NEW PUBLICATION: MARY GUY, COMPETITION POLICY IN HEALTHCARE – FRONTIERS IN INSURANCE-BASED AND TAXATION-FUNDED SYSTEMS, INTERSENTIA 2019

How does EU competition law affect national healthcare reforms? Does healthcare merit special treatment, or can competition work in the same way it does in the energy and telecommunications sectors? Are competition reforms in healthcare an end in themselves, or merely a means to the wider aim of modernising healthcare? Can general competition rules be modified to accommodate the specificities of, and political sensitivity attaching to, the healthcare sector?

Competition Policy in Healthcare – Frontiers in Insurance-based and Taxation-funded Systems engages with these questions and brings a unique, comparative approach to competition policy in healthcare by examining recent reforms in the Netherlands and England.

In 2006, a system of mandatory private health insurance was introduced in the Netherlands, accompanied by a legal framework for “managed competition” overseen primarily by the Authority for Consumers and Markets (ACM) and the Dutch Healthcare Authority (NZa). In England, the Health and Social Care Act 2012 (HSCA 2012) set in motion a significant reorganisation of the National Health Service (NHS) which included provisions for developing competition overseen by the Competition and Markets Authority (CMA) and a new sectoral regulator (NHS Improvement).

This new book is notable for its comparative focus on the law underpinning competition reforms in healthcare, yet comparative studies in the health policy field raise similar questions, namely “why” and “how” we compare.

Why compare an insurance-based system (the Netherlands) with a taxation-funded one (the English NHS)?

It is recognised that competition develops in different ways and to varying extents as a result of the degree of government control of the healthcare system. Despite this, the underlying national frameworks of competition law and merger control share significant similarities. While the Introduction tackles these general considerations, Chapter 1 provides a necessary analysis of the context of the competition reforms in Dutch and English healthcare, noting the influence in both countries of the US health economist, Alain Enthoven, in both the Netherlands and England. The question of “why” can be answered most obviously by the recent nature of the reforms which means a relative absence of case law and experience in the area, so there is a need to look to somewhere (or something) else. The HSCA 2012 reforms in particular clearly draw on the experience of developing competition in other sectors (such as telecommunications and energy). While this indeed offers a comparison, I argue in the book (and elsewhere) that this was too simplistic a basis for the reforms and that comparisons of two countries’ healthcare systems and competition reforms afford greater insights: not least because of the common starting-point in Dutch and English healthcare of solidarity, defined as the principle of universal access to healthcare. The significance attached to solidarity in European healthcare systems also provides motivation for comparison in this book: the development of competition in US healthcare has been considered the result of prioritising efficiency over equity. The Introduction and Chapter 1 may thus be considered to provide an answer to the question of “why” I chose to compare competition reforms in Dutch and English healthcare.

How to compare competition reforms in the Dutch and English healthcare systems?

The question of “how” to compare is clearly linked to comparative law methodology (something which I explored in a previous BACL blog post). The general nature of merger assessment, transposition of EU competition law (provisions governing anticompetitive agreements and abuse of dominance) and the influence of the experience of establishing competition regulators in other sectors provide a range of similarities which make comparison of the Dutch and English reforms meaningful. The insights gained ultimately go beyond questions of recommending whether a transplant approach should be adopted, and the substantive discussions of this book engage in different ways with the question of “how” to compare.

Chapter 2 sketches the competition law framework underpinning the Dutch and English reforms. The starting-point for this is the Treaty on the Functioning of the European Union (TFEU) provisions governing anticompetitive agreements and abuse of dominance (Articles 101 and 102 TFEU, respectively), and the trigger requirement for the existence of an “undertaking”, defined in general terms as an “economic activity” and more specifically as “offering goods or services on a market”. The starting-point of EU law is self-evident insofar as this has been transposed to form Dutch and UK general competition law. In a healthcare context, the element of solidarity may suggest an exemption (as a Service of General Interest) or at least an exception (as a Service of General Economic Interest) within the EU competition law framework. I examine how the Dutch and English reforms build, respectively, “around” and “within” this “core” of solidarity. I outline “exemption” and “exception” perspectives which relate primarily to the different treatment of healthcare providers (typically deemed subject to competition law) and healthcare purchasers (until very recently deemed not to be subject to competition law). In the Dutch context, this led to the enactment of a national provision (Article 122 Dutch Health Insurance Act 2006) to clarify that private health insurers are subject to Dutch competition law (if not EU competition law following AOK Bundesverband). In the English context, this has meant the creation of an “NHS-specific” competition regime which distinguishes the National Health Service (Procurement, Patient Choice and Competition) Regulations (No.2) 2013 (addressed to NHS commissioners, or purchasers) and the “competition oversight” condition of the NHS Provider Licence, which borrow heavily from the terminology of the EU competition law provisions.

Chapter 3 provides an institutional counterpoint to the substantive law focus of Chapter 2 by examining the relationship between the competition authority and healthcare regulators. In both countries, the creation of healthcare regulators with competition functions (the NZa and NHS Improvement) has been influenced by the experience of other sectors. For example, the NZa was given competence to conduct Significant Market Power investigations, a tool designed in the context of telecommunications regulation. In England, NHS Improvement was given “concurrent” powers alongside the CMA such that either agency could conduct market investigations, or oversee competition law cases, consistent with practice in other sectors. The controversy surrounding the reforms in both countries has meant that these institutional arrangements have been subject to varying degrees of (perhaps counterintuitive) modification. For example, most of the NZa’s competition powers have been transferred to the ACM, and NHS Improvement has sole competence to review competition law cases concerning delivery of NHS services.

Chapter 4 examines the modifications made to general merger control in the Netherlands and England to facilitate assessment of hospital mergers. These typically attract more political sensitivity than other mergers (e.g. between health insurers, or pharmaceutical companies). There are fundamental similarities between Dutch and UK general merger control – for instance, both are overseen exclusively by the competition authority, and both can comprise a two-stage assessment of whether a merger significantly reduces competition. Correspondingly, there are similarities between merger assessment in healthcare which provide mechanisms for “how” comparison can be focused – for example, an advisory function for the new healthcare regulators, and how these have explored formal and informal ways of engaging with hospitals wishing to merge.

Building on this comparison of competition reforms in Dutch and English healthcare

In conclusion, two broad themes are identified : the need to recognise the distinctive features of the healthcare sector, and the relationship between the EU competition law framework and the emergent national competition policies in healthcare.

By examining the Dutch and English healthcare reforms and systems, it is possible to demonstrate that the broad healthcare system typologies of “insurance-based” and “taxation-funded” offer a merely starting-point in understanding how competition reforms can differ wildly in their interpretation and implementation. For example, the distinctive interaction between the English NHS and supplementary private healthcare may offer only limited insights for other healthcare systems combining public and private delivery. Alternatively, the mandatory nature of Dutch private health insurance may offer important insights for other insurance-based systems wishing to expand insurance coverage.

Professor Johan van de Gronden (Radboud University, Nijmegen) has noted in his Foreword that there is a need to understand how EU law functions at Member State level, and that future research in this regard is welcome. Such research might inform EU policy as well – for example, country-specific recommendations in the context of the European Semester suggest potential competition reforms, so there is a need in other Member States, to understand how these could function in practice.

Posted by Dr Mary Guy (Lancaster)