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Abstract

In a recent opinion, Arizona v. Maricopa County Medical Society, the United States Supreme Court decided that section 1 of the Sherman Act was "violated by an agreement among competing physicians setting, by majority vote, the maximum fees that they may claim in full payment for health services provided to policy holders of specified insurance plans." As an aid to understanding the Maricopa County decision, this article explores the economic environment of the health care industry. It examines the rampant cost escalation that plagues the industry and explains how much of this inflationary surge is precipitated by a third-party financing method that offers little incentive to control costs. It then traces the development of the health maintenance organization (HMO), a device which has been heralded as holding great promise for containing medical costs without sacrificing quality health care. This background intimates that the foundations for medical care (FMCs) under attack in Maricopa County were not designed to contain costs but were actually anticompetitive schemes designed to undermine the development of the more promising HMOs. The article then pursues a three-pronged survey of the antitrust developments that lay the groundwork for the Court's inquiry in Maricopa County. Initially, this entails an examination of the line of cases that extended the reach of the antitrust laws to the professions in general and the health care profession in particular. Secondly, this part of the article focuses on the judicial construction of the McCarran-Ferguson Act's antitrust exemption for the "business of insurance." Finally, an overview is presented of the judicial fashioning of an appropriate standard of review—a rule of reason or a per se rule—for cost containment efforts that employ maximum fee schedules. With this background, the Court's skepticism over the cost containment justification forwarded by the FMCs in Maricopa County can be better understood. Analysis of the court of appeals and Supreme Court decisions in Maricopa County, coupled with the earlier economic discussion, should provide a useful guide for determining both the effectiveness and legality of future cost containment efforts in the health care industry.

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