Good afternoon and welcome, everyone. Thanks so much for joining us for this important event. My name is Martin Gaynor. I'm the Lester and Helen Hamburg University Professor of Economics and Public Policy here at the Heinz College at Carnegie Mellon, and special adviser to Assistant Attorney General Jonathan Kanter at the Antitrust Division, U.S. Department of Justice. I'll be joining Mr. Kanter for an informal fireside chat after his remarks.
As we all know, health care is one of the most important sectors of our economy. It's not only large — $1 in every $5 in the United States goes to health care. We spend over $13,000 for every woman, man, and child in the country, and this is when our federal poverty line is around $18,000. It's one of the largest sources of employment in the entire country, but it also is critically important because of the impacts on our health and well-being.
However, our health care system doesn't work as well as it could or as it should. Costs are high and getting higher, straining the abilities of average Americans to pay for health care, while the health of many of us is stagnant or getting worse. Adequate health care can be difficult to access. Medical bills are arbitrary, incomprehensible, untimely, and often incorrect, and health care workers often toil under poor working conditions and receive low pay. Outside of that, we're doing great. Look, I'm an economist; it's my job to put the dismal in the dismal science, so there you go.
Now Pittsburgh, where we are here, exemplifies both the best and the worst of U.S. health care. We have extraordinarily skilled and dedicated caregivers, institutions that invest in state-of-the-art medical technology and information technology, and pathbreaking innovations in medicine. However, we also have a health care system with market dominance and little competition, where patients have limited choices about where to receive treatment, health care workers have little choice about where to work, and the dominant firm engages in bare-knuckles tactics reminiscent of the robber barons that dominated this region so long ago.
It's therefore appropriate, timely, and important that we gather here today to hear about and discuss U.S. health care and what to do about it. It's now my pleasure to introduce Carnegie Mellon's Provost and Chief Academic Officer and the Thomas Lord Professor of Civil and Environmental Engineering, Jim Garrett. Jim is a nationally recognized engineer and lifelong Tartan, and has been a steadfast supporter of Carnegie Mellon's engagement with important policy issues and policymakers, and of the research and education that make our university a key contributor to advancing public policy. Please join me in welcoming Provost Garrett.
Thank you for that very kind introduction. I'll call you Professor Gaynor first, and then I'll refer to you as Marty from now on. Thank you, Marty, for that very nice, warm introduction, and it's a pleasure to be here with so many colleagues from the Heinz College and beyond for today's discussion. It's a very important topic, and I'll talk a little bit more about it.
As Marty said, health care in America is a topic that just continues to be at the forefront of national policy considerations and conversations, for all the reasons that Marty just said. It's an important issue that the Heinz College approaches with data, technology, and a commitment to finding solutions that positively impact society. And to that end, it's a true pleasure to be part of today's discussion with our special guest, who I'll introduce in just a moment.
But before I do, I do want to thank Dean Krishnan, who I understand is not able to be here today, but I do want to thank him nonetheless, and Marty and the entire Heinz leadership team for facilitating this very important conversation and many others like this on our campus. So let's give the Heinz College and Dean Krishnan and Professor Gaynor a big round of applause for sponsoring this. Thank you.
So now I'm pleased to introduce our keynote speaker, Jonathan Kanter. In 2021, Mr. Kanter was confirmed as Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice, and in this role he's responsible for the direction and execution of antitrust enforcement and competition policy at the Department of Justice. Throughout his career, Mr. Kanter has been a leading advocate for strong and meaningful antitrust enforcement and competition policy, and as an acknowledged global leader in antitrust, his work has focused on emphasizing aggressive enforcement and innovative, forward-looking approaches.
He's committed to making health care, one of the largest and most important sectors of the U.S. economy — again, as Marty has already made very clear — work to the benefit of all Americans. We're very fortunate to have Assistant Attorney General Kanter with us today, and I, and hopefully all of you, look forward to his speech and fireside chat to follow. So please join me in welcoming Assistant Attorney General Jonathan Kanter. Thank you.
Thank you, Provost, and it's just wonderful to be here and to see so many people gathering for this really important and meaningful discussion. Before I jump in, I did want to take a moment of personal privilege and extend my gratitude to Professor Gaynor, or as known to me, Marty, who is not only one of the nation's leading scholars and, for me, advisers on issues of health care and antitrust and competition, he is an incredibly empathetic, caring person who wants to contribute and has contributed so meaningfully to making our health care system better, to improving antitrust enforcement in this area. He's been invaluable to the Department of Justice, his previous tenure at the FTC, and his contributions going forward will make us all better off. So, Marty, thank you.
The time has come to fundamentally redefine our approach to antitrust and competition policy for health care. For the past three years, I've had the privilege to connect with people across the country. In the coming weeks, I will take time to reflect on my time and experiences at the Antitrust Division and the Department of Justice and to tout our tremendous achievements. But not today.
Throughout the country, I've heard deep-seated concern about the growth and expansion of monopoly power and monopsony power across our country and economy. In nearly every corner of our nation and nearly every industry, the story remains strikingly consistent: people want the opportunity to build better lives for themselves. They don't want handouts. They want to work hard and reap just rewards. They want a free and fair economy. Despite these admirable and righteous aspirations, however, too many people find that pathways to economic freedom are limited, shrinking, or worse, non-existent.
It is extremely striking to me that almost every conversation I have with concerned Americans eventually and inevitably turns to health care. I hear stories of patients trying to get coverage for their prescription medication — a medication that they've been taking for years — only to hear that it's no longer a preferred drug. This means for many patients paying more, having to switch to another drug with potentially adverse side effects, or dealing with their insurer's Byzantine step process to try to get coverage for the original medication.
I hear stories of doctors, nurses, pharmacists, caregivers who are burned out and disillusioned as their work increasingly devolves into battling corporate middlemen to secure care for their patients, as private equity rollups encourage cutting corners and short staffing. I hear the collective state of despair from patients, families, doctors, nurses, pharmacists, and health care professionals about the endless maze of paperwork and faceless middlemen that have overwhelmed the practice and receipt of medicine.
For patients, the paperwork you get in connection with health care is about as valuable as that online privacy policy that you click through. And I hear stories about how many Americans need to pay more money out of their own pockets despite paying hand over fist for health insurance. Foremost, this is a moral and ethical problem. The wealthiest country in the world should not let short-term profiteering get in the way of caring for the sick.
Nowhere is this clearer than in our national failure to take care of older Americans. From leaving their care decisions to the mercy of the algorithm to for-profit nursing homes, we must do better, do more to care for our aging population. We must do it with urgency. But our health care system also places enormous burdens on working-class Americans of all stripes and persuasions, who often do not have the luxury of generous insurance plans or the disposable income to cover the difference. On these bases alone, we must move faster. Lives literally depend on it.
But besides failing to provide care, the system is also exorbitantly expensive, puts enormous strain on our economy more broadly, and has ripple effects throughout the country. Overall, health care costs totaled $4.5 trillion in 2022. Of total health care spending, Medicare and Medicaid together accounted for approximately 40%. Many people do not realize how much of these government programs' spending flows through for-profit companies with high margins.
While Medicare has long contracted with insurers to offer privately run plans, they occupied a modest role until the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. At the time, the bill's proponents said that private plans would provide better coverage at affordable prices, helping, they said, to control the cost of Medicare by using marketplace competition.
Instead, Medicare Advantage has become substantially more expensive per patient to American taxpayers than traditional Medicare, and insurers exploit the system to charge the government more. For example, insurers have strong financial incentive to diagnose patients enrolled in their plans with additional conditions, whether or not they treat them. A recent Wall Street Journal report found that insurers charged Medicare about $50 billion from 2019 to 2021 for diseases, often unusual, that no doctor treated — none. Insurers earned almost $15 billion from one-hour home visits where nurses just inputted new diagnoses on a tablet, often with scant diagnostic equipment.
This is our money. This is your money — money that comes out of our paychecks in the form of payroll taxes used to fund programs like Medicare, which is a huge source of profit for America's insurers. And unlike federal income taxes, every working American pays for Medicare because it is deducted automatically from your paycheck.
Employer-sponsored insurance costs also continue to climb substantially. This is our money too. When employers' health care costs increase, workers pay for it dollar for dollar — stagnant pay, higher shares of premiums, and reduced coverage. For three years, employer premiums have increased by more than 5%, and family premiums for employer-sponsored health care insurance rose 7% this year.
When I speak to businesses around the country, what I hear is that the next biggest expense after payroll or salaries is health benefits. The cost of these benefits makes it more difficult for businesses to give workers raises. And as health care costs skyrocket, businesses are shifting more of those costs onto workers with insurance plans that require them to pay more: higher premiums, higher deductibles, higher co-pays, higher out-of-pocket minimums.
That's money you could be spending on other things that matter to you and your family and the necessities of life: groceries, gas for your car, education, saving for retirement. In short, American health care is struggling. A system that was supposed to introduce competition and efficiency has become less competitive, less efficient, and more wasteful. It presents the gravest and most complex challenges to competition policymakers that we've ever confronted.
And today, I would like to discuss the critical role for competition policy and antitrust enforcement to play in these confounding and pressing challenges. To be clear, I'm not suggesting that competition and antitrust is a one-stop-shop fix to our health care system — that would be naive and unrealistic. But antitrust and competition have an important, have an essential role to play. Undeniably, antitrust enforcement and competition policy are core tools, often the best tools, to address problems that flow from consolidation, anti-competitive conduct, and the emergence of increasingly disproportionately powerful players.
So how did we get here, and how can antitrust enforcers like us bring the next generation of cases to address the problems we now face? For most of my lifetime, competition policymakers have played health care Tetris. Like the game, we looked at whether simplistic blocks line up to create discrete horizontal or vertical lines. Antitrust focused on provider markets or insurer markets without considering whether there are other competitive dynamics at play.
Antitrust exclusively used the two-dimensional geometry of vertical and horizontal analysis to focus on markets that were rapidly evolving into multi-sided and multi-dimensional platforms. Antitrust focused on horizontal consolidation in discrete local geographic markets or traditional vertical integration through things like input foreclosure or raising rivals' costs — all of which are valuable and worthwhile issues to examine.
Unfortunately, however, these simple Tetris-like paradigms bear very little resemblance to the emerging but complex ecosystem that actually confronts patients, health care practitioners, and employers. Using outdated modes of analysis and playing health care Tetris, antitrust enforcement and policy missed opportunities to assess how broader changes in business, such as the rise of platform business models, health care technology, and regulatory incentives, impacted competition.
In the world of health care Tetris, we all agree that horizontal consolidation raises concerns, but failed to look past the two-dimensional geometry to see how these new business relationships intersect. Too often, the antitrust establishment viewed anything other than a straight horizontal merger with so-called vertical integration as presumptively, in their minds, leading to greater value, lower costs, and more integrated care.
This beguilingly simple approach blessed consolidation and entrenchment across vast swaths of the health care ecosystem without appropriate consideration for the broader impact and the long-term effects. America's largest health care companies are no longer just health insurers or pharmacy benefit managers, and they are no longer just medical groups or hospitals. They are all of the above at once.
Meanwhile, consolidated health care markets have failed to deliver the promise of better care, lower prices, and increased access. Instead of increasing efficiency, health care platform integration and annexation has created perverse incentives, conflicts of interest, and opportunities for self-preferencing, steering, and self-dealing. The physical distance between the caregiver and the patient in the examining room may be measured in inches physically, but it is functionally now miles away due to the pervasive thicket of industry middlemen that figuratively sit in the examining room.
The time has come for us to break free from a two-dimensional Tetris-style analysis, which is ill-equipped to address a modern health care system defined by massive intermediation platforms. Continued overdependence on these outdated modes of analysis will continue leading us down a path where the problems get bigger and more difficult to address.
The academic literature has begun to take note, albeit as a lagging indicator. Research on our decades-long experiment with consolidation in health care shows that concentrated markets have led to higher consumer prices and public spending without accompanying improvements in quality or gains in efficiency. It's led to greater monopsony power and control over the health care professionals that dedicate their lives to caring for the sick.
Take the rise of pharmacy benefit managers. Many lauded their ascent as a useful counterweight to drug companies. In other words, we needed more bigness, as they said, to discipline Big Pharma, which may have been at the time characterized as a noble and worthy objective. But PBMs have themselves become big. Three vertically integrated entities now control 80% of the industry, with each enjoying even greater market power at the local level.
But have patients and the economy benefited? Instead, it is commonplace now to hear allegations of PBM self-preferencing and steering to affiliated pharmacies to the exclusion of others, pushing rebating practices that drive up sticker prices and discourage new drug entry, enabling affiliated insurers to evade medical loss ratios, and tying PBM and medical insurance products.
Across health care, we see similar concerns: moat building, and steering, and coercion, and regulatory gamesmanship. At the Antitrust Division, we have confronted many of these challenges and characteristics in other industries, including most notably Big Tech. In effect, we are now witnessing in real time the emergence of Big Health Care platforms, and we are at risk of our markets tipping to one or two major national platforms.
The platformization of health care contains characteristics that are unfortunately too familiar for us at the Antitrust Division. Multi-level entry, platform integration, and consolidation can be used to stymie competitive threats by increasing the difficulty of entry. If a company has market power in one level of the health care system, entry may already be hard enough in that market. But if a single company can acquire businesses across the health care ecosystem and stack, it can further shield itself from competition by forcing a competitor to enter at multiple levels at scale just to compete at any single one.
We see health care companies vertically integrating into this stack now, and the platformization of health care can result in creating moats around these health care stacks and ecosystems. And this is an extremely concerning development in health care, where barriers to entry are high and expensive.
Conflicts of interest: with the development of health care platforms and stacks, we should be concerned about growing conflicts of interest that manifest in ways such as steering, self-preferencing, exclusivity, and other forms of exclusionary and anti-competitive conduct. For example, we see firms with dominant positions choose their own health care stack and businesses and exclude independent rivals.
Regulatory gamesmanship: one of the reasons that health care companies expand could be to circumvent regulatory environments. Health care is one of the few markets with cost-based regulations. These regulations, called the medical loss ratio, require insurers to spend at least 80 to 85% of patient premiums on medical care. But insurers could increase prices in contravention of these medical loss ratios by acquiring non-regulated businesses at different levels of the stack and creating health care middlemen, for example, pharmacy benefit managers or health care providers.
This would allow, and does allow, insurers to regain a greater share of the health care spend by paying more money to their affiliates, for example, an unregulated provider, while keeping costs down in a regulated insurance business. Platform expansion and annexation could further enable health care companies to exercise market power they have in their insurance business that they otherwise could not exploit due to the medical loss ratio or in a more competitive, open ecosystem.
In assessing potential harms from these alarming trends, we must also consider how the loss of independent health care practitioners can harm patients and communities. Independent physician practices, community nursing clinics, and independent pharmacies are themselves entrepreneurs, but not just that — they are harbingers of self-sustaining communities. These small businesses, especially in small or rural communities, are often the lifeblood of an economically viable and healthy community.
The dominance of these large systems, though, not only prevents fair competition and stymies the entry of new competitors, innovators, and business models, it also thwarts badly needed innovation in the organization and the delivery of care — innovation that is technically and humanly feasible, but not in the self-interest of these huge, profitable systems.
When our communities are imperiled this way, it is time to look harder at the market structures in which they exist. In doing so, we are likely to find other distress signals, including a decrease in doctors, practitioners, and pharmacists building thriving independent businesses that function as pillars and core infrastructure in their local communities.
The American public deserves more from competition policy. We need to return to the common sense principles that motivated the passage of the Clayton and Sherman Acts and that have been accepted and enforced by our courts. It means considering harms other than unilateral effects from horizontal coordination. It means a mix of short-term and long-term strategies that cause harm should come into play when conducting our analyses. It means agencies must critically assess and pursue competition as part of a whole-of-government approach.
If we want health care to be a market-based industry, then we must invest in healthy market conditions, which must start with competition and choice. We should start with best practices like asking: how does competition actually work in today's economy? We also need to ask ourselves: what do health care markets look like today? What pieces of the ecosystem are being purchased? How can data be accumulated, shared, and exploited? Why do these pieces matter for health care competition and the price that we have to pay in order to get the fundamental care that we need to stay healthy and to treat our loved ones?
Are there harms beyond just price effects, and how do we talk about them in a way that reflects what people experience in health care markets and doesn't ignore the humanity of the product at play here, which is taking care of sick people?
So let me say this in closing: we are at an inflection point in technology markets. The world has coalesced around a few global dominant technology stacks. Incumbent technology firms seek to maintain their dominance in any number of ways across markets. And once industries settle into such monopolies, oligopolies, or monopsonies, it could be hard — very hard — to remedy the situation.
In health care, I foresee a not-so-distant future where a few integrated health care platform stacks will amass a generational hold over health care. It would be a private single payer without any of the oversight, impartiality, or scrutiny attendant to government health insurance programs.
In 2010, the big insurers promoted a narrative that single payer was a threat to Americans. Nearly 15 years later, we may well be accelerating the march to single payer — just not the kind that anyone imagined in 2010, or not the kind that anyone wants today. The moment for this discussion is now, and the timing is urgent. Thank you.
Thank you, Kanter. Now we're ready for a fireside chat. There's no fire — I don't understand why, but I was told it was just not acceptable.
So over the last three years, I've done dozens of fireside chats. No fire. I've sat in dozens of green rooms — not a single one green.
Well, okay, so truth in advertising. Let's maybe talk about some things that might end up being a little bit fiery. And I think one thing to emphasize, and Jonathan, an important point you made in your remarks, is that really this is about people. This is about patients, this is about their families, this is about people who are facing huge burdens due to the malfunctioning of one of the most important sectors of our economy — workers, doctors, nearly everybody that comes into contact with this. And I think that's something that really comes first and foremost here, and I'm sure you agree.
So let me kick it off. You're well known at the Antitrust Division for saying that as antitrust enforcers we should emulate Wayne Gretzky and skate to where the puck is going to be, not where it is and not where it's been. Apologies to Mario Lemieux and Sidney Crosby — we dearly beloved them here and they are wonderful hockey players. But let's talk a little — you referred to this in your remarks, but let's talk a little bit more about your sense of where the puck is going to be. What's going on with health care markets? Where do you think they're going? What that means for patients, their families, for workers, physicians, everyone, and what that means for antitrust enforcement and what competition policy should be doing in health care?
Yeah, so what we are experiencing is what I just described as the platformization of health care. And so let me — can folks hear me? Yeah. So let me explain what I mean by that. Which is that, you know, when we initially thought of health care, we thought of, okay, you've got a market for your local doctor or physician or caregiver, you have a market for your pharmacy, and you have a market for health insurance, and they all compete in their own little space, whether it was at the industry level or the geographic level.
But now what we're seeing is a world where the largest health insurers are the largest health care providers — meaning the people who own the insurance company own the doctors and own the nurses and own the hospitals, and they own the PBMs, and then they own the technology and the data that sits in between them. And this is now creating an ecosystem of interrelated components, so that to enter it, one, you need to enter it all, so that data that is accumulated on one side can be used across in many respects.
So that when companies are supposed to be, you know, trying to get the best health care, they also care about the bottom line of the insurance. And these conflicts of interest are profound. And in a time when we really should be seeing the development and growth of new and innovative business models that can take on and disrupt these solutions, you need to plug into the platforms, you need to gain access to the provider systems, you need to gain access to the insurance companies, you need to get access to pharmacies and benefits in order to develop these new and innovative products. And that is no longer possible, or is not possible to the extent it should be, because of these closed, moat-protected ecosystems.
Thanks. Let's briefly touch on data and information and sort of use of information technology, because of course it's a topic that is near and dear to the hearts of every single person at Carnegie Mellon. Can you unpack this a bit? In order to do the best job for the bottom line — to do well on the bottom line, but also do well for patients — access to data is now absolutely crucial. But what happens with the platformization is that everything, including the data, now is inside these silos, which makes it hard for entities outside the silos either to get into the market at all, to compete effectively, or to innovate. Does that strike you as correct?
Absolutely. And so, listen — data and technology and development and growth, I mean, these are all things that have the potential to transform health care in really beneficial ways. We can use AI and other automated technologies to help develop new treatments and courses of care. I am in no way, shape, or form suggesting that's a problem. I'm saying we need to unleash that innovation.
But the problem is, if all the access points are captured inside of a moat and become part of an insular ecosystem, then it becomes harder to see the development and growth of those new technologies and business models that might make things more affordable, that might make care better, that might create new jobs, that might allow the caregiver to do their jobs more effectively, and would result in a fair return on investment for the hard work and labor of the people who actually deliver the health care.
Yeah, and unfortunately — or, well, fortunately — the use of it has now become commonplace in health care, as in every other part of the economy, which is certainly a good thing. But I will remark that one of the very first things it was used for in the health care sector was to maximize revenue — not to improve patient care, not to coordinate care, not to drive down cost, but simply to find the most profitable codes to assign to patients. And that trend has not changed.
Let's switch gears and talk about something a little bit different. Many folks in health care and in health policy circles have the view that the issue in health care is fragmentation and lack of coordination — those are the major problems in health care — and that we need more consolidation between hospitals, doctors, insurers, all...
of the participants in the health care sector to address this problem. I wonder what your thoughts and reactions are to this.
Yeah, I just think that's a fictional narrative. It's just not true. When you talk to people in health care — not the people who provide the care and receive the care — they want a more intimate, they want a more direct relationship between the doctor and the patient, the nurse and the patient, the caregiver and the patient, the pharmacist and the patient. They don't want intermediaries who are not delivering that care to functionally be in the room making decisions without specific knowledge of what's in the best interest of the patient. I think this idea that the way to solve the problem of big companies exerting too much power is to create more big companies with more power is antithetical to what we need. The fact of the matter is we need innovation, growth, and we need caregivers to have the freedom necessary in order to deliver health care and take care of their patients in the way they see fit.
Thanks. You want to ask me a question? Sure. So, Marty, as an academic, tell me a little bit about where you think we can do more going forward to help understand, and as students, what should we be studying to keep pace with these tectonic shifts in how health care is delivered, consumed, and both from a clinical perspective as well as the economics of health care.
Sure, thanks. So let me say something first about what we do know from research evidence. So first, we have a few decades now of experience with consolidation of health care. This is not a new thing. This is going back to the 1970s or the 80s. Just the hospital sector alone has well over 1,600 mergers on a base of about 5,000 hospitals to start with. So a huge amount of consolidation. As Jonathan mentioned, lots of acquisitions of physician practices, insurers buying up everything under the sun, etc., etc. So from a research perspective, the fact that we now have had decades of consolidation means there's evidence that we can look at, and researchers have looked at this evidence, and here's what it says: the evidence does not show that consolidation leads to improved patient care. It does not show that it leads to improved health outcomes for patients. It does not show that it leads to more coordination of care. It does not show that it leads to lower costs. What does it show? It shows it leads to higher prices. It shows it leads to higher spending. It shows in some instances that it leads to lower quality care, including increased probability of death, increased mortality for patients who are treated at places that face less potential competition or in the wake of a merger that eliminated important sources of competition. So I want to be clear about that. Right now, academic research — actually, we often think of it as sort of, as one of my colleagues says, as academics we operate where the rubber meets the sky. And there's some truth to that statement. But the research in this area has actually been very important, and having been on the antitrust enforcement side, I can say that it really makes a difference. Now, we need to do more, and in particular, coming back to your question — I didn't answer your question at all.
You're cooking. Yes, you keep going.
But of course we need more research, and the more recent phenomena we're seeing, particularly with very large health insurers acquiring providers of various kinds, we don't yet have the evidence base I think that we'd like to see on that. It raises great concerns, as you've said. We do have some evidence here and there, but certainly we need to understand more of this. We need to understand what happens across local markets. We see trends that are concerning about what happens when there are acquisitions that cross what we'd normally think of as local geographic markets. That's not understood as well as I think we would like. So there's certainly scope for more research, and I think this is the kind of thing that folks at Carnegie Mellon excel at. So we want to do cutting-edge, rigorous research on important real-world problems. That's what we do here. Advances in theory, advances in methods are very, very important. They enable us to do this kind of work, but fundamentally this is what we're about here. We're about making a difference in the world. And so I think there are many, many opportunities for students and faculty here to do work that really makes a difference and to help us as enforcers, as competition policymakers, do our jobs even better.
So another question is, I talked a bit about how antitrust enforcers and theorists used to view the world in this kind of two-dimensional, you know, up and down, vertical, horizontal, across way. But that, as I mentioned before, the world is becoming more like a platform. Maybe you can explain your experience, you know, as an antitrust expert and someone studying these industries, and explain how that change or how important it is for us to keep pace with that change in order to get it right.
Yeah, 100%, and thanks. I think that is very important. So I think in part what happens in applied areas like this is we do have people who are thinking ahead of the puck, as it were, but often we're reacting to what we see around us. And one of the big antitrust challenges in health care literally was the case of hospitals merging with other hospitals. So there was a whole string of mergers, really a wave, that started happening in the 1980s and 1990s, and the Antitrust Division went to court, the Federal Trade Commission went to court, and the courts decided time and time again in favor of the merging hospitals for what we now know are specious reasons. They really didn't make sense, but the courts were convinced by their arguments. And so a very, very important battle was fought there to try and generate the evidence base and generate both the economic evidence and the legal reasoning and evidence to go back to court to go after these with a great deal of success. So there was really a laser focus for a long time on exactly that, because it was important. I mean, hospitals are almost 6% of national income just on their own. So it was very important, and the antitrust agencies had a lot of difficulty there. So that was the focus. And then what started happening over time is we had more things that were not just hospital-hospital, doctor practice-doctor practice, insurer-insurer, but crossing those kinds of boundaries. So people started thinking about those. But I think, as you mentioned, there had been a prevailing wisdom in antitrust for a long time that if you had mergers like that, they were benign or maybe actually very beneficial. And so we needed to go back and start rethinking, both as economists and lawyers, about these kinds of mergers. And there was a lot of thinking that emerged that said, well, not so fast, not necessarily. And evidence started accumulating on that. So now I think where we're at — and I'm finally getting around to your point — look, I'm a professor, I talk a long time. I love it. Anybody taking a nap, it's okay, but it will be on the final at the end of this thing. Okay. So now we realize, I think, and this is your point, that thinking in these boxes — oh, hospital-hospital, doctor-doctor, whatever — that's no longer what we're seeing, and that doesn't make sense. That we were restricting our thinking and not doing the job we should be doing as enforcers, because guess what, the market participants aren't restricting themselves to those boxes. They're doing all kinds of things, and we should not be in the position of always having to play catch-up or trying to or looking at things through a lens that doesn't really fit the phenomenon we're examining.
Got it. And so one question I think maybe for both of us is, how should we think about labor? I use the word monopsony in remarks, and for those who don't know what monopsony is, it's essentially power over inputs, and that could be suppliers, but in recent years it's been focused on how big powerful companies can squeeze people who work. And this is extremely important in health care, where the people who work are the difference between life and death, and the nurse-to-patient ratio, or the amount of compensation, travel time, and burden on, and the ability to earn a living wage from being in the health care ecosystem matters. And so how do we think, and how do you think we should think about labor in the context of this broader platformization of health care?
Yeah, that's a great question, and I think it's a key part. It's inherently a part of what we're talking about. As we started talking at the outset, this is all about people, and the people we're talking about here are people who work in health care. Well, we can have the best information technology in the world, the best medical devices in the world, the best pharmaceuticals, but without skilled and caring health care workers, that's not going to be effective. I know there are some computer scientists who think AI will take care of everything. I don't think that's where we're going or where we're at yet. So if people are not in situations where they have decent working conditions, they get paid fairly, they have the time to give patients the care that they need and to think about the kind of care patients need, then obviously the people that are workers suffer directly, but so will the patients as well, so will our health care system. So I think it's absolutely critical.
Yeah, yeah. What are your thoughts? No, I mean, I think it goes to the concept of a platform or middleman, right? And so when you think about health care, you have, let's say, a doctor and a patient, right? If more value is being captured in the middle, the patient is getting less in terms of quality of care, less in terms of attention, and the caregiver is getting less in terms of being compensated for giving that care, and more is being captured in the middle, we have a problem. And I think when you have these massive platforms that have different ways to move shells around in order to capture more in the middle, it creates a problem. What we need to do is we need to reduce the metaphorical distance, not the physical distance, between the caregiver and the patient, and we need to make sure that more value is going to the people who give the care and people who receive the care.
Yeah, and yet another thing that certainly we've talked about a great deal is when we have these platforms, if they lock up key resources — we were talking about data earlier, but now we're talking about people — if they lock up key health care workers, if they lock up doctors so they're not accessible to other potential competitors, then we've got a problem. That's yet another way that this can manifest itself. And I think your point about sort of there being so many different junctures, so many different points where competition is affected and can be harmed, that makes this particularly difficult.
