FTC Staff Comment to the Hon. William J. Seitz Concerning Ohio Executive Order 2007-23S to Establish Collective Bargaining for Home Health Care Workers

Office of Policy Planning
Bureau of Economics
Bureau of Competition
February 14, 2008
The Honorable William J. Seitz
Ohio Statehouse
Ground Floor, RM # 38
Columbus, OH 43215
Dear Senator Seitz:
The staffs of the Federal Trade Commission=s Office of Policy Planning, Bureau
of Competition, and Bureau of Economics1 are pleased to respond to your request that
we review and comment on the likely competitive effects of Ohio Executive Order
2007 – 23S (Executive Order or Order), which establishes collective bargaining for
home health care workers. In your letter, you asked the Federal Trade Commission
(FTC or Commission) whether the Executive Order is liable to create competition
problems because it confers collective bargaining powers on some health care providers
and not others, whether “the unionization of small business owners who contract with
the state for provision of home health care services funded under the Medicaid program
violates federal antitrust laws,” and “whether the program established by the Executive
Order is immune from the federal antitrust laws under either the ‘state action’ immunity
doctrine” or federal labor law. 2
The Executive Order provides for collective bargaining on behalf of all
Independent Home Care Providers (IHCPs), “regarding reimbursement rates, benefits,
and other terms.” 3 In our judgment, such collective bargaining may raise the cost of
home health care services, and reduce access to them. At the same time, collective
bargaining is not likely to ensure better quality care as a countervailing benefit for
health care consumers. For those reasons, the Commission has enforced the antitrust
laws when certain private groups of health care providers have colluded to fix prices,
1 This letter expresses the views of the Federal Trade Commission’s Office of Policy Planning, Bureau of
Competition, and Bureau of Economics. The letter does not necessarily represent the views of the
Federal Trade Commission (FTC or Commission) or of any individual Commissioner. The Commission
has, however, voted to authorize us to submit these comments.
2 Letter from Rep. William J. Seitz, Ohio House of Representatives, to Maureen K. Ohlhausen, Director,
Office of Policy Planning, Federal Trade Commission (Sept. 24, 2007).
3 Ohio Exec. Order 2007 – 23S, Establishing Collective Bargaining for Home Health Care Workers, 4
(July 17, 2007) (Executive Order), available at
http://www.governor.ohio.gov/Portals/0/Executive%20Order%202007-23S.pdf.
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

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and the Commission consistently has opposed legislative proposals to exempt from
antitrust scrutiny various categories of health care providers. In fact, the Executive
Order appears to require that private parties engage in conduct that normally would be
deemed per se violations of federal antitrust law, including price fixing between
competitors, unless protected by an immunity or exemption from antitrust scrutiny.
Interest and Experience of the Federal Trade Commission
Congress has charged the FTC with preventing unfair methods of competition
and unfair or deceptive acts or practices in or affecting commerce.4 Pursuant to its
statutory mandate, the Commission seeks to identify business practices and regulations
that impede competition without offering countervailing benefits to consumers. For
several decades, the Commission and its staff have investigated the competitive effects
of restrictions on the business practices of health care providers.5 The FTC and its staff
have issued studies and reports regarding various aspects of the health care industry,6
and the Commission has brought numerous enforcement actions against entities in the
industry that have violated federal antitrust laws.7 In addition, the FTC and its staff
have analyzed competition issues raised by proposed state and federal regulation of
health care markets.8
4 Federal Trade Commission Act, 15 U.S.C. ' 45.
5 See Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products, available
at http://www.ftc.gov/bc/hcupdate031024.pdf.
6 See, e.g., F EDERAL TRADE C OMMISSION , P HARMACY BENEFIT MANAGERS : O WNERSHIP OF MAIL-
O RDER P HARMACIES (Aug. 2005), available at
http://www.ftc.gov/reports/pharmbenefit05/050906pharmbenefitrpt.pdf; F EDERAL TRADE COMMISSION,
THE S TRENGTH OF COMPETITION IN THE S ALE OF CONTACT LENSES : A N FTC S TUDY (2005), available at
http://www.ftc.gov/reports/contactlens/050214contactlensrpt.pdf; F EDERAL TRADE COMMISSION AND
D EPARTMENT OF J USTICE, I MPROVING H EALTH C ARE: A D OSE OF COMPETITION (2004) (I MPROVING
H EALTH CARE ), available at http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf.
7 See, e.g., In the Matter of Colegio de Optometras de Puerto Rico, FTC File No.: 051 0044 (Sept. 11,
2007) (Decision and Order), available at http://www.ftc.gov/os/caselist/0510044/070730decision.pdf
(price fixing and concerted refusal to deal with vision and health plans by optometrists); In the Matter of
Advocate Health Partners, et al., FTC File No. 031-0021 (Dec. 29, 2006) (Agreement Containing
Consent Order to Cease and Desist), available at
http://www.ftc.gov/os/caselist/0310021/061229agree0310021.pdf (horizontal agreements to fix prices,
engage in collective bargaining, and refuse to deal individually with health plans by competing
independent physicians and physician practice groups accounting for over 2,900 physicians in Chicago
metropolitan area).
8 See Prepared Statement of the Federal Trade Commission Concerning H.R. 971, “the Community
Pharmacy Fairness Act of 2007,” Before the Antitrust Task Force of the H. Comm. on the Judiciary,
110 th Cong. (Oct. 18, 2007), available at http://www.ftc.gov/os/testimony/P859910pharm.pdf (analyzing
critically proposal to exempt non-publicly traded pharmacies from antitrust scrutiny); see also FTC Staff
Comment to the Hon. Nelie Pou Concerning New Jersey A.B. A-310 to Regulate Contractual
Relationships Between Pharmacy Benefit Managers and Health Benefit Plans (Apr. 2007), available at
http://www.ftc.gov/opp/advocacy_date.shtm; Comments of the FTC Staff Before the FDA In the Matter
of Request for Comments on Agency Draft Guidance Documents Regarding Consumer-Directed
Promotion (May 10, 2004), available at http://www.ftc.gov/os/2004/05/040512dtcdrugscomment.pdf.

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More specifically, the FTC has focused on competition issues raised by
collective bargaining by health care service providers. In addition to investigations
conducted in the course of enforcement actions, there have been more general inquiries
by the Commission and its staff into market issues pertinent to the Executive Order.
For example, the FTC and the Department of Justice Antitrust Division (DOJ) jointly
issued Health Care Statements dealing with, among other things, practitioner
integration issues.9 In 2003, FTC and DOJ considered diverse competition issues
raised by health care markets in joint hearings.10 Among the issues investigated in
those hearings were the following: competition, regulation, and market entry issues for
diverse health care professionals and para-professionals; unionization issues for health
care service providers; professional vertical and horizontal integration issues; Medicaid
and Medicare issues; and the impact of the state action doctrine on competition law and
policy.11 In 2004, the FTC and DOJ issued a report based on the hearings, a 2002 FTC-
sponsored workshop, and independent research.12
In addition, the Commission’s staff has conducted an in-depth review of the
state action doctrine and has issued a report regarding the doctrine and its impact on
competition in diverse markets.13 FTC staff have presented testimony on the state
action doctrine to the Antitrust Modernization Commission (AMC),14 and FTC
enforcement activities have been central to defining the scope of the doctrine.15
Discussion
A. The Executive Order Establishes Collective Bargaining for Certain Home
Health Care Workers.
9 See S TATEMENTS OF A NTITRUST ENFORCEMENT P OLICY IN H EALTH C ARE, 4 Trade Reg. Rep. (CCH) ¶
13,153 (Aug. 1996) (Health Care Statements), available at
http://www.ftc.gov/bc/healthcare/industryguide/policy/hlth3s.pdf. An application is discussed infra, at
text accompanying notes 33-38.
10 See Hearings on Health Care and Competition Law and Policy, June 26, 2003. An overview of the
hearings, with links to agendas and supporting materials, including hearing transcripts and public
comments, is available at http://www.ftc.gov/bc/healthcare/research/healthcarehearing.htm.
11 See id.
12 See generally I MPROVING H EALTH CARE, supra note 6.
13 F EDERAL TRADE C OMMISSION, O FFICE OF P OLICY P LANNING , REPORT OF THE S TATE A CTION TASK
F ORCE (Sept. 2003), available at http://www.ftc.gov/os/2003/09/stateactionreport.pdf; cf. F EDERAL
TRADE C OMMISSION , ENFORCEMENT P ERSPECTIVES ON THE N OERR -P ENNINGTON D OCTRINE: A N FTC
S TAFF R EPORT (2006), available at http://www.ftc.gov/reports/P013518enfperspectNoerr-
Penningtondoctrine.pdf (regarding scope of protection for anticompetitive conduct that petitions for
government action).
14 See, e.g., Prepared Statement of Maureen K. Ohlhausen, Director, Office of Policy Planning, Federal
Trade Commission Before the Antitrust Modernization Commission, on the State Action Doctrine 2
(Sept. 29, 2005), available at http://www.ftc.gov/os/2005/09/050929antitrustmod.pdf.
15 See, e.g., Federal Trade Commission v. Ticor Title Ins. Co., 504 U.S. 621, 639-40 (1992) (upholding
FTC determination that horizontal price fixing by rate regulation boards established by Montana and
Wisconsin was not immune because they failed the “active supervision” requirement).

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In July 2007, Ohio Governor Ted Strickland issued Executive Order 2007 –
23S, “Establishing Collective Bargaining for Home Health Care Workers.”16 The
Executive Order seeks to establish collective bargaining for IHCPs, defined as “those
providers of ongoing Medicaid reimbursed direct care services that are paid for through
a Medicaid waiver program in the State of Ohio and not employed by a private
agency.”17 The Executive Order stipulates state recognition of “one representative as
the exclusive collective bargaining representative for all IHCPs.”18 Procedures for
creating an “eligible voter list,” certification and decertification of the exclusive
bargaining representative, and bargaining between the state and the exclusive
bargaining representative are also specified.19 The Order also stipulates that “the State,
acting throughout the Office of the Governor or his designee, shall engage in collective
bargaining with the elected representative of IHCPs regarding reimbursement rates,
benefits, and other terms.” 20
We note that the Executive Order states that collective bargaining should be
undertaken “to ensure that the quality of services provided to in-home health care
recipients remains constant,”21 but that it contains no particular quality of care
provisions.22 We note, too, that the Executive Order specifies that, “the State intends
that the ‘State action exemption’ to the application of the federal and state antitrust laws
be fully available to the State, IHCPs, and their elected representative to the extent that
their activities are authorized pursuant to this Executive Order.”23 At the same time,
the Executive Order does not offer, and appears not to be accompanied by, any analysis
of the state action doctrine or its potential application to the instant case.
B. The Contemplated Collective Bargaining Would Be Anticompetitive.
Since the advent of active antitrust enforcement in health care services markets,
health care providers have sought antitrust exemptions in state and federal legislatures.
Although varied in certain regards, such proposals have all, at bottom, sought
protection from antitrust scrutiny for anticompetitive conduct that would tend to raise
the prices of health care services without conferring countervailing benefits on health
care consumers. Recognizing that many Americans face difficult health care choices in
the market already, the FTC consistently has opposed such proposals. The Commission
16 Executive Order, supra note 3.
17 Id. at 2.
18 Id.
19 See id. at 2-5.
20 Id. at 4.
21 Id. at 1.
22 The Executive Order does observe that “the State retains its responsibilities … to take appropriate
action when an IHCP fails to behave in a manner consistent with his or her provider agreement.” Id. at 4.
23 Id. at 5.

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has enforced the antitrust laws when certain private groups of health care providers
have colluded to fix prices,24 and the Commission has opposed legislative proposals to
exempt from antitrust scrutiny various categories of health care providers.25
In the FTC staff’s judgment, the Executive Order raises the same sorts of
competition concerns as have those cases and legislative proposals. As FTC staff
explained in a 2002 letter to then-Representative Stapleton,
There is widespread agreement among antitrust authorities that this type of
naked horizontal price-fixing is among the most serious of competitive
concerns, as such conduct predictably and consistently results in
substantial consumer harm. . . . Without antitrust enforcement to block
price fixing . . . we can expect prices for health care services to rise
substantially. . . . For example, collective fee demands by pharmacists in
the State of New York cost the state an estimated $7 million in increased
health benefits expenditures for state employees. In other cases, the
Commission accepted consent orders settling charges that physician
collective bargaining forced health plans to raise their reimbursement rates
- with the attendant risk of increases in premiums for policy holders - and
state and local governments to raise . . . reimbursement levels . . . .26
The analysis is consistent across different types of health care service
providers.27 Just this year the AMC – the body created by Congress to evaluate the
application of our nation’s antitrust laws – addressed the subject of antitrust
exemptions. The AMC urged Congress to exercise caution, pointing out that antitrust
exemptions typically “create economic benefits that flow to small, concentrated interest
groups, while the costs of the exemption are widely dispersed, usually passed on to a
24 See, e.g., In the Matter of Colegio de Optometras de Puerto Rico, supra note 7 (price fixing and
concerted refusal to deal with vision and health plans by optometrists); In the Matter of Advocate Health
Partners, et al., supra note 7 (horizontal agreements to fix prices, engage in collective bargaining, and
refuse to deal individually with health plans by competing independent physicians and physician practice
groups accounting for over 2,900 physicians in Chicago metropolitan area).
25 See, e.g., Letter from Federal Trade Commission Staff to the Hon. Dennis Stapleton, Ohio House of
Representatives (Oct. 16, 2002) (criticizing proposed antitrust exemption for health care providers),
available at http://www.ftc.gov/os/2002/10/ohb325.htm; see also Prepared Statement of the Federal
Trade Commission Concerning H.R. 971, supra note 8 (analyzing critically proposal to exempt non-
publicly traded pharmacies from antitrust scrutiny); Testimony of Robert Pitofsky, Chairman, Federal
Trade Commission, on H.R. 1304, the “Quality Health-Care Coalition Act of 1999" Before the H. Comm.
on the Judiciary, 106 th Cong. (June 22, 1999), available at
http://www.ftc.gov/os/1999/06/healthcaretestimony.htm (regarding federal legislation that would have
exempted all health care workers from antitrust scrutiny).
26 Letter from Federal Trade Commission Staff to the Hon. Dennis Stapleton, supra note 25, at 2 (internal
citations omitted). The magnitude of consumer harm – or potential consumer harm – can vary according
to market size, market power, conduct, and other factors difficult to specify absent detailed analysis of
particular markets. We note too that the Executive Order limits the power of the collective entity to
strike, which may also be a factor.
27 That is, the competition concerns are analogous across these various markets. See id.

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large population of consumers through higher prices, reduced output, lower quality, and
reduced innovation.”28
Although the Executive Order only requires collective bargaining with the State
itself, and only for services provided under Ohio’s Medicaid waiver, Ohio consumers
are not insulated from the effects of such collective bargaining. First, to the extent that
the Executive Order raises reimbursement under the waiver, it raises the cost of a
program supported by Ohio and federal taxpayers.29 Second, the anti-consumer effects
of the Executive Order are liable to spill over into other segments of the market for
home health care services. Home health care services represent diverse medical and
social support services billed to diverse payers.30 Among the payers are private
individuals who self-pay, private third-party payers, and public third party payers –
including not just Medicaid but Medicare, the Veterans Administration, and others.31
Although the Executive Order defines IHCPs as “those providers of ongoing Medicaid
reimbursed direct care services that are paid for through a Medicaid waiver program in
the State of Ohio and are not employed by a private agency,”32 it does not define IHCPs
as those who provide only such services and no others. Indeed, it may not be
practicable to restrict such collective bargaining to service providers who deliver no
professional services, and receive no reimbursement, except under the State’s Medicaid
waiver program. To that extent, there is a very real risk of unanticipated
anticompetitive effects.
In brief, once IHCPs are organized – or combined – for the purpose of
negotiating price and other terms with the State, there is a significant likelihood that
such anticompetitive conduct will harm other payers beyond Medicaid.
C. Unless Shielded from Antitrust Scrutiny, the Private Conduct
Contemplated in the Executive Order Would Violate Federal Antitrust
Law.
28 A NTITRUST M ODERNIZATION COMMISSION , REPORT AND R ECOMMENDATIONS 335 (Apr. 2007)
available at http://www.amc.gov/report_recommendation/toc.htm.
29 Title XIX of the Social Security Act establishes the joint federal and state Medicaid program and sets
forth terms for federal payments to the states. See 42 U.S.C. § 1396b (payments to the states).
30 See, e.g., Home Health Care Overview, Ohio State University Medical Center, available at
http://medicalcenter.osu.edu/patientcare/healthcare_services/senior_health/home_healthcare_overview/.
The Executive Order recognizes that there are home health care services that fall outside its terms, as
well as providers who do not meet its definition of an IHCP. See Executive Order, supra note 3, at 2
(contemplating conditions under which state should consider expanding IHCP definition to include long-
term personal care services and noting that IHCPs are only those providers “not employed by a private
agency”).
31 See, e.g., Paying for Home Health and Hospice Care, Ohio State University Medical Ctr, available at
http://medicalcenter.osu.edu/patientcare/healthcare_services/senior_health/paying_for_home_health_hos
pice_care/.
32 Executive Order, supra note 3, at 2.

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Unless shielded from antitrust scrutiny by an exemption or immunity, the
private conduct contemplated by the Executive Order would violate the antitrust laws.
Specifically, the Order would permit competing providers to agree on the prices they
would accept for their services, which constitutes per se illegal price fixing. The
Health Care Statements issued by the FTC and DOJ address this issue directly.33 In
Example 3 of Statement 8, competing providers form a hypothetical independent
practice association (IPA) to “combat the power” of managed care plans by negotiating
with them collectively rather than individually.34 The IPA involves no integration that
is likely to result in significant efficiencies (i.e., no financial risk sharing among the
members; no indicia of clinical integration, such as joint development of protocols for
improving care). In addition, as noted above, the Executive Order contains no
particular quality of care provisions and makes reference to no particular means of
ensuring the quality of care.35 Collusion under these terms could, in fact, tend to reduce
competition on qualitative aspects of home health care services. This combination –
collective negotiation over price and no significant efficiency-enhancing integration –
means that the agreement to bargain “will be treated as per se illegal price fixing.”36 In
short, collective bargaining over prices is per se illegal price fixing37 and is inconsistent
with antitrust law and policy.38
D. The State Action Doctrine and Federal Labor Laws.
1. 	The State Action Doctrine: The Executive Order says that “[t]he State
Action Doctrine Applies for the Purpose of Antitrust Laws.”39 The state action doctrine
– first articulated by the Supreme Court in Parker v. Brown40 – shields certain
anticompetitive conduct by the states from federal antitrust scrutiny. Although a legal
analysis of the state action doctrine, and its application to the Executive Order and
private conduct related to the Executive Order, is beyond the scope of this letter, we
33 See generally H EALTH CARE S TATEMENTS , supra note 9.
34 Although the professional health care providers in the hypothetical are physicians, the antitrust analysis
is the same.
35 The Executive Order does observe that “the State retains its responsibilities … to take appropriate
action when an IHCP fails to behave in a manner consistent with his or her provider agreement.”
Executive Order, supra note 3, at 4.
36 H EALTH C ARE S TATEMENTS, supra note 9, at Example 3, Statement 8.
37 See, e.g., FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 422 (1990).
38 As the Supreme Court has observed, “The preservation of the free market and of a system of free
enterprise without price fixing or cartels is essential to economic freedom.” Ticor Title, supra note 15, at
632 (citing United States v. Topco Associates, Inc., 405 U.S. 596, 610 (1972)). We also note that, with
reference to the spillover effects discussed above, such conduct may violate the antitrust laws
independent of any explicit agreement to negotiate price with such payers. See, e.g. , United States v.
General Motors Corp., 384 U.S. 127, 142-43 (1966) (“it has long been settled that explicit agreement is
not a necessary part of a Sherman Act conspiracy”); Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d
996, 1000 (3d Cir. 1994); ES Dev., Inc. v. RWM Enterprises, Inc., 939 F.2d 547, 553 (8th Cir. 1991).
39 Executive Order, supra note 3, at 5.
40 317 U.S. 341 (1943).

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note that it is settled law that states cannot immunize private anticompetitive conduct
merely by stipulating the application of state action immunity.41
Parker represents the Court’s reading of the preemptive reach of the Sherman
Act,42 a reading “grounded in principles of federalism.” 43 In Parker, the Court found
“nothing in the language of the Sherman Act or its history which suggests that its
purpose was to restrain a state or its officers or agents from activities directed by the
legislature.”44 Accordingly, the Court held that the Sherman Act does not prohibit state
regulation that tends to suppress competition when “the state itself exercises its
legislative authority” and, “as sovereign,” adopts and enforces such regulation.45
Notably, however, the Court has recognized that the principles of federalism underlying
the state action doctrine are best served if Parker immunity is narrowly construed:
“Neither federalism nor political responsibility is well served by a rule that essential
national policies are displaced by state regulations intended to achieve more limited
ends.”46
Under the state action doctrine, the conduct of the state, as sovereign, generally
is immune from antitrust scrutiny. However, “[t]he national policy in favor of
competition cannot be thwarted by casting … a gauzy cloak of state involvement over
what is essentially a private price fixing arrangement.”47 Although states themselves
may adopt and implement policies in tension with federal antitrust law, subordinate
political entities, including state regulatory boards and municipalities, “are not beyond
the reach of the antitrust laws because they are not themselves sovereign.”48 Private
parties, moreover, are not insulated from antitrust scrutiny merely because a state
legislature stipulates their immunity.49 When a state expresses a policy to displace
competition in favor of regulation, but delegates to private parties the implementation
of that policy, Parker immunity requires establishing that the anticompetitive conduct
41 See text accompanying notes 46-54, infra, regarding certain state action doctrine limits. Analysis of
the question whether the Order is preempted by the federal Social Security Act and its implementing
regulations is also outside the scope of this letter.
42 “We may assume also, without deciding, that congress could, in the exercise of its commerce power,
prohibit a state from maintaining … [such a program] because of its effect on interstate commerce.”
Parker, 317 U.S. at 350.
43 Ticor Title, supra note 15, at 633.
44 Parker, 317 U.S. at 350-351.
45 Id. at 352.
46 Ticor Title, 504 U.S. at 636.
47 Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, 445 U.S. 97, 106 (1980).
48 Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38 (1985) (municipality not the sovereign); see also
Southern Motor Carriers Rate Conference v. United States, 471 U.S. 48, 62-63 (1985) (state Public
Service Commissions “acting alone” could not shield anticompetitive conduct from antitrust scrutiny);
Goldfarb v. Virginia State Bar, 421 U.S. 773, 791-92 (1975) (state bar association, which was state
agency for certain purposes, not entitled to state action exemption).
49 Midcal, 445 U.S. at 106 (“a state does not give immunity to those who violate the Sherman Act by
authorizing them to violate it, or by declaring that their action is lawful.”)

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is sufficiently “the state’s own.”50 Two tests are required for that purpose: “First, the
challenged restraint must be ‘one clearly articulated and affirmatively expressed as state
policy’; second, the policy must be ‘actively supervised’ by the State itself.”51 Because
“IHCPs are not State employees,”52 collective bargaining by them or their privately
elected representatives cannot be immune unless it passes both of these tests. For
example, in California Retail Liquor Dealers Association v. Midcal Aluminum Inc.,53
California’s system for wine pricing was not immune from antitrust scrutiny because
the legislature itself did not establish prices, review the reasonableness of price
schedules, or engage in any “pointed reexamination” of the program – hence, failing the
active supervision test.54
2. 	Federal Labor Law Issues: The Executive Order seeks to confer
antitrust immunity styled as a labor exemption. Although FTC staff is primarily
concerned with the competition and antitrust law implications of the Executive Order,
the staff does note that the Order appears entirely at odds with federal labor policy. The
federal labor exemption is limited to the employer-employee context; it does not protect
combinations of independent business people.55 The Order, however, expressly
excludes employees in favor of independent contractors,56 inverting the distinction
Congress drew between them. Unlike the labor law system, the Executive Order also
lacks the exclusions from protected negotiations for subjects unrelated to the intended
purpose of those laws, as well as the oversight of the process by the National Labor
Relations Board.
Moreover, the creation of a labor exemption for home health care workers is
offered as a remedy for problems that collective bargaining was never intended to
address. The stated goal of the Executive Order is to “ensure that the quality of
services provided to in-home health care recipients remains constant.”57 The labor
exemption, however, was not created to ensure the safety or quality of products or
services. Collective bargaining rights are designed to raise the incomes and improve
50 Ticor Title, 504 U.S. at 635.
51 Midcal, 445 U.S. at 105 (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410
(1978)).
52 Executive Order, supra note 3, at 4.
53 Supra note 51.
54 Id. at 105-106.
55 See, e.g., Columbia River Packers Ass'n v. Hinton, 315 U.S. 143 (1942); United States v. Women's
Sportswear Mfg. Ass'n, 336 U.S. 460 (1949); American Medical Ass'n v. United States, 317 U.S. 519,
533-36 (1943) (rejecting assertions that the labor exemption to the antitrust laws applied to joint efforts
by independent physicians and their professional associations to boycott an HMO in order to force it to
cease operating). NLRA Section 2 (3) gives the right to bargain collectively only to "employees." The
1947 Taft-Hartley amendments to the NLRA included a provision expressly stating that the term
"employee" does not include "any individual having the status of an independent contractor." 29 U.S.C. §
152 (3).
56 Executive Order, supra note 3, at 2.
57 Id. at 1.

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the working conditions of union members. The law protects, for example, the United
Auto Workers’ right to bargain for higher wages and better working conditions, but we
do not rely on the union to bargain for safer, more reliable, or more fuel-efficient cars.
Congress has addressed those concerns in other ways, as well as relying on competition
among automobile manufacturers to encourage product improvements. The quality of
home health care deserves serious consideration, but a labor exemption is ill-suited to
the task.
In sum, the Executive Order is designed to confer a labor exemption on parties
whose situations are very different from those eligible for the exemption under well-
established principles of labor law. Instead, it would grant private independent
contractors a broad immunity to present a "united front" when negotiating price and
other terms in dealing with the State of Ohio and very likely other public and private
payers.
Conclusions
Since the advent of active antitrust enforcement in health care services markets,
health care providers have sought antitrust exemptions in state and federal legislatures.
Although varied in certain regards, such proposals have all, at bottom, sought
protection from antitrust scrutiny for anti-competitive conduct that would tend to raise
the prices of health care services without conferring countervailing benefits on health
care consumers. Recognizing that many Americans face hard health care choices in the
market already, the FTC consistently has opposed such proposals.
In staff’s judgment, the Executive Order raises the same competition concerns
raised by those legislative proposals. Horizontal price fixing by independent health
care providers tends to work to the substantial detriment of health care consumers and
is inconsistent with federal antitrust law. Claims of immunity from antitrust scrutiny
based on, for example, federal labor laws, are, in our judgment, problematic.
In brief, FTC staff is concerned that the Executive Order is likely to foster
certain anticompetitive conduct that is inconsistent with federal antitrust law and
policy, and that such conduct could work to the detriment of Ohio home health care
consumers.

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Respectfully submitted,
Maureen K. Ohlhausen
Director
Office of Policy Planning
Michael R. Baye
Director
Bureau of Economics
Jeffrey Schmidt
Director
Bureau of Competition

Dissenting Statement of Commissioner Jon Leibowitz In re Ohio Executive Order 2007-
23S, Matter Number V080001
Although I share my colleagues’ concern with laws creating antitrust immunity
(both in general and especially in health care), I dissent from the decision to authorize the
staff letter on the Governor of Ohio’s July 2007 Executive Order permitting self-
employed home health care workers to collectively bargain with Ohio’s Medicaid
program.
States are struggling to control Medicaid costs and to improve access to in-home
care, which may offer a less-costly alternative to nursing homes. Ohio is operating under
a Medicaid waiver so that it can make home services available to Medicaid recipients as
an alternative to institutional care, and the Executive Order is part of that effort. I do not
believe that the FTC has enough information about the context and circumstances in
which the Executive Order operates to offer a thoughtful evaluation of its likely effects.
There does not appear to be any reason to proceed on the basis of such limited
information. There is no indication of any pending review of the Executive Order or its
implementation. A state legislator requested the letter, but the letter does not address any
action pending in the legislature related to the Executive Order. As far as I know, except
for two occasions, since 1994, the staff has submitted comments only where a pending
proposal existed (whether it was to adopt a new law, rule, or regulation; repeal it; modify
it; or renew it). This letter can have no effect on policy because there is nothing to affect.
In fact, rather than assisting state decision-makers, the primary effect of the letter
may be to discourage home health care workers from participating in the state’s effort to
expand access to Medicaid home health services. The letter warns that participation
pursuant to the Executive Order will violate the antitrust laws if the state’s effort to
confer antitrust immunity is ineffective. When there is no political or regulatory decision
pending, we should not issue a letter that would undermine a state’s implementation of its
programs and limit the governor’s ability to address health care problems in his state.
Respectfully, I dissent.