Bioethics & Competition: Antitrust as a Determinant of Health

Antitrust Bioethics Agriculture

Antitrust is one of the biggest current issues in bioethics. Yet, beyond hospital and pharmaceutical industry mergers, it is overlooked by the field. Healthy competition in the corporate or business landscape would impact health. A lack of antitrust enforcement negatively affects health, access to healthcare goods and services, and access to those other goods and services that determine health, like healthy food, education, internet service, good jobs, and small business loans. Antitrust laws encourage competition within industries and provide rules that require fair play, and they bar monopolistic behaviors.

For basic background, the Sherman Antitrust Act makes it unlawful for people or companies to unreasonably restrain trade or conspire to monopolize. It covers price fixing, rigged bidding, and dividing a market. The Clayton Act (as amended by the Robinson-Patman Act of 1936) and the Hart-Scott-Rodino Antitrust Improvements Act 1976) forbids price discrimination, interlocked directorships (when the same person controls several competing companies), some exclusive sales arrangements, and other anticompetitive practices, and requires notice of mergers. The FTC Act also covers unfair and deceptive trading practices.

The Biden Administration Executive Order on Promoting Competition in the American Economy issued July 9 will increase regulatory focus on antitrust, pull other government agencies into enforcement, and have agencies review regulations across industries. Regulators will revisit guidelines for vertical and horizontal mergers. By mentioning industries (agriculture, banking, consumer finance, healthcare, internet service providers, technology platforms, transportation) and calling for regulatory agencies to take steps (amend, remove, or add regulations) to improve competition, the order directs more government attention to antitrust.

Biosciences and Seeds

Across industries, antitrust affects health. Now with a Bayer Monsanto merger and a Dow DuPont merger, four companies control  the control about 75 percent of the seed market and some say three companies control 60 percent.  Family farms have difficulty procuring “seeds, equipment, feed, and fertilizer”.  The corporate systems are less sustainable than family farms. They encourage monocrops and lead to less choice of affordable healthy food. Food Politics explores policy, business practices and food supply.

The international political structure and power of a handful of food companies changed the global food supply system. Market control by the “global north” dictates international and national policies leading to low wage growers, a complex system of exports, and the elimination of the voice of the public as consumers, environmental activists, or health activists. Obesity in the US is inextricably tied to food production and consumption and the incentives, and the deflated and inflated prices at various points in the system.

Internet Services, Social Opportunity and Education

In “Profiles of Monopoly”, internet service is depicted as primarily monopolistic in the US. The large corporations have failed to provide access to many in need and their practices make small providers face barriers to entry and an inability to garner any real market share collectively. Internet is necessary for education (even more so during the pandemic) and for the ability of older adults or people who are rural or homebound to establish and maintain important social connections. Internet connection also broadens job possibilities as working virtually relies on connecting.

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Banking and the “Unbanked”

An inability to even participate in modern banking unleashes havoc on people with low incomes. In “How the Other Half Banks”, Mehrsa Baradaran explores the experiences of being left out of the largely merged system of big banks. Banks originally served a social or public purpose. 14.1 million adults in the US have no bank account. Black and Hispanic households are five times as likely to be “unbanked”. Many low-income customers resort to pay-day banking, check cashing services, and antiquated money wiring companies. People without ATM cards or check writing capabilities experience financial stress and pay more fees to accomplish simple financial transactions. Fees are usually highest for those with the lowest balances. Those living paycheck to paycheck are subjected to proportionally more fees while they are vulnerable to becoming unable to afford housing and food.

An inability to develop a credit rating makes it impossible to secure loans from institutions with the best rates. A failure to participate in the banking system effects health by narrowing prospects for those left out. People unable to access higher education or small business loans encounter difficulty in achieving those social goods like savings and jobs that determine health. Many Americans do not have any opportunity to earn interest or hold assets likely to appreciate.

The repeal of Glass Steagall, which separated retail and investment services, undermined the rules protecting how much of a banks deposits could be exposed to risk. The financial crisis or much of its damage to low- and middle-income people may have been prevented in a structure where local small banks served low- and middle-income individuals.

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Technology, Data, Retail, and Robotics

In the tech sector, data-generating patents allow monopolies over certain health information. Those monopolies unreasonably empower corporations over consumers of healthcare goods. Technology also is replacing personal labor, reducing the number of jobs available. Amazon uses technology and robotics to maintain its dominance in its monopoly and monopsony (buying monopoly). Without Amazon’s market dominance, smaller competitors might rely on labor more, hire more people, and create competition for employees, driving up wages and perks. In places where Amazon starts a warehouse, other warehouses tend to go out of business. In “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities,” the Institute for Local Self-Reliance criticizes the business practices, citing vacant storefront, decreased competition and choice, poor working conditions, and contracts that take advantage of or pressure suppliers. The report also notes the vertical expansion into manufacturing competing goods crowding out other manufacturers.

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Large Hospital Systems

US healthcare costs are inflated, partly due to industry monopolization. Hospital mergers, sometimes seen as a symptom of the inability of multiple hospitals to compete, undermine competition that would spark higher quality at better prices. “A recent and widely discussed study by Yale economist Zack Cooper and others has found that if you stay in a hospital that faces no competition, your bill will be $1,900 higher on average than if you stay in a hospital facing four or more competitors.” Large hospital systems exert corporate control and make choices to close unprofitable hospitals regardless of community need. NCH Health Systems lobbied against a rural new hospital in Immokalee, Florida that would compete with them. One story of why it took so long for El Paso to finance and open its Children’s hospital argues that Tenet Health opposed the project out of a fear of competition. Rural areas and cities with few financial resources tend to suffer the most, as their populations travel further for care and pay more.

Hospitals also increasingly own physician practices. Now a majority of doctors do not own their practice. Once a hospital system or chain increases its market share or completely controls a region, it uses its power to negotiate with insurers. The negotiations are not just about price. They also cover referrals that keep people seeking care in the realm of the corporation.

Hospitals cite economies of scale and cost savings associated with size, but there is not much evidence and the savings are not passed on to consumers of healthcare. “Horizontal consolidation among hospitals almost universally results in higher prices and worse (or unchanged) patient outcomes, despite the fact that costs to hospitals do not significantly increase as a result of the consolidation.” Care coordination and electronic health records in large hospital systems may evidence economies of scale. And coordinating more physicians’ offices or radiology groups within the hospital corporation can also have some economic savings, or “economies of scope”. But there so far is not a way to prevent large hospital systems from wielding power that drives up prices and burdens consumers of healthcare.

In New York City, the many mergers that created three large hospital systems also led to closures of smaller hospitals, defining who has access to care nearby, essentially leaving outer some neighborhoods with fewer full-service hospitals. The business models also seem to favor specialties over primary care.

Moving Toward Enforcement Should Benefit Consumers and Health

One article points to libertarian judges and a judicial movement toward freedom to enter contracts and increasing respect for corporate rights as a cause for the lax enforcement. The executive order may represent a movement away from the extreme view of corporate rights. Enforcement will protect small businesses, consumers, and workers. A politically neutral idea (historically many Republican and Democratic politicians favor competition) as reviewed under a multiple streams framework, antitrust is ripe for enforcement.

Antitrust enforcement may not seem like the answer to the health woes of the country. But it is a key determinant with a role in obesity, access to health care, internet service, earnings potential, and a rebirth of competitive small businesses with hiring potential. As such, antitrust enforcement should be explored as a social or political determinant of health.

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