"Free choice" as a restraint of trade, and the counterintuitive contours of competition.
This article explores the important implications of the little-noticed 1979 Federal Trade Commission ruling that the American Medical Association's ethics requiring "free choice" of physician violate the nation's antitrust laws. "Free choice" as it was known to the health care community for decades suddenly was illegal. To examine this counterintuitive aspect of competition, the article begins by defining two types of free choice. The AMA's free choice ethics, ruled inconsistent with antitrust law, is termed "guild free choice." The other, consistent with antitrust principles, is termed "market free choice." The distinction between market free choice and guild free choice provides a simple yet powerful tool for understanding many of the novel issues raised by the fundamental restructuring of the health care industry currently under way in the United States. For example, market free choice, deduced from the FTC ruling and the antitrust laws, is shown to be equivalent to proposals by Ellwood, McClure, and Enthoven for market reform. A history of American health care delivery and insurance from a free choice perspective reveals three historic periods: a market free choice era from 1870 to 1932, a guild free choice era from 1933 to 1982, and an emerging market free choice era today. Finally, the distinction is seen to undermine the conventional wisdom held by many physicians, economics and health care policy analysis.
D000574:American Medical Association; D004465:Economic Competition / Q000331:legislation & jurisprudence*; D004467:Economics / Q000331:legislation & jurisprudence*; D004470:Economics, Medical; D004992:Ethics, Medical; D006077:Government Agencies; D006291:Health Policy / Q000266:history*; D049672:History, 19th Century; D049673:History, 20th Century; D007348:Insurance, Health / Q000266:history; D014481:United States; D014485:United States Federal Trade Commission