Anticompetitive Contracts Between Insurers and Providers in Health Care

For people with private health insurance in the United States, contracts between insurers and providers are important to fostering health care competition and improving efficiency. However, insurer-provider contract provisions do not always advance competition and consumer welfare. This essay discusses the contracting strategies used by insurers to increase competition, and four anticompetitive contract terms: anti-tiering or anti-steering, all-or-nothing, most favored nation, and gag clauses, that may be used by dominant health systems to protect themselves from competition. I conclude with a discussion of policy responses that can be used to address provider use of anticompetitive clauses and that can reduce the negative impacts of provider market power. Understanding anticompetitive contract provisions and the potential policy responses to limit their impact is critical to health care competition.