District Democratic candidate for Congress, is opposed to SB 2048 on grounds that it damages transparency and accountability and unreasonably limits the ability of citizens to communicate meaningfully with their government. If this is indeed Dr. Olsen’s position, then good for him, and good for the people when he is elected.
Somebody — no, more than “somebody ” — each one of us — should use our voices and our votes to tell the political establishment that managing the people’s business for the benefit of private interests won’t be tolerated any more, and that we, the people, have had our fill of behind-the-scenes legislative manipulation, misleading rhetoric, and special-interest shenanigans.