September 16 2016 Kevin OConnor 608 2842600 koconnorgklawcom 160964811 2 Overview Main Takeaways History of Health Care Transformation in WI in the1980s How Selffunding Will Affect These Markets ID: 799735
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Slide1
The Role of State Government in Wisconsin’s Health Care Markets
September 16, 2016
Kevin O’Connor
(608) 284-2600/
koconnor@gklaw.com
16096481.1
2
Overview
Main Takeaways
History of Health Care Transformation in WI in the1980s
How Self-funding Will Affect These Markets
Slide3I. Takeaways
A. Wisconsin enjoys cost-effective, high-quality health care, especially in South Central WisconsinWhy? In large part, it was the result of:- Application of antitrust laws to health care- Smart purchasing decisions by the state- Avoidance of ill-conceived regulation 3
Slide4Takeaways
Self-funding Could Undermine These Policies and Results By:- Unraveling the integrated delivery of care- Complicates the state’s exercise of “buyer power” - Shifting risk to taxpayers of health care cost increases4
Slide5WI Health Care History 101: Antitrust
Arizona v. Maricopa County Medical Society (1982): Supreme Court holds that health care entities subject to antitrust lawsProviders and Insurers Required to Compete on the Merits, Like Other IndustriesCaused Sea Change in Approaches to Health Care Competition and Collaboration5
Slide66
II. Purpose of Antitrust Laws
Antitrust laws promote business competition.
Competition is the best way to achieve low prices, high quality, and best service.
Potential antitrust issues arise whenever competition may be lessened.
By coordination among competitors; or
By strong firm's actions to limit weaker competitor's access to market.
Antitrust laws punish anticompetitive behavior
.
Slide7History Continued: Closed Panels
State Regulatory Changes in 1980s- Wisconsin eliminates ban on closed panel plans - Prior to 1983, only two insurance companies operated in WI and, by law, they had totally open panels- Closed panels began to be formed as antitrust laws became relevant7
Slide8More History: The State as Power Buyer
ETF develops aggressive bidding process for state employees in 1983Worked in tandem with antitrust enforcement and allowance of closed panelsCaused massive reorganization of markets in Dane County and, to lesser extent, in other parts of the state8
Slide9The Result? Vertical Integration
South Central Wisconsin has three* vertically-integrated systems that compete vigorously1. Dean Health Plan/Dean Clinic/St. Mary’s Hospital2. Physicians Plus/Unitypoint Meriter/MMG3. Unity/UWH4. *GHCSCWBasic Economics: Intense competition = lower costs + improved quality9
Slide10The Rest of the Story:
Dumb Regulation Avoided Regulation of Health Care Markets Can Undermine the Gains from CompetitionStates Can Exempt Private Anti-competitive Conduct from the Federal Antitrust Laws provided a State Actor Actively Supervises10
Slide11Hospital Rate Setting
Mid-1980’s: WI allows hospitals to coordinate their pricing with rate-setting agreements - Clearly illegal under federal antitrust lawsReaction? State sets up Hospital Rate Setting Commission to dictate hospital ratesReplaced by Cost Containment Commission (CON “light”)—eventually abolished11
Slide12COPA
Certificate of Public Advantage statutes passed by 20+ states, including WI, in 1990sPurported to immunize health care collaborations from federal antitrust Absence of supervising state actor undermined purpose- “Legitimate joint venture” allowed when clear conditions are met12
Slide13Dodging the Bullet
Wisconsin is fortunate that the policies put in place in the 1980’s were not undermined by counter productive regulation and state policies13
Slide14Can WI Dodge It Again?
Self-funding has superficial appeal, but- Will likely unravel connection between risk-bearing function and providing care- Change in incentives (essentially move to fee-for-service) antithetical to way these systems operate- Will allow providers to engage in opportunistic behavior 14
Slide15OFFICES IN MILWAUKEE, MADISON, WAUKESHA, GREEN BAY AND APPLETON, WISCONSIN
AND WASHINGTON, D.C.
The presentation and materials are intended to provide information on legal issues and should not be construed as legal advice. In addition, attendance at a Godfrey & Kahn, S.C. presentation does not create an attorney-client relationship. Please consult the speaker if you have any questions concerning the information discussed during this seminar.
Questions
or Comments?
Kevin O’Connor (608) 284-2600
koconnor@gklaw.com
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