In a Republican sweep of all the elected branches of the federal government, Donald Trump won the presidential election and Republicans retained control of the House and Senate. What does this mean for antitrust enforcement in the healthcare industry? Although the breadcrumbs are few and far between, we attempt to make some predictions.
Although in a typical Republican administration we would expect to see a more "pro-business" approach to antitrust and a focus on avoiding overenforcement, there is nothing typical about this Republican presidential candidate. The Trump campaign did not release an antitrust policy, and Trump made few comments about antitrust enforcement on the campaign trail.
The comments Trump did make suggest that he will want to continue an active antitrust enforcement program, at least in the media and technology sectors. For example, in May 2016 he commented that Jeff Bezos of Amazon had "a huge antitrust problem, because he's controlling so much, Amazon is controlling so much of what they are doing."1
Following the announcement of AT&T's planned takeover of Time Warner, Trump declared that it was "a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." In the same speech, he also complained about Comcast's 2011 purchase of NBCUniversal, saying that it "should never ever have been approved in the first place."2
It remains to be seen whether these statements carry through to actual enforcement action against Amazon or the AT&T/Time Warner deal, or inform Trump's approach to antitrust generally. Given the limited attention paid to antitrust in the campaign, a better barometer of the direction of antitrust enforcement policy will likely be Trump's choice of Attorney General and Assistant Attorney General for Antitrust, as well as his Federal Trade Commission (FTC) Chair and Commissioner appointments. If Trump appoints strong enforcers to these positions—and his attitude toward litigation suggests that he might—we would expect to see a continuance of existing antitrust enforcement policy, with a willingness to litigate and push the boundaries on difficult cases.
Healthcare Goals and Insurance Competition
One of the major campaign issues was the direction of healthcare in the U.S. and in particular the future of the Affordable Care Act (ACA). Consistent with Republicans' repeated attacks on the ACA since its inception, Trump promised to "repeal and replace" it. But the Trump Healthcare Policy states that healthcare under his administration will operate "[b]y following free market principles and working together to create sound public policy that will broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans."3 If this sounds remarkably like the "triple aim," which is the framework for major provisions of the ACA, that is likely because the underlying issues that led to the introduction of the ACA—an aging population, the need to reduce costs, and the migration toward a system based on value rather than a traditional fee-for-service model—have not gone away.
In statements made after the election, Trump suggested that his "repeal" of the ACA might not be as extensive as first thought: He expressed a desire to maintain popular provisions such as allowing parents to keep children up to age 26 on their healthcare plans, and preventing insurance companies from denying coverage because of preexisting conditions.
Trump ostensibly plans to achieve his healthcare goals by focusing on increasing competition in insurance markets. The theory is that by allowing the sale of health insurance across state lines and eliminating other restrictions on competition, such as the antitrust exemption in the McCarran-Ferguson Act, more insurance plans will compete for subscribers, resulting in lower prices and better-quality coverage.
In addition, Trump believes that eliminating healthcare for illegal immigrants will relieve healthcare cost pressures, and allowing tax deductions for health insurance premiums will incentivize consumers to buy insurance. But, without a mandate and subsidies, it is unclear whether these measures will be enough to keep healthy patients in insurance plans, or if they could prevent skyrocketing premiums in the face of the high-risk patient pool that will result from the preexisting condition waiver.
The preliminary Republican plans for healthcare suggest that Trump Administration antitrust enforcers will focus heavily on insurance company competition. Since much of the policy depends on competitive insurance markets providing multiple options for consumers, with the impact of competition keeping premiums down, we can expect significant concentration in insurer markets to be viewed with skepticism.
Although nothing has been said to date about provider concentration, the underlying drivers of the healthcare industry will remain intact, so incentives for hospitals and other providers to merge will remain. The significant body of economic evidence indicating that hospital mergers have historically led to increased prices and the continuing focus on cost will likely lead a Republican administration to encourage the existing FTC approach to hospital mergers. Less concentrative collaborations—such as accountable care organizations—are likely to continue to be favored by the antitrust regulators as the best means to address cost and quality issues while maintaining competition.
The recent news that former Republican FTC Commissioner Professor Joshua Wright will lead Trump's transition team on the FTC reinforces the view that the agency will continue its focus on healthcare antitrust. While Wright was notable for dissents in several cases, as well as for his focus on having a solid economics basis for agency decision-making, there were few opportunities for dissent in hospital merger cases.4 One area in which he has written that could have consequences for healthcare transactions is the FTC's assessment of efficiencies in the merger review process: in a non-healthcare case, he dissented from the Commission's enforcement action on the basis that the benefits to consumers flowing from the expected efficiencies from the transaction would outweigh the potential anticompetitive effects.5 Several of the transactions reviewed by the Commission in recent years, in particular the Advocate-NorthShore merger, had strong efficiency claims that were not credited by the FTC in bringing enforcement action. Perhaps these cases would be viewed differently by a Wright-led Commission.
Trump has also pledged to "drain the swamp" by eliminating federal agencies and reducing overall the amount of federal government intervention in markets and state government. Depending on how far this goes, it is possible that more healthcare policy and enforcement may shift to the states. Several states have already attempted to more closely manage their healthcare markets and bring healthcare antitrust enforcement "in house" through Certificate of Public Advantage (COPA) laws. COPA laws provide immunity from the federal antitrust laws in return for monitoring and supervision by the state. Although the FTC has consistently opposed such laws as shielding potentially anticompetitive conduct, proponents argue that the states are best placed to understand the needs of their communities and to regulate and manage provider relationships on an ongoing basis.
Although there is little conclusive evidence to go on at this point, it is likely that a Trump Administration will continue with an active antitrust enforcement program and focus strongly on supporting competition among insurance companies, as well as other actors in the healthcare industry. If Trump lives up to his campaign promises around reducing the federal government's part in policy and enforcement, we also may see the states taking on a more significant role in these areas.