An economic analysis of the Maricopa decision

In Arizona v. Maricopa County Medical Society the United States Supreme Court ruled in a 4-3 decision that the Maricopa Foundation for Medical Care, a nonprofit Arizona corporation, had violated Section 1 of the Sherman Act by engaging in a maximum price-fixing scheme. The Supreme Court in this decision, however, failed to consider the economic impact of the Maricopa Foundation on the cost and quality of health care. The Court's adoption of a per se approach in Maricopa can have a negative impact upon the competition which the antitrust laws are attempting to promote. By focusing only on the narrow aspect of price fixing, the Court ignored (1) the potential of the Maricopa Foundation to contain costs, (2) the potential competitive effect that the foundation may have on third-party carriers and organizations in the marketplace, (3) the relationship of maximum price fixing to economic performance, and (4) the nature of competition in the health care marketplace. This article describes the background of Maricopa as well as the Supreme Court decision. It describes foundations for medical care with special emphasis on the Maricopa Foundation and analyzes Maricopa from an economic rather than the traditional legal perspective, emphasizing how the two perspectives might differ. Attention is paid to the concept of maximum price fixing in the health care marketplace. The concluding section evaluates the Supreme Court decision.