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96–053 PDF 2015

STATE OF COMPETITION IN THE HEALTH CARE 

MARKETPLACE: THE PATIENT PROTECTION 

AND AFFORDABLE CARE ACT’S 

IMPACT ON COMPETITION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 10, 2015 

Serial No. 114–46 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

MIMI WALTERS, California 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

SEPTEMBER 10, 2015 

Page 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 2 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 11 

WITNESSES 

Thomas L. Greaney, Professor of Law, St. Louis University School of Law 

Oral Testimony ..................................................................................................... 13 

Prepared Statement ............................................................................................. 16 

Richard J. Pollack, Executive Vice President, Advocacy and Public Policy, 

American Hospital Association 

Oral Testimony ..................................................................................................... 31 

Prepared Statement ............................................................................................. 33 

Barbara L. McAneny, M.D., Member of the Board of Trustees, American 

Medical Association 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

Daniel T. Durham, Executive Vice President, Strategic Initiatives, America’s 

Health Insurance Plans 

Oral Testimony ..................................................................................................... 65 

Prepared Statement ............................................................................................. 67 

Scott Gottlieb, M.D., Resident Fellow, American Enterprise Institute 

Oral Testimony ..................................................................................................... 81 

Prepared Statement ............................................................................................. 84 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary, submitted by the Honorable Henry C. ‘‘Hank’’ Johnson, 

Jr., a Representative in Congress from the State of Georgia, and Ranking 

Member, Subcommittee on Regulatory Reform, Commercial and Antitrust 

Law ........................................................................................................................ 4 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Letter submitted by the Honorable Tom Marino, a Representative in Congress 

from the State of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 120 
Page

IV 

Response to Questions for the Record from Richard J. Pollack, Executive 

Vice President, Advocacy and Public Policy, American Hospital Association . 123 

Response to Questions for the Record from Barbara L. McAneny, M.D., Member of the Board of Trustees, American Medical Association ........................... 161 

Response to Questions for the Record from Daniel T. Durham, Executive 

Vice President, Strategic Initiatives, America’s Health Insurance Plans ....... 164 

Question for the Record submitted to Scott Gottlieb, M.D., Resident Fellow, 

American Enterprise Institute ............................................................................ 168 

Response to Question for the Record from Scott Gottlieb, M.D., Resident 

Fellow, American Enterprise Institute ............................................................... 170 
(1) 

STATE OF COMPETITION IN THE HEALTH 

CARE MARKETPLACE: THE PATIENT PROTECTION AND AFFORDABLE CARE ACT’S IMPACT ON COMPETITION 

THURSDAY, SEPTEMBER 10, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:02 a.m., in room 

2141, Rayburn Office Building, the Honorable Tom Marino (Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Collins, Walters, 

Ratcliffe, Trott, Bishop, Johnson, Conyers, DelBene, and Cicilline. 

Staff present: (Majority) Anthony Grossi, Counsel; Andrea Lindsey, Clerk; and (Minority) Slade Bond, Counsel. 

Mr. MARINO. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law will come to order. Without objection, the 

Chair is authorized to declare recess of the Committee at any time. 

We welcome everyone to today’s oversight hearing on ‘‘The State 

of Competition in the Health Care Marketplace: The Patient Protection and Affordable Care Act’s Impact on Competition.’’ 

I am going to recognize myself now for an opening statement. 

Today’s hearing marks the beginning of a series of hearings on 

competition in the health care marketplace. The first hearing will 

undertake a broad examination of competition within the hospital, 

insurance, and physician marketplaces. Additionally, we will also 

focus on the impact that the Patient Protection and Affordable 

Care Act, or ‘‘Obamacare,’’ has had on competition within each of 

these sectors. 

There is no doubt that there has been significant movement in 

each of the hospital, insurer, and physician markets since the enactment of Obamacare. Hospital mergers nearly doubled between 

2009 and 2013, the period surrounding the congressional debate on 

Obamacare and immediately after its enactment. Four of the five 

largest for-profit health insurance companies recently announced 

their intent to merge, which will be the subject of a separate Subcommittee hearing in the coming weeks. Additionally, reports of 
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physician practices either merging or being purchased by hospitals 

has increased in recent years. 

On top of all this activity, we are spending more on health care 

than ever before, and that number is only expected to grow. I trust 

that competition will put pressure on market actors to deliver quality product at a reasonable price. I have infinitely more confidence 

in the judgment of a competitive marketplace over the judgment of 

government. 

Obamacare is another government experiment attempting to replace the will of the market with its own. An experiment that, in 

my view, has gone horribly wrong. As Chairman of the Subcommittee overseeing our antitrust laws in competition, I believe 

we have a duty to ensure that the laws Congress pass are encouraging competition and that the antitrust laws are being enforced 

effectively. Today’s hearing will help inform Congress of the status 

of competition in the predominant health care sectors, as well as 

add to the record of Obamacare’s impact on the state of competition 

in each of these sectors. 

I look forward to hearing from our witnesses, and I yield back 

the balance of my time, and I now recognize the Ranking Member 

of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Mr. Hank Johnson of Georgia, for his opening statement. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Today’s hearing is the first in a series of hearings that will examine the state of competition in the health care marketplace. It is 

also the third hearing that this Committee has held on this topic 

in as many years. But much has changed since our last hearing in 

September of 2013. 

Since the first open enrollment period began in October 2013, the 

Affordable Care Act has already expanded coverage, savings and 

protections for millions of American consumers. Since provisions of 

the Affordable Care Act have taken effect, the law has resulted in 

the coverage of 16.4 million uninsured people, dropping the uninsured rate by 35 percent, the lowest in 50 years, and lowering the 

overall cost of health care for both insured Americans and health 

care providers. It saved 9.4 million seniors more than $15 billion 

on prescription drugs, or about $1,598 for every beneficiary, and it 

has dramatically slowed the cost of health care spending, to the 

benefit of taxpayers and the entire health care system. 

The Department of Health and Human Services likewise reported in July that the law has slowed the cost of health care premiums as new competitors in local markets and price competition 

intensifies. The Congressional Budget Office also reported that 

these lower premium costs have lowered previous cost estimates for 

the Affordable Care Act by about $142 billion, or 11 percent, while 

the Washington Post reports that ‘‘the cost of the law has been falling for several years now that analysts are beginning to assess the 

evidence of the law’s impact from its first full year of implementation.’’ 

There is also ample evidence that the Affordable Care Act is a 

reaction to, not a cause of, consolidation in the health care marketplace. A unifying bipartisan theme of our hearings on this topic is 

that waves of consolidation among health care providers and insur-
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ers occurred long before the Affordable Care Act. Whether due to 

lax antitrust enforcement or bad policy, many local markets were 

highly consolidated before the enactment of the Affordable Care Act 

in 2010. According to the Department of Health and Human Services Report on Competition in Health Insurance Marketplaces, 

competition has intensified across the country as the number of 

health insurance issuers have increased in most counties. As I have 

already noted, this increased competition has had the effect of reducing premium growth through an influx of new plans and increased pressure for incumbent insurance issuers to moderate the 

cost of premiums. Preserving and promoting this competition is 

critical, and I encourage the antitrust enforcement agencies to do 

so at every opportunity. 

In closing, it is clear that now that we have put it to work, the 

Affordable Care Act is saving lives and money. Rather than demonizing the Administration and the law that has done so much for so 

many, we would be ensuring that the progress we have made in 

such a short time is not jeopardized by anti-competitive behavior 

or consolidation. With that in mind and notwithstanding the consistently partisan nature of discussions concerning health care and 

the Affordable Care Act, I thank the Chair for calling this hearing 

and I look forward to future hearings on this subject. Few topics 

directly affect the lives of American consumers as ensuring that 

health care markets are delivering the best and most health care 

choices in every county in America. 

And with that, I would yield back. But let me say before I yield 

back, I would like to offer into the record, without objection, the 

statement of Ranking Member John Conyers. 

Mr. MARINO. So ordered, without objection. 

[The prepared statement of Mr. Conyers follows:] 
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Mr. JOHNSON. I yield back. 

Mr. MARINO. The Chair recognizes the Chairman of the full Judiciary Committee, Mr. Bob Goodlatte of Virginia, for his opening 

statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Before we begin today’s hearing, which marks the beginning of 

a series of hearings on competition in the health care marketplace, 

I think it would be helpful to clarify two points of overriding concern. 

First, health care is not provided in a true free market, and has 

not been provided in a free market since at least the onset of major 

government intervention in the market through Medicare and Medicaid. 

Second, health care as a service is unique in that nearly every 

person in America will require some medical treatment over the 

course of their lives. Health insurance is not like fire insurance or 

car insurance, where there is a hope that one will never have to 

use it. Medical costs inevitably occur and hopefully insurance or 

some funds set aside for these costs will be used when the time 

comes. 

In the face of these facts—that the health care market is not a 

fully free market and that Americans have no choice but to participate in the market—it is essential that we preserve as much competition and freedom in the overall health care marketplace as we 

can. 

We should strive to enact laws that foster competition so that 

prices are checked, patients have choices, and the premium quality 

of American health care can be maintained. Otherwise, costs will 

go up, choices will narrow, and quality will be diminished. That is 

simply the laws of economics at work. 

In 2010, President Obama signed into law the Patient Protection 

and Affordable Care Act, which I believe is antithetical to competition. Rather than promoting free markets, Obamacare put in place 

a regulatory structure that stifled competition and instituted incentives for increased market consolidation. 

Since the enactment of Obamacare, I have been sounding the 

alarm bells. The Judiciary Committee held hearings on Obamacare 

and competition in each of the last two congressional sessions. I am 

pleased that the Committee meets again to continue to sound the 

siren and supplement the growing record of Obamacare’s anticompetitive results. 

One of the principal tenets of economics is that competition can 

lead to lower prices, enhanced product variety, greater innovation, 

and downward pressure on costs. When markets consolidate, there 

exists the potential for reduced competition resulting in the contraction of the related benefits. 

Of course, consolidation does not always lead to a reduction in 

competition. Market efficiencies can be obtained, and the expansion 

of successful products can be achieved more rapidly through transactions. However, when non-market and government forces compel 

consolidation, those underlying forces and their effects should be 

closely examined. 

Accordingly, it is vitally important that antitrust laws are properly and consistently enforced to prevent anticompetitive consolida-
12 

tion and conduct, and that laws that promote these activities are 

subject to strict and ongoing scrutiny. Continuous and vigilant 

oversight, such as at today’s hearing, will help to ensure that 

health care markets operate as freely and competitively as possible, 

in order to provide consumers with premier and affordable health 

care. 

I look forward to the testimony of our witnesses on the state of 

competition in the predominant health care markets. Thank you, 

Mr. Chairman. I yield back. 

Mr. MARINO. Thank you, Chairman Goodlatte. 

Without objection, other Members’ opening statements will be 

made part of the record. 

Now I will begin by swearing the witnesses in. Would you please 

stand and raise your right hand, please? 

Do you swear that the testimony you are about to give before the 

Committee is the truth, the whole truth, and nothing but the truth, 

so help you God? 

Let the record reflect that all the witnesses have answered in the 

affirmative. 

Please be seated. 

We have a distinguished group of witnesses here today that I 

think are going to contribute a great deal to some of the questions 

that we would like to have answered. 

We will begin with Professor Thomas L. Greaney, who is a Chester A. Myers Professor of Law and Co-Director of the Center for 

Health Law Studies at the St. Louis University’s School of Law. 

Professor Greaney also is the author of Health Law, one of the 

leading health care casebooks, as well as numerous articles on the 

intersection of antitrust and health law that have been published 

in, among other places, the New England Journal of Medicine, the 

Antitrust Law Journal, the Journal of the American Medical Association, and the Yale Journal of Health Law and Policy. 

Prior to joining the St. Louis University School of Law, Professor 

Greaney served as the Assistant Chief in the Antitrust Division of 

the Department of Justice. Mr. Greaney received his B.A. magna 

cum laude from Wesleyan University and his J.D. from Harvard 

Law School. 

Welcome, professor. 

Mr. Richard Pollack recently became the 11th President and 

CEO of the American Hospital Association, known as AHA, on September 1st, 2015. Mr. Pollack has been with the AHA for over 32 

years, recently serving as the institution’s Executive Vice President 

for Advocacy and Public Policy, where he was responsible for the 

development, implementation and management of the Association’s 

advocacy, representation and public affairs activities. 

Mr. Pollack started his professional career here on Capitol Hill, 

serving as a legislative assistant to former Congressman Dave 

Obey. Mr. Pollack earned his Bachelor’s degree in Political Science 

and Communications from the State University of New York’s College at Cortland, and his Master’s degree in Public Administration 

from American University. 

Welcome, Mr. Pollack. 

Dr. Barbara McAneny was re-elected on June 2014 to the American Medical Association AMA Board of Trustees. Dr. McAneny is 
13 

a board-certified medical oncologist and hematologist from Albuquerque, New Mexico, and has served in numerous leadership roles 

at the AMA. Additionally, Dr. McAneny was appointed by Health 

and Human Services Secretary Tommy Thompson to the Practicing 

Physicians Advisory Council from 2002 to 2006. 

Dr. McAneny graduated magna cum laude from the University 

of Minnesota and with honors from the University of Iowa College 

of Medicine. 

Doctor, welcome. 

Mr. Dan Durham is the Executive Vice President of Strategic Initiatives at America’s Health Insurance Plans, known as AHIP. Mr. 

Durham has over 30 years of leadership experience with major policy and regulatory issues, primarily in the health care field. In addition to holding senior positions within AHIP, Mr. Durham served 

in high-level policy positions in the Federal Government, at the 

United States Department of Health and Human Services, the Social Security Administration, and the Office of Management and 

Budget. 

Mr. Durham received his B.A. from the University of Notre 

Dame and his Master’s degree from Duke University. 

Mr. Durham, welcome to you also. 

Dr. Scott Gottlieb is a recent Fellow at American Enterprise Institute and a practicing physician. Dr. Gottlieb has served in various capacities at the Food and Drug Administration, including as 

a Senior Advisor for Medical Technology; Director of Medical Policy 

Development; and, most recently, Deputy Commissioner for Medical and Scientific Affairs, in addition to serving as a senior policy 

advisor at the Centers for Medicare and Medicaid Services. 

Dr. Gottlieb is also a prolific writer on health care issues, and 

has been published in leading medical journals and other well-respected periodicals. 

Dr. Gottlieb received his B.A. in Economics from Wesleyan University and his M.D. from Mount Sinai School of Medicine of New 

York University. 

Welcome, doctor. 

Each of the written statements will be entered into the record in 

its entirety, and I ask each of the witnesses to summarize his or 

her testimony in 5 minutes or less. To help you with the timing, 

you see the lights in front of you. The lights will switch from green 

to yellow, indicating that you have 1 minute to conclude your testimony. And when the light turns red, it indicates that the witness’ 

5 minutes have expired. 

I do this, and I know that some of you are probably going to do 

it. We are so intent on saying what we want to say or reading our 

statements that we pay no attention to those lights, and I will very 

politely just sort of raise the gavel to get your attention to ask you 

to please summarize. So, thank you. 

With that, Mr. Greaney, would you like to make your opening 

statement? Would you put your microphone on, sir? 

TESTIMONY OF THOMAS L. GREANEY, PROFESSOR OF LAW, 

ST. LOUIS UNIVERSITY SCHOOL OF LAW 

Mr. GREANEY. Thank you very much, Chairman Goodlatte, 

Chairman Marino, and Ranking Member Johnson. 
14 

Mr. MARINO. Could you pull it a little closer to you? It is off to 

the side. 

Mr. GREANEY. I appreciate this opportunity to testify again before this Committee. 

Let me summarize my testimony with four key points. 

First of all, the Affordable Care Act both depends upon and promotes competition in health care markets. And secondly, while 

there is no doubt that excessive concentration undermines the competitive policies of the ACA, it is entirely erroneous to claim that 

the ACA is somehow responsible for this consolidation. Mergers to 

monopoly and oligopoly are efforts to avoid or frustrate the Act. 

Third, the recently announced health insurance mergers threaten 

competition in a variety of product markets and bear careful scrutiny. The only point I am going to make there is that you should 

not be taken in by the argument that consumers are somehow better off having big insurers confront big hospitals. I call that the 

Sumo Wrestler theory. 

And finally, my last point is that if state and Federal legislators 

are concerned about competitiveness of health care markets, as 

they should be, it is finally time to take a hard look at the real 

problems that beset the health care market—outdated regulations, 

anticompetitive practices that can be corrected by procompetitive 

legislation, and payment incentives that wrongly encourage consolidation. Those are your real culprits, not the ACA. 

Okay, let me begin with my first point. The ACA does not regulate prices. It relies heavily on private-sector competition, competition between providers and payers and rivalry within each of those 

markets. Why do we need government regulation to help competition? Well, let’s remember what that putative market, as we like 

to call it, looked like before health reform. There was a dysfunctional market for individuals and small groups; we had a non-system of service delivery, as hospitals and physicians each operated 

in their own silos; and we had payment systems that rewarded volume and not outcomes. 

What has the ACA done to improve market competition? My 

written testimony goes into a variety of areas, but most importantly it put in place efficient markets for shopping and bargaining 

in the individual and small-group market. Very importantly, the 

exchanges set up mechanisms to shop and compete. And remember 

that the ACA also put in rules that made insurance products now 

comparable, understandable, and assure basic levels of coverage. 

These are Economics 101 conditions for better competition. 

What do we have as a result? Well-functioning exchange markets 

that have enabled over 10 million people to shop for and find products. 

The doomsday predictions about the exchanges—risk selection 

would destroy the exchanges, policies would be unaffordable, employer-sponsored markets would crumble—proved to be wrong, 

wrong, and wrong. 

As to the commercial market, the ACA also has had important 

salutary effects. First and foremost, it forbid insurers to engage in 

medical underwriting, going after preexisting conditions. That sent 

a message to the insurance market that is very important. I want 

to channel Bill Belichek here. It said ‘‘do your job’’ to insurers, de-
15 

velop health plans that control costs and improve quality rather 

than chase risk. And widely overlooked is what the ACA did with 

Medicare reform that is still ongoing. Medicare payment reform 

emphasizing now value-based purchasing, ACOs and lots of other 

things, shifted delivery in a very important way, and we know that 

private commercial markets follow what Medicare does. 

So is everything copasetic? No. Unfortunately, concentration is a 

big problem, but a little history is in order. Much of that, much of 

the problematic concentration preceded the ACA. The good news is 

that the DOJ and FTC are on the job and have won a series of important victories that should send a clear message about future 

consolidation. 

I will just mention very briefly my point on insurance sector consolidation since my time is running short. The insurance market 

consolidation is problematic. It is going to take an in-depth inquiry 

by the Department of Justice. But the concept—and it is a fallacious one in my view—the idea that somehow we are better off 

where we pit dominant insurers against dominant hospitals, that 

is unsupported by the economic evidence, both in theory and in 

practice. There are lots of antitrust cases where we have seen large 

insurers and hospitals confronting each other, and they find a way 

to either conspire with each other, either hurting rivals or simply 

splitting the spoils of their market power. Sometimes we find out 

that the sumo wrestlers would rather shake hands than compete. 

I listed a long list of ideas for a procompetitive agenda, including 

things that would help de-concentrate markets. There are a number of steps that could be taken. I commend Dr. McAneny’s testimony, which I think gives many of the ideas which I support. 

So I think those are the steps that would promote competition 

and advance the goals of this Committee. [Applause.] 

[The prepared statement of Mr. Greaney follows:] 
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Mr. MARINO. Thank you, Professor. 

Mr. Pollack? 

TESTIMONY OF RICHARD J. POLLACK, EXECUTIVE VICE 

PRESIDENT, ADVOCACY AND PUBLIC POLICY, AMERICAN 

HOSPITAL ASSOCIATION 

Mr. POLLACK. Chairman Marino, Ranking Member Johnson, and 

distinguished Members of the Committee, on behalf of our Nation’s 

hospitals, I appreciate your inviting me to be here today. 

The health care landscape is rapidly changing, and hospitals are 

helping to lead the way forward. They are focusing on improving 

the patient care experience, enhancing quality, and lowering the 

cost of patient care. Many of the market forces reshaping health 

care were in place long before the passage of the Affordable Care 

Act, but the ACA has accelerated that pace of change. 

A major part of that change is the realignment in the hospital 

field that I would like to discuss this morning. The emphasis on 

wellness or population health has encouraged collaboration among 

providers, along with the development of coordinated care models. 

These new models are often value-, not volume- or cost-based, 

which means that providers are at financial risk if they don’t 

achieve specified quality and cost goals. 

The Department of Health and Human Services has launched a 

number of these programs, and by 2018 it expects to move half of 

all Medicare payments to alternative models of reimbursement that 

reward value. The Department has also recognized that achieving 

these goals would require hospitals to make fundamental changes 

in their day-to-day operations that improve quality and reduce the 

cost of care. 

The hospitals and health systems realigning and transforming 

care means closely working with other providers to make sure that 

patients and communities have convenient access to care. That 

means coordinating with doctors and other caregivers to deliver 

better patient-centered care; it means hospitals are aligning with 

other hospitals to unify patient information, better coordinate transitions and follow-up care, and share financial risk, among other 

improvements; and it means partnering to keep the doors of certain 

financially failing hospitals open so that patients won’t lose access 

to the medical care they and their community rely on. 

For example, a health system in Ohio acquired a small community hospital in bankruptcy that saved 250 community jobs and actually expanded access to care in that rural area, and many small, 

stand-alone, and rural hospitals are particularly in need of partners. Just the cost of acquiring and maintaining electronic medical 

records, which can be as much as $50 million for a midsize hospital, can tip the financial balance of these organizations. 

Outdated regulatory barriers continue to constrain the pace of innovation, and despite repeated calls for the Federal agencies to 

modernize these regulations, to date only one has been changed. 

For example, we have repeatedly asked the Federal Trade Commission, which oversees transactions in the hospital field, for guidance 

on constructing clinical integration arrangements that could in 

some instances take the place of mergers. However, we have not 

received this guidance. 
32 

Now, despite these challenges, the results of hospital realignment are promising. It is even impressive. The author of a recent 

study in the Journal of the American Medical Association used the 

term ‘‘jaw-dropping’’ to describe the results, which found hospitalizations and costs going down for patients. He observed that 

there has been tremendous focus on making sure that our hospitals 

are safer and that treatments are more timely and more effective. 

Moreover, he acknowledged that the savings per patient did not 

come at the expense of quality. 

And let me highlight just one other fact, and that is that hospital 

price growth is at historically low levels, less than 1 percent in 

2015. 

Now, while I understand that this hearing is not focused on the 

recently announced health insurance acquisitions, I would just like 

to briefly touch on that point. We have serious concerns about two 

potential acquisitions and believe they merit the greatest scrutiny 

from both the Department of Justice’s Antitrust Division as well as 

Congress. 

Anthem’s proposed acquisition of Cigna, and Aetna’s proposed acquisition of Humana, would eliminate two of the largest national 

health insurance companies, leaving just three dominant national 

providers of health insurance. That would leave consumers with 

fewer and, no doubt, more expensive options for coverage, and it 

would diminish the insurers’ willingness to be innovative partners 

with providers and consumers to transform care. 

In conclusion, I just want to say that America’s hospitals are 

woven into the fabric of our communities. Hospitals care for patients when they are sick, and we work to keep communities 

healthy. We have tried to lead the way and will continue to try to 

lead the way to reshape the system, to improve quality, to improve 

efficiency, and to make health care more affordable for patients 

and families, and we certainly look forward to working with the 

Committee on making sure that consumers have access to highquality, affordable care in their communities. 

Thank you. 

[The prepared statement of Mr. Pollack follows:] 
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Mr. MARINO. Thank you, Mr. Pollack. 

Dr. McAneny? 

TESTIMONY OF BARBARA L. McANENY, M.D., MEMBER OF THE 

BOARD OF TRUSTEES, AMERICAN MEDICAL ASSOCIATION 

Dr. MCANENY. Thank you. Good morning. I am Dr. Barbara 

McAneny. I am a cancer doctor practicing in New Mexico, and I am 

immediate past chair of the American Medical Association. Thank 

you for inviting us to participate in this oversight hearing on competition in the health care marketplace. 

Physicians want to participate in a health care delivery system 

that allows us to deliver high-quality and efficient care to our patients. We believe that competition between and among health care 

providers, facilities and insurers is an excellent prescription for 

achieving that goal. 

The Affordable Care Act, which includes provisions that are designed to stimulate competitive forces in segments of the health 

care market, is a disruptive force whose impact is still being revealed. New payment and delivery models focusing on quality and 

efficiency can foster competition by encouraging innovation. Physician leadership in these new models is critical both to protecting 

patients’ interests and driving down costs. 

Indeed, preserving the ability of physicians to participate in alternative payment models, including small or specialty or rural 

practices, is essential because it ensures patient choice, preserves 

the doctor-patient relationship, and provides better competition in 

health care markets. Therefore, we recommend reassessing and removing legal barriers that inhibit physician engagement. 

Specifically, we strongly support the FTC and DOJ efforts to 

clarify the application of antitrust laws and urge additional guidance to encourage the development of physician-guided, innovative 

delivery models. Currently, broad prohibitions under the Federal 

fraud and abuse laws discourage physicians from adopting innovative incentive programs that could kick-start competition. We 

therefore urge Congress and the Administration to strengthen and 

expand program integrity exemptions for physicians participating 

in alternative delivery and payment models. 

Ultimately, physicians should be able to maintain independent 

practices and participate in innovative care models. Anticompetitive hospital markets may undermine the incentive of hospitals to 

compete based on quality, potentially laying the groundwork for 

suboptimal care. Lifting the ban on new physician-owned hospitals, 

which have developed an enviable track record on quality and cost, 

offers one way to inject new competition into hospital markets. 

Similarly, we believe that competition, not consolidation, is the 

right prescription for health insurer markets. Competition can 

lower premiums, enhance patient care, and spur innovative ways 

to improve quality while lowering costs. Our annual study of commercial health insurance markets shows that 70 percent are already highly concentrated. We believe that there must be a rigorous review of proposed mergers to determine their effects on competition and their consequences for patient care. 

In 2010, the Department of Justice found that the proposed Blue 

Cross merger in Michigan would have resulted in ‘‘the ability to 
44 

control physician reimbursement rates in a manner that could 

harm the quality of health care delivered to consumers.’’ The same 

analysis should be applied to pending mergers. 

In practice, the concentration of market power among a handful 

of nationwide insurers impacts physicians’ ability to facilitate individualized care. Doctors are left with no recourse to advocate for 

our patients, and innovation is stifled. Market dominance does not 

produce patient benefits when physicians are squeezed and networks are narrowed. Patients should be able to select their doctors 

based on quality and service, and doctors should be free to get patients what they need and deserve. This is a stark reminder of 

what is at stake: the health and safety of American patients. 

We are at a critical decision point on health insurance mergers 

because once the handful of national players is further reduced, 

there is simply no going back. Post-merger remedies are likely to 

be both ineffective and highly disruptive. Thus, we believe that the 

time for heightened scrutiny and careful consideration is now, before proposed mergers take effect and result in a fait accompli 

wherein patients and physician practices are permanently harmed. 

Competition plays a major role in enabling patients to access the 

high-quality care they deserve at a reasonable cost. We thank the 

Subcommittee for your continued efforts on this issue, and we look 

forward to working with you to improve health care competition. 

Thank you. 

[The prepared statement of Dr. McAneny follows:] 
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Mr. MARINO. Thank you, Dr. McAneny. 

Mr. Durham? 

TESTIMONY OF DANIEL T. DURHAM, EXECUTIVE VICE PRESIDENT, STRATEGIC INITIATIVES, AMERICA’S HEALTH INSURANCE PLANS 

Mr. DURHAM. Good morning, Subcommittee Chairman Marino, 

Chairman Goodlatte, Ranking Member Johnson, and Members of 

the Subcommittee. I am Dan Durham, Executive Vice President at 

America’s Health Insurance Plans, and I appreciate this opportunity to testify on issues regarding competition in the health care 

system. 

A competitive health care system is the best way to achieve innovative, high-quality, affordable health care. Competition among 

health plans occurs at the local level, and the diversity of AHIP’s 

membership, which includes local, regional, and national plans, reflects the many choices available to consumers. 

Innovation in payment and delivery has resulted in a broad 

range of options available in the marketplace as health plans continually work, in collaboration with providers, to improve the value 

of their products for consumers. Our written testimony highlights 

initiatives that our members have pioneered to promote quality 

and affordability, as well as consumer tools that promote patientcentered care. 

Regarding competition in the marketplace, the Department of 

Health and Human Services reports that an average of 40 plan options are available per county in 2015. That is up from 30 last 

year. And McKinsey reports a 26 percent increase in the number 

of issuers competing on exchanges. Competition within local markets is evolving, with a variety of high-value products, from patient-centered medical homes to bundled payments to accountable 

care models. The range of collaborative products that drive value 

is vast, and health plans tailor these products to help meet the specific needs of local patient populations. 

As has been reported, there is merger activity in the health insurance industry. While I can’t speak to the potential outcomes of 

these reviews, it is important to understand the broad framework 

that the antitrust agencies use to evaluate whether a particular 

transaction is procompetitive or anticompetitive, and the evolving 

nature of the market for health coverage. 

Assessing the impact of proposed mergers should start with a 

clear understanding that many mergers and acquisitions are beneficial to consumers. They facilitate new, high-value products and efficiencies that reduce cost. The Department of Justice has indicated, ‘‘The primary benefit of mergers to the economy is their potential to generate significant efficiencies, and thus enhance the 

merged firm’s ability and incentives to compete, which may result 

in lower prices, improved quality, enhanced service, or new products.’’ The DOJ, along with 50 state attorneys general and insurance commissioners play an important role in reviewing proposed 

mergers and determining their potential impacts. This includes a 

thorough evaluation of a large body of data and other evidence to 

determine whether a merger would harm consumers by adversely 
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impacting competition in specific products and specific geographic 

areas. 

Notably, there is no single national market for health coverage. 

Health plans negotiate with providers in local markets and offer 

particular types of products that differ widely from one another. 

The agencies also consider the nature of the market itself and 

whether it is undergoing changes that are relevant to its analysis. 

For example, the highly regulated nature of health insurance markets is relevant to an analysis of the potential competitive effects 

of transactions. This highly regulated market we face distinguishes 

health insurance from other less regulated markets. 

The bottom line is that consolidation should be looked at on a 

case-by-case basis and it is problematic only when a transaction 

leads to anticompetitive effects such as an increase in cost resulting from harmful consolidation in provider markets. 

There is substantial evidence in peer-reviewed research that 

shows a significant share of health care cost increases are driven 

by dominant providers charging higher prices. The Robert Wood 

Johnson Foundation study found that increases in hospital market 

concentration lead to increases in the price of hospital care, and 

that when hospitals merge in already concentrated markets, the 

price increase can be dramatic, often exceeding 20 percent. This 

study further cautions that physician-hospital consolidation has not 

led to either improved quality or reduced costs. Other studies that 

we have detailed in our written testimony show that anticompetitive consolidation in provider markets is resulting in higher health 

care costs for consumers and employers and government programs. 

Thank you again for this opportunity to testify. AHIP and our 

members look forward to continuing to work with the Subcommittee and other stakeholders to improve patient access to 

high-quality, affordable health care. 

[The prepared statement of Mr. Durham follows:] 
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Mr. MARINO. Thank you, Mr. Durham. 

Dr. Gottlieb? 

TESTIMONY OF SCOTT GOTTLIEB, M.D., RESIDENT FELLOW, 

AMERICAN ENTERPRISE INSTITUTE 

Dr. GOTTLIEB. Thank you, Mr. Chairman and Mr. Ranking Member, for the opportunity to testify. My name is Scott Gottlieb. I am 

a physician and Resident Fellow at the American Enterprise Institute. 

The health care sector is undergoing a secular consolidation as 

payers and providers assume an historic level of acquisition and 

mergers. These trends were underway prior to implementation of 

the Affordable Care Act, but there is no question that the ACA hastened them. 

The consolidation of physicians at the local level should be a particular concern. In the end, most health care is local. Once an institution has monopolized the providers in its market, it renders market-based reforms hard to achieve and reduces the ability of competition to be used as a tool for improving quality and reducing 

costs. 

More importantly, the new arrangements that are being forged, 

where doctors become part of large delivery systems, usually with 

a hospital at its hub, reduces productivity. Compelling economies 

of scale are not apparent in a physician practice marketplace. This 

has been borne out by many studies that examine the question, 

some of which I review in my written statement for this hearing. 

There is a lot of evidence that as doctors transition to becoming 

salaried employees of hospitals and health systems, their individual productivity in terms of metrics such as volume and intensity of care delivered also generally declines. 

Looking at this in view of our broader fiscal challenges when it 

comes to health care, the only way that we are going to solve some 

of the challenges facing the entitlement programs like Medicare is 

to get more health care for every dollar of GDP that we spend on 

it. To these ends, the last thing we ought to be doing is adopting 

structures that reduce productivity. 

I know there will be some discussion today of new technology, 

and particularly drugs, as factors driving increases in the cost of 

medical care, and I want to just comment briefly on that. However 

one interprets the data on drug costs, it is widely agreed that many 

new technologies improve productivity by improving outcomes or 

obviating costly alternatives. 

Take oncology care. Although very costly, total spending on oncology care as a percentage of our $2.7 trillion national health care 

budget has been constant over the last 20 years. It is just less than 

5 percent of total health care spending. It comes out to about .8 

percent of GDP. But the mix of expenditure has changed dramatically over time. Far less money is being spent on services like hospitalizations and far more on outpatient medicines. Cancer treatments that used to make patients very sick and require costly hospitalizations have been replaced with targeted drugs that can allow 

patients to be treated at home. 

So the proportion of spending on inpatient care admissions fell 

from 64 percent of total cancer spending in 1987 to 27 percent by 
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2005, according to studies. Here is what happened. Transferring 

cancer care to the outpatient setting produced substantial savings. 

It is cheaper to deliver care outside the hospital. This is how technology improves productivity and lowers costs, which brings me 

back to the consolidation underway in the market for health care 

services. 

This consolidation not only reduces productivity and in turn increases costs, it also reduces patient access. This is especially troubling when it comes to rural markets where there is a lower density of doctors and patients can find it harder to get care at a site 

near their homes. It is important to remember that the scope of the 

consolidation that we are seeing in health care is not a response 

to market factors. Rather, it is a deliberate function of policy 

choices. The ACA envisions doctors practicing in large integrated 

health systems, often with a hospital at its hub. The idea is that 

these newly consolidated entities will be big enough to take 

capitated risk and invest in the kinds of technologies that it is believed will lead to better coordination in medical care. The ACA’s 

mix of policies seeks to hasten these outcomes. 

The relationships that doctor practices are forging with their acquiring entities are far stickier than past arrangements. Moreover, 

for doctors, the opportunity to unwind these business engagements 

and go back to their old configurations are much more narrow. The 

economics behind these arrangements also raises some more fundamental questions. For one thing, these constructs were, in part, a 

response to criticism of a fee-for-service approach to payment, 

which is widely presumed to give doctors a financial incentive to 

prescribe more care. As the analysis commonly goes, under a feefor-service arrangement, doctors are paid more when they do more 

things and not necessarily when they improve outcomes. But in reaction to these concerns, have we merely traded one flawed set of 

financial incentives for another? After all, if the financial incentives 

work in one direction, they have to work in the opposite direction. 

If doctors will prescribe too much care when they are paid to do 

more, as critics of the fee-for-service medicine system maintain, 

won’t these same inducements work in reverse? Won’t doctors prescribe too little care when they are paid to do less? 

This also raises another key question, and this one is clinical. 

Are patients better off on the margin when they are prescribed a 

little more care than they need or a little less? The body of literature doesn’t fully resolve this question. 

Since all health care is local, and the lack of competition will 

soon make it much harder to implement market-based reforms in 

health care, the resulting monopolies will make more regulation 

the most obvious solution to the inevitable cost and quality problems. To change these outcomes, I believe that Congress needs to 

reform the ACA to remove the pervasive biases in the ACA that 

favor health system ownership of medical practices. At a time when 

the urge to merge doctors into health systems and turn physicians 

into salaried roles, there is a private market counter-effort to create new models that have physicians practicing in smaller units. 

Many aspects of medical practice are not responsive to scale, and 

where scale does help, many of the characteristics of health care 
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that benefit from integration can be achieved without consolidation 

but by better use of technology. 

A legislative proposal to improve health care quality that manages cost would support local competition between providers and 

choice for patients. We need to improve productivity and preserve 

entrepreneurship, autonomy, and local competition that have long 

been the hallmarks of American medical progress. Thank you. 

[The prepared statement of Dr. Gottlieb follows:] 
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Mr. MARINO. Thank you, Dr. Gottlieb. 

Members on the dais will now begin their 5 minutes of questioning, and I recognize myself for my 5 minutes. 

Mr. Pollack, I would like to begin with you, sir. There have been 

a number of reports of hospitals purchasing physician practices. In 

some cases, patients enter the same building and see the same doctor after the purchase, but the Medicare reimbursement rate for 

the service is significantly higher. In some instances, Obamacare 

increased these pricing disparities. 

Are Medicare reimbursement rates driving purchases of physician practices, and do you think that will impact Medicare’s solvency? 

Mr. POLLACK. I think, Mr. Chairman, there are two issues here. 

One is the issue of physicians wanting to be part of teams and 

wanting to be part of group practices that deliver care in a coordinated way, and very often they are part of the hospital entity. That 

is certainly a trend that we are seeing. When physicians do become 

part of the hospital entity and they deliver services within the hospital entity, there are requirements that have to be met that they 

are part of that facility, as opposed to providing service in their 

own office or in a different site. 

Hospital costs for those physicians are legitimately higher, and 

the Medicare rate does, in fact, reflect a higher amount. That is legitimate, in our view, because the regulatory requirements for 

practice in that setting are very different than what the requirements are in a physician office or an ambulatory care center. The 

patients we take care of in that setting are anyone who walks 

through the door, Medicare or Medicaid. We are open 24 hours, 7 

days a week. The patients that are taken care of in those hospitalbased physician clinics tend to be sicker, and we have studies that 

we are happy to submit for the record that show they are poorer 

and more economically challenged. They suffer from a more difficult set of circumstances. So it is, in fact, more expensive to take 

care of patients in those types of settings. 

Mr. MARINO. Thank you. 

Dr. McAneny, would you like to respond to my question? 

Dr. MCANENY. Yes. Thank you very much, Mr. Chairman. I take 

care of cancer patients in a very poor community in New Mexico 

which ranks at the lowest for income. While the American Medical 

Association supports the right of physicians to choose employment, 

we focus on the word ‘‘choose.’’ We don’t believe that competition 

should force physicians to select employment over self-employment 

or other options. 

I do disagree with the statement that we are unable to take care 

of sicker patients in the outpatient arena. In our practice, if I sold 

to the hospital tomorrow and I saw the same patient and did the 

same services, you are absolutely correct, my services would be reimbursed at a higher level if I were hospital-based than physician 

fee schedule. But we do take care of very ill patients, and we manage to keep them in the outpatient arena. 

The regulatory burden that physicians have is one of the impediments to physician practices. The ability to be able to comply with 

all the regulatory requirements is one of the barriers that has driven younger physicians in particular to wanting to join hospitals in 
106 

hopes that someone else will take care of all that and just let me 

see my patients. 

Mr. MARINO. Thank you. 

Dr. Gottlieb, I have a specific question for you. In your testimony, you stated that there has been a net loss of insurers since 

the enactment of Obamacare. You also discuss co-op insurance 

plans that have been subsidized under Obamacare. Can you discuss the success rate of the co-op insurance plans and how the declining number of insurers will affect competition in the insurer 

marketplace? You have about 56 seconds. 

Dr. GOTTLIEB. I am referring mostly to the commercial marketplace. There has been no new net commercial insurance company 

formation since the enactment of Obamacare, actually since 2008. 

So whatever new plans we have seen, new carriers enter the market, we have seen offsetting losses. And actually, we have seen a 

loss of new carriers. We have seen new plans enter the market, but 

they have all been existing carriers that have decided to offer plans 

on the exchanges. They are not new carriers. So I don’t think that 

is very robust competition. It is an indication that investors aren’t 

allocating capital to start new health plans, I think because of the 

regulatory impediments and the high cost of getting into the market. 

As far as the co-ops and the provider-sponsored plans, particularly the hospital-sponsored plans, I think the Administration envisions that picking up the slack and providing competition. But the 

co-ops are all—I think almost all under water, and one has already 

declared bankruptcy, and I am not very optimistic that a lot of the 

provider-sponsored health plans are going to survive. We have done 

this in the past, and it has been demonstrated that hospitals don’t 

manage risk well. There is a reason why insurance companies 

exist. 

Mr. MARINO. Thank you. 

My time has expired. 

The Chair recognizes the Ranking Member, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Dr. Gottlieb, do you disagree with all of the studies that have 

proven that the cost of health care insurance premiums, the increases in the cost of insurance premiums has gone down since the 

onset of the Affordable Care Act? 

Dr. GOTTLIEB. What I see is that—— 

Mr. JOHNSON. Do you agree or disagree? 

Dr. GOTTLIEB. I disagree with the premise because what I am 

seeing is that costs are being shifted to consumers. So the cost of 

providing coverage for employers, which is what the Administration often cites, has in fact been growing less quickly than in the 

past. 

Mr. JOHNSON. My question has to do with the premium growth, 

the cost of premiums, the growth in the cost of premiums. 

Dr. GOTTLIEB. Right. So the cost that would—— 

Mr. JOHNSON. Not shifting of cost to consumers. I am just talking 

about the cost of health care premiums and the rise in the cost of 

health care premiums. Do you agree that the price increases have 

moderated since the passage of the Affordable Care Act? 
107 

Dr. GOTTLIEB. I disagree because the cost to consumers has gone 

up. 

Mr. JOHNSON. All right. Thank you. You just refuse to answer 

that question. 

Well, let me ask you this. Do you—— 

Mr. MARINO. Just a minute. I am going to give the witness 30 

seconds to respond to that. 

Mr. JOHNSON. No, no. From whose time, Mr. Chairman? 

Mr. MARINO. From your time. You have to let the witness—— 

Mr. JOHNSON. No, no, no, no. 

Mr. MARINO. You must let the witness answer the question. 

Mr. JOHNSON. Mr. Chairman, the witness has not answered the 

question. 

Mr. MARINO. Dr. Gottlieb, please respond if you would like to respond. 

Mr. JOHNSON. I have a problem with parliamentary order. Parliamentary inquiry, Mr. Chairman. 

Mr. MARINO. Yes? 

Mr. JOHNSON. Who controls the time during my questioning of 

my witnesses? 

Mr. MARINO. I do. 

Mr. Gottlieb, answer the question. 

Mr. JOHNSON. All right. Well, I am going to take exception. 

Mr. MARINO. Exception noted. 

Dr. Gottlieb, you may go ahead and answer the question. 

Mr. JOHNSON. In fact, I am just going to—if you won’t—— 

Mr. MARINO. No, you have to give the witness an opportunity to 

answer the question. 

Mr. JOHNSON. Mr. Chairman, when I ask a question and the witness refuses to answer the question—— 

Mr. MARINO. You didn’t give him an opportunity to answer the 

question. You kept cutting him off. 

Mr. JOHNSON. The witness refused to answer the question, and 

it is my prerogative, Mr. Chairman, as the questioner, to—— 

Mr. MARINO. You still have your time, you still have your time. 

Mr. JOHNSON. My time is running because I am responding to 

your interruption of my questions. 

Mr. MARINO. You continue to ask your questions, and we will 

give him 30 seconds when you are—— 

Mr. JOHNSON. Mr. Chairman, you started at 4 minutes and 20 

seconds—I had 4 minutes and 20 seconds—— 

Mr. MARINO. Go ahead. 

Mr. JOHNSON [continuing]. When you interrupted me to try to 

give this witness an opportunity to answer my question in the way 

that he wanted to answer it. 

Mr. MARINO. You have the extra time. Go ahead again with your 

questions. 

Mr. JOHNSON. Okay. All right. 

Now, Dr. Gottlieb, I asked you a question, do you agree or disagree with the studies that have shown that the rise in premium 

costs has been moderated since the passage of the Affordable Care 

Act, and you went into a discussion about shifting of costs to consumers. That is not my question. I will give you one last chance 
108 

to answer my question, and I think you understand my question. 

Do you agree or disagree with those studies? 

Dr. GOTTLIEB. I disagree with those studies because I think they 

are flawed. 

Mr. JOHNSON. All right. Thank you. All right. 

Now, Dr. Gottlieb, do you agree that Congress should repeal the 

McCarran-Ferguson Act antitrust exemptions for insurance companies? 

Dr. GOTTLIEB. No, I do not. 

Mr. JOHNSON. All right. Thank you. 

Dr. McAneny, I hope I pronounced that correctly. In a speech in 

June of 2015, FTC Commissioner Julie Brill stated that while the 

antitrust agencies are watchful of anticompetitive behavior, not one 

accountable care organization has been challenged for anticompetitive conduct by the antitrust agencies. What is your response to 

this approach to provider collaborations in the health care marketplace? 

Dr. MCANENY. I think the antitrust laws are very confusing to 

people, with or without an affordable care organization, to try to 

create an organization that allows us to collaborate as physicians, 

take economic risk together, and to do clinical integration. And I 

can’t speak as a physician since I am not a lawyer to what the FTC 

and DOJ are doing with that, but we feel that if we could release 

some of those barriers and make those laws much more clear so 

that physicians could understand them and stay within the confines of the law but still be able to collaborate together, we 

wouldn’t have to become employees or consolidate the industry in 

order to create a lot of new mechanisms that could deliver better 

care at a lower cost. 

Mr. JOHNSON. Thank you. In your written testimony you argue 

that Medicare and Medicare Advantage are distinct product markets. Why is Medicare not an adequate substitute for Medicare Advantage, and what effect would consolidation in the Medicare Advantage market have on physicians and seniors? 

Dr. MCANENY. Thank you, sir, for that question. The AMA has 

found that very few patients will switch back and forth from Medicare Advantage programs to plain fee-for-service Medicare, in part 

because of the concerns of being able to pay the 20 percent co-pay 

with fee-for-service Medicare. The Medicare Advantage programs 

have been given extra money to be able to provide better benefits, 

and patients respond to that. 

What we find is that when those patients consolidate into fewer 

and fewer Medicare Advantage plans, that if the benefits are not 

what the patient wants, if a physician, for example, is not on the 

panel of that Medicare Advantage program, that they have a distinct disadvantage in being able to get care and they are often 

forced to pick between their primary care doctor, who is on one, 

and their specialist is on another, and they need both of us. So we 

look at the managed care Medicare Advantage market as being distinct from fee-for-service Medicare for those reasons. 

Mr. JOHNSON. All right. Thank you. 

Mr. Greaney, in their testimony, both Mr. Pollack and Dr. Gottlieb observed that consolidation in the health care marketplace was 

hastened by the ACA. What is your response to that? 
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Mr. GREANEY. I think that is a bit misleading. Surely the Affordable Care Act encourages providers to get together, to consolidate, 

to form efficient delivery systems, and that is certainly true. But 

nothing in the ACA encourages consolidation to monopolies and oligopolies. In fact, just to give you an example, your doctor probably 

tells you a glass of wine with dinner every night is probably a good 

thing, but he would counsel against two bottles of wine, and I think 

that is what we are talking about here. We are talking about consolidation that is excessive. 

As I have said in my testimony, the Affordable Care Act is premised on having competitive units at the delivery level and at the 

insurance level so that the ACA relies on competition and relies on 

healthy enforcement of the antitrust laws. If you look to the string 

of victories the FTC has achieved, both in hospital markets and in 

challenging physician mergers, it is doing its job. So to that extent, 

blaming the ACA for consolidation is misleading because you would 

be hard pressed to find a health care economist or policy person 

who thought what was needed was anything but the fragmentation 

that we have had heretofore. 

Mr. JOHNSON. Thank you, and I yield back. 

Mr. MARINO. The Chair recognizes the Chairman of the full Committee, Congressman Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Dr. Gottlieb, I think you wanted to explain your answer of trends 

with regard to insurance premiums, and I think you should be afforded that opportunity, so I will give that to you now. 

Dr. GOTTLIEB. Thank you, Congressman. What we have seen in 

the market and what the Administration often talks about is the 

cost of coverage, of providing coverage for employers to their employees and premium growth, and it is true that premium growth, 

at least in the recent years, has moderated, although we are seeing 

it accelerate quite dramatically. 

But what has happened is we have seen a very dramatic shift 

of cost to consumers. We have seen the advent of very narrow 

plans, closed drug formularies, closed networks, exclusive provider 

organizations, and all of that has served to shift costs onto consumers. I think that that is a big component—— 

Mr. GOODLATTE. Things that aren’t covered by the insurance, in 

other words? 

Dr. GOTTLIEB. Exactly. 

Mr. GOODLATTE. So the opposite of what is purported to be the 

benefit of Obamacare? 

Dr. GOTTLIEB. Well, closed drug formularies in particular is a 

real new phenomenon in the market. The only place where we had 

seen closed drug formularies prior to implementation of the Affordable Care Act was in Medicare Advantage. But Medicare Advantage had the protected classes which made sure that the 

formularies were robust. 

What is happening in the Affordable Care Act in the exchangebased plans is there are closed drug formularies where if the drug 

isn’t on the plan’s formulary, you are completely out-of-pocket and 

what you spend doesn’t count against your deductible. 

Mr. GOODLATTE. I need to take my time for other things. So what 

you are saying is that whether or not insurance premiums are 
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moderating, that doesn’t necessarily mean that the overall cost to 

the consumer and overall cost to society—— 

Dr. GOTTLIEB. Exactly. 

Mr. GOODLATTE [continuing]. The overall cost to taxpayers has 

moderated. 

Dr. GOTTLIEB. It has gone up quite a bit to the consumer. 

Mr. GOODLATTE. Right. Thank you. 

Dr. McAneny, I may come back to Dr. Gottlieb if I have time, but 

he said that health system ownership of medical practices is an undesirable trend. You said that you wanted to make sure that they 

had choice. In a moment I will go to Mr. Pollack and give him an 

opportunity to respond as well. But one of the things that I see and 

one of the things I hear from my physicians is that they are actually in competition with the employees who are at the hospital, and 

it is very difficult to compete with them when there are such disparate reimbursement rates that take place in the hospital compared to what the physician may get in their private practice. 

What is your observation about that? 

Dr. MCANENY. Well, Mr. Chairman, I think you summarized it 

very well, that it is very difficult for individual physicians to be 

able to compete with hospital-based physicians because they have 

the leverage that we as individuals lack to be able to negotiate 

with insurance companies. We find that the regulatory burden is 

still there in the independent market and that hospitals are able 

to purchase a lot of the same supplies and everything else that we 

need to purchase at a lower price or a subsidized price. 

Mr. GOODLATTE. Mr. Pollack, I take your point with regard to the 

cost of operating a hospital, but I also am concerned that if we are 

trying to promote competition and there is only one hospital in a 

community, and that hospital has people providing services in this 

area, how do the private practitioners successfully compete with 

the hospital practitioners, if you will, in that kind of marketplace, 

and what are the trends there? I see a lot of consolidation. I think 

Dr. McAneny said it is already at 70 percent, perhaps, of physicians going in to work at hospitals. Where do you get the competition if they all go into the hospital and nobody is out there providing that competition? 

Mr. POLLACK. I think some of the competition is among hospital 

systems, and I think what we have to remember here is that we 

have a new way of paying for a lot of care in terms of different 

mechanisms that require payment for taking care of people. 

Mr. GOODLATTE. What if there is only one hospital in the community? 

Mr. POLLACK. By the way, you made an eloquent point at the 

very beginning, Mr. Chairman, about how health care is a unique 

kind of market. 

Mr. GOODLATTE. I agree with that. 

Mr. POLLACK. There are 13—— 

Mr. GOODLATTE. But I am still not going to let you off the hook 

with that. We still have to find ways to compete. 

Mr. POLLACK. No, no, your point is very well taken. There are 

1,300 critical access hospitals in this country in areas in which 

there really is not competition. There are another 500 or so sole 
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community providers or rural referral centers. So inherently, it is 

hard to say that competition plays out in a very even—— 

Mr. GOODLATTE. Competition amongst hospitals is an important 

issue, and we are going to get to that as a part of this series of 

hearings that we are going to hold. But right now I want to talk 

about competition between doctors working in the hospital and doctors who are working outside the hospital. How do we promote 

that? How do we assure that we continue to have competition from 

physicians who want to practice on their own; or, from a societal 

standpoint, from an economic standpoint, is it important that they 

be outside the system and practice on their own? 

Mr. POLLACK. And I think that pluralistic approach still exists 

today. But I think what is important to recognize is that there are 

a lot of physicians that want to be in practices that are group practices, whether they are on their own or whether they are employed 

arrangements. There are a lot of physicians in the next generation 

that are coming out of medical school that actually want to be a 

part of these groups because they don’t want to take calls 24/7 and 

they want to be part of these teams. 

Mr. GOODLATTE. Mr. Chairman, if I might, I would like to let Dr. 

Gottlieb answer this same question that I just asked Mr. Pollack. 

Mr. MARINO. Without objection. 

Dr. GOTTLIEB. What was the question? 

Mr. GOODLATTE. The question is how do we assure continued 

competition in communities that have only one hospital system 

when the fact of the matter is more and more physicians go to 

work in the hospital and take up that competition? 

Dr. GOTTLIEB. I think we don’t, and I practice in one such community. I think when the hospital monopolizes most of the local 

physicians, it is very hard to have provider-based competition. I do 

believe that provisions in the Affordable Care Act have skewed the 

market in this direction, quite deliberately so. I think it is part of 

a broader political philosophy that I think, to date, hasn’t been successful. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. MARINO. The Chair now recognizes the Ranking Member of 

the full Judiciary Committee, Congressman Conyers from Michigan. 

Mr. CONYERS. Thank you, Mr. Chairman. 

I welcome the witnesses, apologize for my late arrival. 

I would like to start off with Professor Greaney by asking him 

what he has heard or observed here today that you think we ought 

to be most cautious about in terms of this analysis between competing aspects of providers for the Affordable Care Act. 

Mr. GREANEY. Thank you, Mr. Chairman. I think several of the 

things that have been mentioned today—— 

Mr. CONYERS. Pull that mic a little closer. 

Mr. GREANEY. Several of the things that have been brought up 

today I think are absolutely valid criticisms of the current state of 

the law. I think the disparate payments between site of payment 

really makes no sense. MedPac has put out studies showing that 

those payments should be adjusted appropriately. That is the kind 

of change where I think Congress can step in and correct preexisting law, law that preexisted the ACA, and take steps. 
112 

Chairman Conyers has been talking for many years about the 

McCarran-Ferguson Act. You heard Dr. McAneny’s testimony about 

changing the fraud and abuse laws to permit and encourage greater cooperation short of mergers. There are many of those steps that 

can be undertaken, and I think Congress should devote its attention to those things because we have a lot of old law that is like 

barnacles on the hull here. There is old law that is dragging competition down, but they preceded the ACA, and Congress could and 

should step up to the plate and deal with them. 

Mr. CONYERS. Thank you. 

I wanted to yield, if he needs time, to my friend from Georgia, 

Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. I will go back to Dr. 

McAneny. 

You mentioned the narrowing of physician networks, which happens when insurance companies consolidate. Could you tell us a little bit more about that issue? 

Dr. MCANENY. Thank you very much, Mr. Johnson, for that question. That is one of our major concerns. When a patient who has, 

in my field of cancer, a specific need, say a genomics test that says 

a certain drug is indicated, I have to be able to go to my insurance 

company and convince them to provide that medication or that 

service or that referral. The more consolidated the industry becomes, the further away it is from my individual patient, the harder it is for me to weave through the regulatory areas of the insurance company to be able to get to somebody who can approve that 

drug for that patient, and it often takes months. 

The more burdens that—— 

Mr. JOHNSON. And, by the way, that is not the regulatory apparatus of the government. You are talking about the regulatory apparatus of the insurance companies. 

Dr. MCANENY. Exactly, sir. 

Mr. JOHNSON. All right. Proceed. 

Dr. MCANENY. Yes. It gets very difficult for me to be able to advocate appropriately for my patients. When the insurance company 

is small and local and they need me in their network, then they 

will listen to me when I try to get something for a patient. If I go 

to a national network or I am obviously always advocating for a patient, I become a disruptive physician and I am less inclined to be 

included in that network because I spend more money and I am a 

thorn in the side of insurance companies who don’t want to buy 

those expensive drugs and processes that Dr. Gottlieb was talking 

about. 

So it is very intimidating to physicians. If you know in your practice that you can’t do without a given payer, they know that they 

don’t really have to pay attention to what you are requesting because you can’t afford to leave. 

Mr. JOHNSON. And consolidation aggravates this situation. 

Dr. MCANENY. It will make it far worse. Yes, sir. 

Mr. JOHNSON. All right. Well, let me ask Professor Greaney, contrary to reports that costs have gone up overall for consumers since 

the passage of the Affordable Care Act, a shifting of, say, premium 

increases to higher deductibles and co-pays and that kind of thing, 

what is your response to that, sir? 
113 

Mr. GREANEY. We have seen a number of studies where competition has lowered premiums, has lowered costs. The exchanges are 

a particularly good example where it has occurred, has had a very 

beneficial effect on cost. The individual markets experienced much 

better cost experiences, and I think the message here is that competition works. 

Mr. JOHNSON. Yes, 9.4 million seniors have saved more than $15 

billion on prescription drugs since the passage of the Affordable 

Care Act, an average of $1,598 per senior. 

Mr. GREANEY. Yes. 

Mr. MARINO. You can finish, sir. The gentleman’s time has expired, but you can finish your point. 

Mr. GREANEY. Well, I was just going to mention that one important driver of cost is whether we get new entry into markets, and 

there is a particularly interesting example in Arkansas. When it 

expanded Medicaid, Arkansas said let’s have the private option, 

let’s have private insurers cover the new Medicaid beneficiaries. 

What happened there? Not only did the new beneficiaries get covered, but it increased competition in the marketplace in Arkansas, 

so everybody benefitted, including the private market. It went from 

two competitors to six. So private competition can be generated, 

and I think states that haven’t expanded Medicaid are shooting 

themselves in the foot in the private market as well. 

Mr. CONYERS. Chairman Marino? 

Mr. MARINO. Yes, sir? 

Mr. CONYERS. Could I ask unanimous consent for one question 

additional? 

Mr. MARINO. Yes, sir, without objection. 

Mr. CONYERS. I thank you so much. 

My last question is to Professor Greaney again, and it is about 

the implementation of the health insurance exchanges under the 

Affordable Care Act. Has it promoted competition, in your view? 

Mr. GREANEY. Oh, most certainly. I think we have seen a lot of 

markets where there has been new entry and there has been a 

shakeup of the markets. But there are still plenty of markets 

where we haven’t had much competition, new entry in exchanges, 

and that is why Congress is rightly concerned about the insurance 

mergers, because we want new entry. But if we have gone from five 

down to three, the most likely new entrants are going to disappear. 

So that is a concern on the horizon. 

Mr. CONYERS. Thank you, Mr. Chairman. 

Mr. MARINO. The Chair now recognizes the Congresswoman from 

California, Ms. Walters. 

Ms. WALTERS. Thank you, Mr. Chairman. 

I want to direct the question to Mr. Durham, and then give Mr. 

Pollack an opportunity to respond. 

Mr. Durham, your testimony raises concerns about hospital consolidations. The testimony cites an analysis that claims, ‘‘Hospitals 

and acquisitions increased 44 percent between 2010 and 2014, with 

a total of 442 transactions occurring during this timeframe.’’ Surely 

not all of these mergers have an anticompetitive effect, and how do 

we differentiate between a consolidation that increases competition 

and one that decreases competition? 
114 

Mr. DURHAM. A very good question, Congresswoman. I believe 

that is really a detailed analysis that the Department of Justice 

conducts. They look at data that is not publicly available and examine it at the local market. It is critical that this analysis be done 

in specific geographic areas to really determine the potential impact on competition. 

As I mentioned in my testimony and oral statement, DOJ sees 

that there are circumstances where mergers can create efficiencies 

and enhance competition. So it really depends on what they are 

seeing in the local geographic market. 

We are all about driving value, moving away from the antiquated 

fee-for-service model that pays for volume and providing value for 

patients, lower cost, and higher-quality care. And these mergers 

can certainly make that happen, particularly when two companies 

have different areas of expertise. One may have expertise and may 

have done a lot in chronic care management, while another has 

done more in value payment models in collaboration with providers. Bringing those two together can bring higher value to patients, and that is what we are focused on in terms of bending this 

cost curve. 

Ms. WALTERS. Thank you. 

Mr. Pollack? 

Mr. POLLACK. Thank you very much for that question, I appreciate it. Mr. Durham’s testimony has a litany of studies that talk 

about how consolidation increases prices. I think a lot of them are 

old. They are old data. They are incomplete. For example, there is 

one study that is mentioned in the testimony that looks at 12 

states, but they say that they can only find a relationship in three 

out of the 12 states. The three states that they look at—Ohio, Georgia, and Missouri—have a lot of critical access hospitals, rural referral centers, and sole community providers, which we said inherently are a different situation. 

The newer studies that we have seen from JAMA show that, in 

fact, we have reduced costs. We have seen other studies that show 

that our price growth is at historic lows, and we have studies that 

I would be glad to submit to the record that do not show a correlation between consolidation and price increases. 

The last and very important point is that we also did a study 

that I would submit for the record by the Center for Health Transformation, and it looked at hospital deals, if you will, between 2007 

and 2013. There were 607 in that period. That represents only 12 

percent of our field. Of the 607 that occurred, all but 22 resulted 

in at least five hospitals still remaining after those consolidations. 

And of the 22 where there were less than five, if you go through 

the stories of each of those 22, some were to prevent a bankrupt 

hospital from going out of business entirely, and many were to reconfigure hospitals so they can exist to be an access point in communities that wouldn’t have access to care. 

So I think in the hospital world, our arrangements are focused 

on a different objective, which is to move to the future in terms of 

rationalizing the system and finding ways to preserve access where 

many just wouldn’t exist if we didn’t have these arrangements. 

Thank you. 

Ms. WALTERS. I yield back. 
115 

Mr. MARINO. Thank you. 

The Chair now recognizes the congressman from Georgia, Mr. 

Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

Mr. Greaney and Dr. Gottlieb, I have a question. I will frame the 

question and I would like, Mr. Greaney, if you would start; and, 

Dr. Gottlieb, if you would weigh in on this as well. 

One, I want to thank the Chairman for holding this series of 

hearings that we are going to be having looking at these issues and 

on similar topics, but I also want to focus a little bit today on one 

because I want to encourage that there be a hearing on this issue 

in particular, the effects of PBMs on competition in the health care 

market and how Obamacare may have affected the competition in 

that area. 

This summer the FTC approved CVS’ acquisition of Omnicare 

without conducting a significant investigation into the combination 

of the largest long-term care pharmacy with the largest Part D 

PBM. The FTC’s lack of action ties into other concerns I have 

heard from my constituents about the conduct of PBMs and their 

effect on competition. 

Independent community pharmacists play a vital role in Northeast Georgia, where I am from, a rural community, and across the 

Nation, but they are being crippled many times by burdensome 

regulations, and also the often, at times, abusive PBM practices. 

My constituents and I share a concern that the way Obamacare 

treats the PBMs will further harm independent community pharmacists. 

To that end, Mr. Greaney and Dr. Gottlieb, I would like to know, 

in your opinion, what can be done to ensure independent pharmacies and PBMs can compete on a level playing field? And in this 

post-Obamacare environment, has Obamacare really affected that? 

And do you feel like, aside from congressional action, in the PBM 

space, could the FTC be doing more in this area of PBMs and independent pharmacies, especially in the health care chain? 

So, Mr. Greaney, I will start with you. 

Mr. GREANEY. Well, surely I agree, Congressman, that the PBMs 

are like other intermediaries in health care. They play an important role in containing costs and doing the bargaining. But if their 

size and their market structure is concentrated, we face the same 

problems we face in other industries. And I think, particularly in 

PBMs, there was the controversial decision of the FTC to allow the 

Express Scripts-Medco merger years ago—— 

Mr. JOHNSON. Excuse me, sir. Can you pull the mic up? Thank 

you. 

Mr. GREANEY. Sure. There was some question about the FTC’s 

decision to let that merger go forward. At the time, the FTC was 

comforted by the fact that there would be new entry and smaller 

participants would generate more competition. The FTC has done 

retrospectives of its own decisions, and this might be a good time 

for it to do so, to look back and say how has that worked out. To 

the extent that their prior prediction has proven untrue, and I 

don’t know that it has but I have heard talk that it has, maybe it 

would be time for a retrospective to see how the market is operating. 
116 

Mr. COLLINS. Dr. Gottlieb? 

Dr. GOTTLIEB. I am less concerned, to be honest about it, about 

the vertical integration of PBMs trying to buy acquisitions outside 

their core space than the horizontal acquisitions that would increase their market concentration. The reality is we have a concentrated market of PBMs, and the Express-Medco merger would 

concern me more than the Omnicare acquisition because it is more 

of a vertical integration. What is happening is the PBMs are trying 

to sort of buy their way out of their current market to try to capture more margin from other market segments. 

I think that this would all be less concerning if it was easier for 

new PBMs to get started and existing PBMs that are small to continue to grow by trying to offer focused services and differentiate 

themselves in the marketplace. Quite frankly, I think the health 

plan consolidation will make it harder for smaller PBMs to continue to grow and will potentially give more market share to some 

of the existing large PBMs. 

Mr. COLLINS. One of the things right there that concerns me is 

there is a PBM market there, and we understand that, but my 

problem is concerning our independent pharmacies and others who 

are outside this who would provide a service in communities in the 

health care chain that are basically, because of many times the 

practices, small or large, are being worked out. 

I wasn’t going to do this but, Dr. McAneny, do you all have anything to add on that, especially from—because I have heard from 

physicians as well who struggle with their patients to get drugs 

filled in a certain area because of restrictions, especially in my 

area, a rural area. 

Dr. MCANENY. I would agree with you as another person from a 

rural area, sir. What we have found in practice is that the PBMs 

add another barrier because of their large consolidated structure 

that makes it hard for us to get patients what we want, and it has 

driven a lot of independent pharmacies out of business, and those 

were the pharmacies where, when somebody needs something at 

midnight, you can get the pharmacist to provide the drug. When 

it is a large consolidated company living a thousand miles away, 

they are not going to open a store to get patients something in the 

middle of the night. 

Mr. COLLINS. I am glad I am not one of the only ones that has 

actually been ringing this bell. 

This panel is great and our time is limited. Mr. Durham, I think 

we have had a chance to talk about this, how we deal with this in 

isolation. I appreciate you being here and the challenges of rural 

health care in a market in which consolidation is really not an aspect because you have a dominant player and you have a lot of 

smaller players due to many things. Obamacare, frankly, is one of 

them. They are struggling right now in many markets. 

So again, Chairman, great hearing. I think this is something we 

need to continue. Again, my folks a little bit more on that issue in 

the whole health care chain, along with our hospitals, because it 

has been effective there as well. 

With that, I yield back. 

Mr. MARINO. Thank you. 
117 

The Chair now recognizes the congressman from Texas, Mr. 

Ratcliffe. 

Mr. RATCLIFFE. Thank you, Mr. Chairman. 

You know, during my time in Congress, already I have had to 

fight to protect the 700,000 Texans that I represent from the perversely named Patient Protection and Affordable Care Act because, 

let me assure you, the stories that I get from my constituents certainly confirm that the law does not protect them and that it is certainly not affordable. Time permitting, I could relate to you hundreds and hundreds and hundreds of examples like constituents of 

mine in Paris, Texas, a business owner who has seen his monthly 

cost go up $300 and his deductible go up $3,000; or another constituent in Gilmore, Texas who has seen his deductible go up over 

$7,000 this year. And now the news is even worse because we are 

told that the cost of insurance plans on healthcare.gov in Texas are 

expected to increase by another 25 percent next year. Does that 

sound affordable to anyone? I don’t think so. It certainly doesn’t 

seem that way to my constituents because survey after survey 

show that 80 percent of them are opposed to Obamacare and want 

to see me help get rid of it. 

And it is not just individuals. It is hospitals. The impact on hospitals in my district has been, frankly, gruesome. I have had hospitals in Gilmore and Linden and Mt. Vernon and Clarksville close 

in just the last 2 years alone. How do my constituents who live in 

those rural areas get access to life-saving care and treatment that 

they need? How is this improving access to my constituents? 

The simple truth is that it is not, that Obamacare has reduced 

access, it has increased the cost of health care, and it has lowered 

the quality of health care in my district. So I appreciate, Mr. Chairman, you having this hearing so we can learn from these witnesses 

on how we can keep insurance affordable, hospitals accessible, and 

health care competitive under this terrible law. 

So let me turn and start with you, Dr. Gottlieb. Do you believe 

that the heavy regulatory burden under this law is driving solo and 

small group practices out of the health care market? 

Dr. GOTTLIEB. Well, I absolutely do. I think the ACA provisions 

are biased in favor of consolidation of physicians into large systems. I think the arbitrage that we talked about today between the 

Medicare billing system, the inpatient-outpatient billing system is 

certainly one. But also if you look at the payment reforms, they are 

all structured around the idea of doctors practicing in integrated 

delivery systems, but they are biased in favor of a hospital owning 

that delivery system. For example, there is a need for physical infrastructure of the IT system. The anti-Stark provisions don’t apply 

unless doctors are part of those new arrangements. 

I think there is a way to try to come up with policies that give 

an equal footing to doctors practicing independently but still practicing in an integrated way, but not requiring them to sell their 

practices. 

The other thing we need to keep in mind is that the law also increases medical practice costs quite substantially at the same time 

that physician reimbursement is being held flat under Medicare 

and probably declining commercially. So doctors are seeing their 

costs go up year over year, and they are seeing their revenues stay 
118 

stagnant or decline. That is also forcing them into these arrangements. 

Mr. RATCLIFFE. So, Dr. Gottlieb, what impact will this have on 

competition? 

Dr. GOTTLIEB. My view is—and I practice in a market that has 

a lot of doctors, but I believe in my market competition is declining 

because a handful of health systems are monopolizing the local providers. 

I think the bigger question before this Committee is also the 

issue of productivity. In these arrangements, there is no good data 

demonstrating that productivity actually improves among providers 

inside these arrangements and that medical practice itself benefits 

from scale. There are a lot of studies demonstrating the opposite. 

I am sure you could find one or two studies that demonstrate the 

counterpoint, but there is a body of literature now showing that 

productivity goes down, and that should worry us. 

Mr. RATCLIFFE. Thank you, Dr. Gottlieb. 

Mr. Durham, can you comment on Obamacare’s impact on access 

to mental health services and what is the insurance industry doing 

about it? 

Mr. DURHAM. Certainly, Congressman, I would be happy to talk 

about that. Our industry has long supported the Mental Health 

Parity Act, and health plans have been committed to implementing 

parity requirements to ensure that patients have access to highquality, evidence-based treatments and care at affordable prices. 

Now, there is strong enforcement of parity laws, and health plan 

benefit and coverage options related to mental health services must 

be approved by state and Federal regulators. Health plan coverage 

decisions for mental health and substance abuse follow evidencebased guidelines and recommendations from leading medical and 

behavioral health specialists, and our plans are reviewing new evidence every day to make sure patients have access to safe and effective treatments. 

There is still more work to be done here to address the wide variation in clinical practice and the cost of health care that pose serious barriers to patient access. We are committed to improving the 

value of care for all patients, particularly those that are suffering 

from mental problems. 

Mr. RATCLIFFE. Thank you, Mr. Durham. 

I see my time has expired. Mr. Chairman, I will yield back. 

Mr. MARINO. Thank you. 

Seeing no other Members to ask questions, this concludes today’s 

hearing. 

I want to thank all the witnesses for attending and for being 

present. You all contributed to answering questions that are important to us. Without objection, all Members will have 5 legislative 

days to submit additional written questions for the witnesses or additional materials for the record. 

This hearing is adjourned. 

[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.] 
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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Response to Question for the Record from Scott Gottlieb, M.D., 

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