Judge Posner's RFP: antitrust law and managed care.

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Abstract
PROLOGUE: In a rapidly changing health care marketplace, decisions are commonly made with less than complete information. The recent Marshfield case, a landmark antitrust decision between Blue Cross and Blue Shield United of Wisconsin and the Marshfield Clinic, exemplifies this reality in striking terms. In Marshfield, Judge Richard Posner, chief, judge of the U.S. Court of Appeals, Seventh Circuit, found that the defendant clinic and its affiliated health maintenance organization had not unlawfully wielded its market power in violation of antitrust law. Despite his praise for Judge Posner as a scholar and jurist, William Sage characterizes the decision as follows: The court “made a host of theoretical guesses about the economics of managed care ... and, lacking empirical proof of liability or damages, ruled sweepingly for the defendant.” In Sage's view, one of the more serious problems with Judge Posner's opinion was that it contradicted the most recent policy statements issued by the federal regulatory bodies responsible for antitrust oversight: the U.S. Department of Justice and the Federal Trade Commission. In effect, Judge Posner's ruling was a clarion call for health services research to weigh in with sound empirical data on managed care, and specifically about the nature of competition. Sage, a physician and an attorney, is an associate professor of law at Columbia University, where he teaches courses in health law, regulatory policy, and professionalism. His medical and law degrees are both from Stanford. In 1993 Sage served on the White House Task Force on Health Care Reform. Prior to joining the Columbia faculty, he practiced health care and general corporate law at O'Melveny and Myers in Los Angeles. The emergence of a competitive market in health care portends an increasingly important role for antitrust law. Managed care is even more difficult than fee-for-service practice to analyze in the quantitative, economic terms required by modern principles of antitrust law. This paper examines a recent court decision authored by a prominent judge and antitrust scholar: Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic. The purpose of the paper is not to describe the law as it is or as it should be, but to illustrate the assumptions and gaps in understanding that can occur when courts are asked to evaluate this complex and rapidly changing industry without the benefit of sound empirical research.

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