Antitrust: The U.S. Vs. Michigan Blue Cross Blue Shield

Today's news of the overreaching federal state brings reports of antitrust action by the US Department of Justice against Blue Cross and Blue Shield of Michigan.  The purported violation? As Michigan's largest health plan, BCBS was able to persuade hospitals not to charge lower fees to any other carrier.  According to the story, other health plans paid hospitals 25 percent more than BCBS.

I don't want to wade to deeply how Michigan BCBS has maintained such a dominant position.  A credible argument is that the tax breaks it enjoys for being the insurer of "last resort" give it an advantage (and cause political conflict with other insurers in the state).

Nevertheless, this case demonstrates the absurdity of federal antitrust: The law proposes to punish one competitor for having the most market share.  If Michigan BCBS has a high market share because of malformed state policy, then the state of Michigan should address this.

More fundamentally, the idea that insurers are the most efficient agents for patients to benefit from the lowest hospital fees is, I believe, deeply flawed - but that is another topic for another day.

The absurdity here is that federal antitrust law has reached into a parochial arrangement between Michigan BCBS and Michigan hospitals - and which has nothing to do with interstate commerce.  Remarkably, the state of Michigan has joined the U.S. DOJ in the lawsuit.

If Michigan's own antitrust laws are not adequate to address the purported peril, it would be far better for the state's politicians to reform them, instead of kicking the ball upstairs to the remote US DOJ, which surely has less understanding of local conditions than the state government.

A while back, I wrote about this topic in a Health Policy Prescription, with respect to a US DOJ case against doctors allegedly colluding against health plans.