Do the Uninsured Become Healthier Once They Receive Health Care Coverage?

Bernard Black, José-Antonio Espín-Sánchez, Eric French & Kate Litvak, The Effect of Health Insurance on Near-Elderly Health and Mortality, Nw. L. & Econ. Research Paper Series, available at SSRN.

While advocates for the Affordable Care Act (ACA) assume it will improve the health of the uninsured, Bernard Black and co-authors observe that the link between health insurance and health is more tenuous than one may think. Partly because other factors have a bigger impact on health than does health care insurance and partly because the uninsured have always been able to rely on the health care safety net, we may see little improvement in the health of the previously uninsured from ACA.

In their study, Black et al., collected nationwide data on people who were age 50-61 in 1992. The authors looked at this “near-elderly” population because a beneficial effect of insurance would be most likely found in that group—younger people are healthier, and older people are covered by Medicare. The authors then looked at the study subjects’ access to health care and their health outcomes for the next 18 years. As expected, insured individuals used more health care resources than did uninsured people. However, there was no evidence that being insured lowered the risk of death 12-14 years into the study, and only mild evidence of a mortality benefit at 16-18 years.

As Black et al., write, even the mild benefit may have reflected unmeasured factors (e.g., diet or exercise habits) rather than health insurance status. By 16-18 years into the study, everyone would have become a Medicare recipient, and many of the study subjects would have become Medicare eligible much earlier. One would expect risk of death to have declined rather than increased once the uninsured persons became insured under Medicare, but their mortality rate rose only after they enrolled in Medicare. Other study results suggest that the lower risk of death for the insured resulted from factors other than insurance status. For example, people who had Medicaid or other public insurance had higher mortality rates than did the uninsured.

The study results are consistent with data from Oregon. After the state expanded its Medicaid program and assigned the limited new slots by lottery, it effectively created a randomized controlled study of the benefits of Medicaid coverage. When researchers analyzed data from the first two years of the expansion, they found that Medicaid coverage resulted in greater utilization of the health care system. However, there was no reduction in levels of hypertension, high cholesterol or diabetes. There was a reduction in levels of depression, but no increase in the extent to which participants reported being happy.1

To be sure, other studies have found improvements in health status that were related to improvements in insurance status. In one study, for example, researchers compared three states that had expanded their Medicaid programs between 2000 and 2005 to include childless adults with neighboring states that were similar demographically but had not undertaken similar expansions of their Medicaid programs. In the aggregate, the states with the expansions saw significant reductions in mortality rates compared to the neighboring states.2 But as Black et al., observe, only one of the states showed a significant decrease in mortality from the expansion, and the decrease was too large to be explained by the reduction in the number of uninsured. Similarly, while another study found a significant decrease in mortality rates for patients with emergency needs for health care once Medicare kicked in at age 65, the decrease in mortality was too large to be explained by changes in care for the small percentage of Americans who moved from being uninsured to being insured at age 65.3

All of this is not to say that health care does not matter. Rather, the study from Black et al., suggests that ACA will not do that much more for the health of the previously uninsured than did the pre-ACA safety net. The safety net is porous, but it may provide nearly as much benefits for health as will ACA.



  1. Katherine Baicker et al., The Oregon Experiment—Effects of Medicaid on Clinical Outcomes, 368 New Eng. J. Med. 1713 (2013). []
  2. Benjamin D. Sommers, Katherine Baicker & Arnold M. Epstein, Mortality and Access to Care Among Adults After State Medicaid Expansions, 367 New Eng. J. Med. 1025, 1026, 1029-1031 (2012). []
  3. David Card, Carlos Dobkin & Nicole Maestas, Does Medicare Save Lives?, 124 Quarterly J. Economics 597, 632-633 (2009). []
 
 

Mello’s MedMal 2.0 Study Documents Discordant Outcomes in the Communication-and-Resolution Programs

• Michelle M. Mello et al., Communication-And-Resolution Programs: The Challenges And Lessons Learned From Six Early Adopters, 33(1) Health Affairs 20 (2014).
• Michelle M. Mello, Susan K. Senecal, Yelena Kuznetsov & Janet S. Cohn, Implementing Hospital-Based Communication-And-Resolution Programs: Lessons Learned In New York City, 33(1) Health Affairs 30 (2014).

In January of 2014, Health Affairs published an entire issue dedicated to new approaches to medical malpractice reform, featuring several jotworthy articles with overlapping lists of authors, including these two led by Michelle Mello. This work is invaluable as it provides an early look at two sets of demonstration projects exemplifying new solutions to the problems of medical error and medical liability.

Across the multiple medical malpractice crises and waves of reform, the traditional debates have focused on ways to reduce the number, amount, and variability of liability judgments—imposing shorter statutes of limitations, interposing screening panels to filter out some cases, narrowing the range of potential expert witnesses eligible to testify, and capping damages regardless of the individualized proof determined by the jury. Regrettably, there is no reason to think that these reforms actually reduced the number of medical errors patients suffer. In fact, they may have exacerbated that problem if they have weakened the (imperfect) deterrence signal sent by liability. This point was sharpened in 1999, when the Institute of Medicine released a report summarizing evidence estimating that over 40,000 Americans were being killed every year due to preventable medical errors: the equivalent of a couple of jumbo jets full of passengers crashing every day.

One of the problems with the liability model for regulating medical error is that it puts physicians and hospitals into a mode of “deny and defend,” where they “man the barricades” against the hordes of money-seeking plaintiffs lawyers, hired gun expert witnesses, and seemingly incompetent juries of laypersons. This adversarial position may not be optimal for engendering a culture of self-criticism for healthcare providers, one where they would admit their errors, identify the causes, and figure out ways to ensure that they do not happen again. The deny-and-defend culture may be antithetical to a culture of patient safety.

These 2014 articles provide early results from “medmal reform 2.0,” as they report on demonstration projects funded in 2010 by the Agency for Healthcare Research and Quality. The two Mello articles describe communication-and-resolution programs (CRP) in which hospitals and insurers have tried new approaches to handling medical errors and patient liability. One hopes that these new models might achieve a patient safety culture while also ensuring that injured patients get the compensation they deserve.

In the first article, Mello and colleagues studied six CRPs, which had adopted either of two models, both of which start with an adverse event being disclosed by the hospital staff to management. One “early settlement” model included the hospital investigating the quality of care provided, and where it was substandard, offering a settlement in exchange for the patient’s written waiver of liability. The other “limited reimbursement” model operated by insurers excluded serious injuries, did not involve an investigation, and did not demand a waiver of liability, but limited payments to $30,000.

Although the article does not discuss the rates of payments made to patients under each program, the data are provided in Exhibit 2. As I analyze the numbers, within the early settlement model, it appears that conditional on the hospital opening a “case” (presumably because the healthcare team referred a serious adverse event to the risk management officials), there is wide variation across hospitals in how often they pay patients, with rates of 44%, 9%, and 55%. With such large variance, an average may not be meaningful, but it would appear to be about 44% of patients receiving payments. (The one hospital that paid 9% of cases also had very few cases.) The three insurers in the no-fault limited-reimbursement model paid about 61% of the cases they opened, with variance being more muted (61%, 54%, and 49%, dominated by a huge number of cases in the first hospital).

Thus, it appears that the no-fault model pays out more often, as one might expect. But in this “no fault” system, 39% of the cases are still not paid. Aside from fault, what other element is missing? The traditional tort elements are duty, breach, causation, and injury. One could speculate that injury or causation element were unmet in these cases: that the patient did not have any reimbursable expenses or that the injury was unrelated to medical care. It is also possible that the patient cut the process short by involving an attorney.

Studdert and Mello (2005) have previously done pathbreaking work to document the “discordant outcomes” that arise from medical malpractice litigation. A “discordant outcome” is a case where the patient-plaintiff should have been paid (because all elements of the claim were present) but was not paid; or a case where the patient-plaintiff should not have been paid, but was nonetheless paid. In these new CRP articles, the investigators made no effort to themselves determine the merit of the claims. Instead we just get the outcomes. Thus, we cannot assess how “accurate” the CRP payments were in tracking the cases involving substandard care, and thus cannot compare it to traditional liability on this dimension. Especially since the limited-reimbursement model purports to be “no fault,” it would be an apples-and-oranges comparison anyway.

Instead, in these new CRP articles, Mello and her co-authors focus on the institutional dynamics involved in adopting such a program. Some hospitals that adopted the first sort of program felt that investigations into the quality of care would be essential to drive improvements. “In contrast, participants in the limited reimbursement programs felt that this model’s no-fault approach would increase participation by reassuring physicians that the program would not lead to adverse consequences.”

The second article evaluates a CRP implemented by five New York City hospitals for serious adverse events arising from their general surgical practice. The hospital endeavored to increase reporting of these events from the clinicians to management, and then tried to support clinical staff as they disclosed the problems to patients. After investigating why the injuries occurred, the hospitals planned to offer apologies and compensation when they determined that the standard of care had been breached.

In this study, the scholars were again unable to assess the accuracy of the hospital’s determination as to compliance with the standard of care, but we do get more granularity in the data about the cases in which they made payments. “Hospital and insurer staff determined that the standard of care was violated in thirty cases and met in ninety-three cases; they made no determination in two cases. Compensation (beyond waiving medical bills) was deemed appropriate in nine of the cases of substandard care and actually offered in four of those cases, plus two cases of substandard care in which compensation was not initially deemed appropriate.” Given the biases known to exist in all self-interested humans, it seems likely that these figures underestimated the true numbers of adverse events and underestimated the rate of medical errors within that set.

It is nonetheless striking that the CRP program paid patients in only 13% (4/30) of the cases in which the hospitals admitted (to themselves at least) that they delivered substandard care, and in less than half (4/9) of the cases in which the hospital itself determined that compensation was appropriate. Strangely, though, “compensation was offered in another three cases in which the standard of care was met.”

Following Studdert and Mello’s 2005 study of traditional liability systems, this new preliminary research suggests that the CRP programs have their own problems with discordant outcomes. One might cogently respond that these hospitals are still operating in the shadow of the traditional liability system, and its distortions may be infecting their choices about whether to pay patients. Still, along the dimension of compensation, these early data do not present a strong argument for dismantling the liability system. Instead, even with these innovative CRP reforms, we might be happy to retain the courts as a backstop for situations where the hospital fails to pay patients that they should.

After evaluating the first twenty-two months of the New York program, the authors conclude that, “We found that all five hospitals improved disclosure and surveillance of adverse events but were not able to fully implement the program’s compensation component.” This sort of evidence is invaluable to the ongoing debates about medical liability reform.

 
 

What Makes Health “Public”? Finding a Middle Path

Lindsay F. Wiley, Rethinking the New Public Health, 69 Wash. & Lee L. Rev. 207 (2012).

As New York City Mayor Michael Bloomberg left office, commentary on his public health initiatives abounded; the reviews ranged from lauding him as an innovative pioneer to painting him as a meddling nanny-in-chief. At the core of these contrasting views lies a sharp divergence in how commentators understand the scope of the state’s proper interest in protecting its citizens from today’s primary threats to their health, threats posed by chronic and non-communicable conditions such as obesity, diabetes, heart disease, and cancer. Does the state’s interest in protecting public health—and thus its police power to advance that interest—extend to combating such conditions’ growing prevalence? Or is the state’s public health authority limited to addressing health threats like those that historically have occupied public health officials, threats like communicable diseases, tainted food, and unsafe water? In short, what makes health threats “public”?

Lindsay Wiley’s article “Rethinking the New Public Health” reconsiders this debate and suggests a novel approach to finding a middle path between the public health expansionists (who view any problem diminishing the health and longevity of a significant number of people as a public health problem subject to regulatory intervention) and the public health minimalists (who would confine the state’s regulatory authority to addressing those collective threats against which responsible individuals cannot protect themselves). By identifying and analyzing a common strand of thought in public health and public nuisance law, Wiley provides a theoretical basis for identifying those “public bads” that are properly targets of public health interventions. Wiley would define those “public bads” as having not only economic, but also epidemiological meaning.

Wiley proposes the concept of “epidemiological harms” as comprising harms to the public collectively that justify state intervention. She defines these as harms “for which causation can be established at the population level, but not necessarily at the individual level” and views them as nonconsensual and indivisible harms posing collective action problems, and not simply an aggregation of individual choices and exposures. Examples of these “public bads” justifying public health intervention include exposure to lead paint and access to cheap cigarettes. While it may be nearly impossible to prove that any particular person benefits from measures requiring lead abatement or taxing cigarettes, epidemiological studies can establish a link between these measures and improved health outcomes at the population level. As Wiley points out, in this sense, harms found in the social, economic, and information environments (e.g., “the overrepresentation of fast food outlets and underrepresentation of full service grocery stores in low-income neighborhoods”) can be viewed as threatening an entire community in much the same way that industrial emissions or smallpox do.

I really like this article, for several reasons. Wiley carefully links the contemporary debate over the proper scope of public health law to its historical heritage. She highlights that even the “old” public health (which battled poor sanitation and communicable diseases) was new at one point, and that public health law has continually evolved as public health science has advanced and the nature of the greatest threats to health has changed. She deftly explores the parallels between public nuisance law and public health law and draws upon the insights of the science of epidemiology, particularly social epidemiology, to expand our understanding of “public bads” beyond the traditional understanding.

This article advances the project of developing a theoretical foundation for government efforts to address the social, environmental, and economic determinants that decrease a population’s health overall and that often produce or exacerbate health disparities among different demographic groups. At the same time, Wiley’s approach accepts the objection, voiced by liberal critics of the “new public health,” that the widespread nature of health problems experienced by individuals does not alone make them “public” health problems justifying state regulatory intervention. Her concept of “epidemiological harms” distinguishes “public bad” harms from a simple aggregation of individual harms.

Wiley’s approach will not overcome all libertarian resistance to new public health interventions. While she characterizes her approach as middle of the road, Wiley seems firmly wedded to the legitimacy of social epidemiology, which has its own critics. And, as a political matter, some interventions properly characterized as “public health” (under Wiley’s approach) may not be palatable to the public itself and thus may not be politically viable. But political viability presents a democratic question about how the government should exercise its police power, not about whether the power is legitimately the government’s to wield.

Scholarship regarding public health law has blossomed in recent years, and “Rethinking the New Public Health” is a valuable contribution to the ongoing discussion.

 
 

Don’t Get No Respect: Defining the Field of Public Health Law

Micah L. Berman, Defining the Field of Public Health Law, 15 DePaul J. Health Care L. (forthcoming 2014), available at SSRN.

In a methodical, comprehensive exposition, Micah Berman’s forthcoming article considers why public health law remains the Rodney Dangerfield of the legal academy. As a member of a working group of scholars and practitioners who share the mission of advancing the prominence of public health law, I am well versed on the issue but was enlightened by Berman’s insights. I especially appreciated that he began by begging his own question: What difference does it make to recognize public health law (or any other area of law, for that matter) as a “field”? Why it matters, he answers, is respect: For an area of law to be recognized as “field” is to be in the mix of law school hiring priorities, to headline symposia and conferences, and generally to be taken seriously within the academy and practicing bench and bar.

Berman’s article is exceptionally well organized, stepping through difficult foundational questions, clearly explaining the paradigms, testing those paradigms with other examples, and engaging the leading scholarship on the problem presented. His roadmap proceeds by: (1) Defining a field of law; (2) defining public health law; and (3) evaluating whether public health law is a field of law.

To frame his first question, “What is a field of law?,” Berman carefully sets out two alternative rubrics. The first is Todd Aagaard’s two characteristics: (1) commonality and (2) distinctiveness. The second is Ted Ruger’s more traditional test: (1) a reductionist focus on internal logic; (2) a focus on essential legal form; (3) an emphasis on linear historical development, and (4) a high level of institutional specification and centralization. Underlying both schema are prescriptive and descriptive approaches; members of the field might share a normative perspective or might simply write and teach the same subject matter.

Before applying the definitional rubrics to public health law, Berman applies them to two other relatively recently recognized legal fields: environmental law and health law. Descriptively, each of those fields involves common subject matter but neither offers a distinct analytical perspective on the law. Prescriptively, environmental lawyers may seem to share the goal of protecting natural resources and future generations. But Berman finds that suggestion under-inclusive of existing environmental law scholarship. For health law, it is even harder to identify a shared normative perspective, with scholarship presenting a range of social justice, patient autonomy, economic, and other analyses of the law. Both environmental law and health law lack universal organizing principles or unique methodological approaches.

Tellingly, Berman finds health law even harder than environmental law to defend as a field under either Aagard’s or Ruger’s characteristics. That admission should give pause. If health law does not meet the definition of a field of law, how can an arguable sub-topic, public health law, possibly receive that recognition? Yet Berman ultimately concludes that the volume of scholarship and active debate regarding the definition of health law is sufficient to establish it as a field. So concluding, Berman unfortunately sidesteps his otherwise careful analysis, effectively suggesting that if enough people are doing it, or wanting it to be a field, then it is a field.

Berman hits his most comfortable stride in answering his second question, “What is public health law?” He begins where many of us do, with Larry Gostin’s definition, ultimately tweaking and simplifying it to a more manageable mouthful. Gostin is widely credited with giving academic gravitas to the public health law renaissance at the beginning of the millennium and continuing the mission of bringing coherence and distinctiveness to the “field” in the post-9/11, post-Katrina, post-Bloomberg era. As Berman notes, Gostin’s recent revisions to his seminal texts, strike a notably more prescriptive cord, defining as public health law’s “prime objective,” the pursuit of “the highest possible level of physical and mental health in the population, consistent with the values of social justice.” Berman acknowledges that this more strident tone is likely to turn off those who do not share Gostin’s objectives and who resist more invasive government action, or “nanny state-ism.”

Ultimately, Berman concludes that the key to defining public health is its population-based perspective. This view exposes the hyperindividualism that characterizes much American legal discourse and instead focuses on populations, rather than individuals, as the primary objects of law and policy. Berman aptly notes that Wendy Parmet has done extensive work infusing traditional areas of law, especially constitutional law, with public health’s population-based perspective and scientific methodologies. He would go further and include the population-based perspective as a defining element of a separate field, not merely an analytical approach applicable to already recognized fields. Berman’s streamlined, “workable” definition of public health law starts with Gostin, including the reference to social justice, but not as the field’s “prime objective.” He adds Burris’s notion of “incidental” public health laws (e.g., land use) and Parmet’s focus on population health and public health science.

Finally, Berman turns to his third question, “Is public health law a field of law?” He readily concedes Ruger’s “traditional” test unmet but finds Aagaard’s two characteristics more easily satisfied. The population-based perspective is critical, establishing public health law as not merely a field addressing common subject matter – Aagaard’s “commonality” prong. That approach also offers, if not unique legal rules or doctrine, a distinct value and concern of the law – the “distinctiveness” prong. Moreover, public health law’s reliance on epidemiological and social science methodologies distinguishes it from traditional legal analysis. The population-based perspective also answers the question whether public health law is a field separate from, or merely a subfield of, health law. The two are “direct opposites” in many ways, urges Berman. Public health law focuses on disease prevention and population-level interventions, while health law perpetuates an individualistic focus on medical care and the patient-provider treatment relationship.

Although Berman ultimately concludes that public health law does not entirely satisfy any formal definition of a legal field, he finds promise in the proliferation of public health scholarship, centers and programs, and course offerings across the country. As with health law, he suggests that more people doing public health law brings it closer to the respect and legitimacy that fields of law enjoy.  But it is not clear how a deeper public health law infrastructure would establish it as a “field” under the tests that Berman sets out at the beginning of the article. A more satisfying conclusion, after finding Aagaard’s and Ruger’s tests inadequate to the task, might have been for Berman to define an alternate approach applicable to emerging, interdisciplinary areas like public health law.

 
 

A Big Picture View of What Could Be Done About the Institutional Corruption of Medicine

Marc A. Rodwin, Conflicts of Interest, Institutional Corruption, and Pharma: An Agenda for Reform, 40 J.L. Med. & Ethics 511 (2012), Suffolk Univ. Law School Research Paper No. 12-40, available at SSRN.

Since long before his 2011 Oxford University Press book that takes a comparative approach to the problem, Marc Rodwin has been a leading voice in the debate around the pharmaceutical-healthcare industrial complex, and the conflicts of interest that it perpetuates. In his latest contribution in the Journal of Law, Medicine, and Ethics (JLME), Rodwin wisely moves from the language of ethics—which finger-waggingly suggests an individualism of bad guys and good guys—to the language of “institutional corruption.” Rodwin writes that, “in the past, physicians and scholars typically conceived of conflicts of interest as an ethical issue to be resolved according to individual judgment or professional and organizational norms. However, society can mitigate or eliminate conflicts of interest by changing financial and organizational arrangements in medicine.” Larry Lessig has encouraged this sort of move from individuals to institutions in his own work, and in his leadership of the Institutional Corruption Lab at the Edmond J. Safra Center for Ethics at Harvard, where Rodwin is a lab fellow. (Disclosure: I receive support from the Lab too).

Institutional corruption is useful as a lens to understand these problems because it directs us to examine the two-way economy of dependence. To the extent that incentives matter in our world of rational actors, an economy of dependence is an economy of influence. Rodwin notes that the pharmaceutical industry depends on public support in the form of tax subsidies, patent law rules, and other incentives. It is a strange exchange relationship, one where our government gives tax breaks for research and marketing, and even enforce a monopoly, for any new chemical compound invented by a drug company. It does so to the same extent, regardless of whether the new chemical is a cure for cancer or a “me too” drug, which makes no real improvement to clinical care. On the other hand, Rodwin identifies several ways in which the public, physicians, and patients now rely on drug companies. Pharma—not the Food and Drug Administration—sets its own priorities for drug development; designs and conducts the clinical trials that demonstrate safety and efficacy; monitors adverse drug reactions; and finances continuing medical education (CME), medical societies, and journals.

Rodwin gives us a big-picture agenda for reform, in a punchy article that takes full advantage of the short and lightly-footnoted format of JLME, to stay out of the weeds. His self-titled “agenda for reform,” includes everything from changes in patent length (to calibrate with degree of innovation) to new funding for National Institutes of Health research grants to explore drug safety and efficacy, funded by a small tax on drug company sales. Rodwin also revives a proposal from the 1970s, which would have required that drug companies pay for clinical trials that are actually conducted by the FDA, thus minimizing bias (assuming regulatory capture does not just replicate the problem). He argues for expansion of the mandate for disclosure of clinical trial data, to combat the publication bias that currently infects biomedical journals, and repeal of the tax deduction for marketing of pharmaceuticals, given the evidence that it is often inaccurate. He also seeks to tax the healthcare industry to support CME, medical societies, and journals, rather than making them subservient to commercial interests.

What I like about Rodwin’s article is that it is a concentrated indictment of the status quo, paired with an equally efficient proposal for comprehensive reform. In these 10,000 words, Rodwin has delivered the critical yet constructive agenda for reform, which has until now been scattered across hundreds of disparate scholarly reviews, academic books, Congressional hearings, and Office of Inspector General reports. As Rodwin acknowledges, “the details of the reforms suggested in this article need to be worked out, the proposals have limitations, and there are certainly alternative ways to reduce improper dependency on pharmaceutical firms.” Indeed. And, there is much to be said about the political economy of such reforms: I would be the last to suggest that we could levy new taxes on a humongous industry, and tinker with patent law, with a mere stroke of the pen.

But every now and then, it’s nice to have the broad outlines of a comprehensive package of reforms articulated in a single compelling statement. If nothing else, Rodwin has provided us with the regulatory ideal of what a coherent policy might aspire towards.

 
 

Harnessing the Power of Comparative Effectiveness Research for More Rational Health Care Financing

Russell Korobkin, Relative Value Health Insurance: The Behavioral Law and Economics Solution to the Health Care Cost Crisis, Mich L. Rev. (forthcoming 2013), available at SSRN.

Nearly all health insurance contracts currently sold in the U.S. cover all medically necessary, non-experimental services, subject to only specifically listed exclusions. As a result, the coverage provided is what those in the benefits industry would refer to as “rich” coverage. If the treatment is non-experimental and is expected to have a positive clinical benefit, no matter how small, it is covered regardless of cost. This rich coverage leads to some predictable problems. Because individuals typically have little incentive to decline treatment that might benefit them, utilization is high and costs rise accordingly. This, in turn, makes health insurance more expensive for all purchasers. Our health system has tried to remedy this issue by adopting managed care structures to create incentives for providers to limit utilization of a treatment where it has only marginal benefits. And, more recently, consumer-driven health care has been developed to create incentives for patients themselves to reduce utilization of marginally beneficial treatment.

Russell Korobkin’s new article seeks to address this well-known problem through a novel use of comparative effectiveness data to create health insurance contracts that only cover services that provide a given level of cost effectiveness.  He refers to this type of insurance as “relative value health insurance.” The basic idea is to start with an index of treatments based on cost-effectiveness, with a proposed scale of 1 for highly cost-effective treatments to 10 for treatments with low cost-effectiveness. Health insurance contracts could then be sold based on the level of cost-effectiveness they will cover. For example, insurers might offer a policy that covered all treatments with a rating of 3 or above for $X, while charging significantly more for a policy that covers all treatments with a rating of 7 or above. Korobkin’s basic argument is that relative value health insurance would greatly simplify an individual’s tradeoffs between medical care and competing goods and services.

The idea of offering a health insurance contract that provides a lower level of coverage for less money is not new.  But while there has been theoretical interest in these “pay less to get less” contracts, no one has yet come up with a practical way for insurance companies to structure such contracts, particularly to structure them in such a way that consumers could meaningfully shop for and compare policies. Professor Korobkin’s proposal seeks not only to create a reasonable way to buy “less” health insurance, it also relies on behavioral insights to create a choice architecture that will allow consumers to make meaningful choices, or at least better informed choices, than are possible under current contract structures.

I admit to being skeptical initially of this basic proposal. In particular, I wondered whether any insurance purchaser would actually want to buy insurance that provided perhaps less-than-complete coverage based on cost-effectiveness. What if you develop a life-threatening illness and the treatment your physician tells you is necessary to give you the greatest chance of survival happens to score low on the cost-effectiveness scale? Korobkin’s reply to this concern, which I found helpful, was to make an analogy to car purchasing decisions:

“Few people purchase the safest possible car, completely ignoring the tradeoffs this would entail, as they would do if they were truly to adopt a non-compensatory decision strategy that refused to trade off health and safety against other product attributes. In this sense, the relative value health insurance purchase decision would probably look much the same to most consumers. The promise of infinite and unlimited medical care would be nice to have, just as the safest care that technology can produce would be nice to have. The reality, however, that resources are scarce and dollars spent on medical care cannot be spent on other things likely would encourage boundedly-rational decisionmakers to employ a consciously compensatory decision making approach, leading to more efficient resource allocation decisions.”

There are clearly big hurdles to implementing a system of relative value health insurance, most of which Korobkin acknowledges. First and foremost, we would need to have the data necessary to construct a meaningful index of cost-effectiveness.  While the Affordable Care Act funds the Patient-Centered Outcomes Research Institute (PCORI) in order to generate better data to support evidence-based medicine, we may be decades away from having sufficient data to make a relative value index possible.1 And once we have the necessary data on outcomes, we’d need to agree on the methodology for converting the data into an easy to understand cost-effectiveness index. Assuming we could get the index up and running, there are also significant adverse selection problems with relative value health insurance that would need to be thought through and addressed.

To be clear, the article does not present a ready-made perfect solution to growing health care costs that can be implemented tomorrow. Indeed, there are many details that would need to be thought through and ironed out.  But the reason this article is important is that it gets the ball rolling on needed discussions of how we can allow consumers meaningful choice in health insurance without simply suggesting that costs and burdens should be shifted to consumers. And it does so using thoughtful insights from behavioral law and economics, and by proposing a system that will take advantage of the clinical outcomes data to which we should (relatively soon) have access.



  1. The ACA in fact prohibits PCORI from calculating cost-effectiveness measures, although presumably private insurers could provide such calculations relying on PCORI’s underlying clinical effectiveness data. For more information on PCORI and the limitations on cost-effectiveness calculations, see Elizabeth Weeks Leonard, Death Panels and the Rhetoric of Rationing, 13 Nev. L.J. 872 (2013), available at SSRN. []
 
 

Medicare’s Design Flaw

Nicholas Bagley, Bedside Bureaucrats: Why Medicare Reform Hasn’t Worked, 101 Geo. L.J. 519 (2013).

Medicare is a behemoth. But the legal literature on it is almost negligible by comparison. Only a few scholars tackle Medicare broadly, like Ted Marmor, Tim Jost, and David Hyman. Most articles (like Jacqueline Fox’s two must-read articles on coverage decisions), tackle discrete problems with Medicare. And there is no shortage of those.

It takes a fair bit of pluck to confront Medicare’s design flaws, as Nicholas Bagley does in Bedside Bureaucrats. Bagley applies administrative law sensibilities to argue that Medicare can’t implement its programmatic goals in large part because it relies on decentralized administration by private insurance contractors and, more importantly, by hundreds of thousands of private physicians as “street-level bureaucrats.”

One of the article’s major contributions is observing that private physicians run Medicare on the ground: they judge whether treatments are eligible for reimbursement; they certify whether Medicare will pay for hospital stays; and they diagnose conditions that determine how much Medicare pays for treatment. In administrative law terms, each participating physician is an “adjudicator”—making judgments about which Medicare beneficiaries need which care under which circumstances. But the Medicare statute, according to Bagley, “deprived federal administrators of the conventional roster of legal and management tools typically used to control frontline bureaucrats.”

Deference to private physicians highlights a persistent tension in Medicare. The very first words in the 925-page Medicare statute declare that “Nothing … shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine….” As Bagley notes perceptively, these words from the original 1965 statute describe the root of Medicare’s biggest problems: cost and quality controls. Bagley argues—and many agree—that fixing Medicare requires us to “adjust physician practice patterns.” But Medicare’s design creates a conflict between competing public values: Medicare was designed to preserve physician autonomy and patient choice; but those two values now hamstring our efforts to rein in costs and impose quality controls.

Not surprisingly, Bagley observes, four decades of reforms have not changed Medicare’s basic administrative design. Instead, they skate the periphery. For example, in 1972, Congress tried to influence physician practice patterns and combat Medicare fraud by creating peer review organizations. But these were controlled by private physicians. Then, to battle overbilling under fee-for-service payments, Congress adopted a physician fee schedule. But instead of allowing Centers for Medicare and Medicaid Services (CMS) to make hard choices, Congress outsourced the duty to a committee run by the American Medical Association. When Congress experimented with Medicare managed care, it turned to private insurers. But Medicare Advantage and its precursors are considered to be colossally expensive failures. Finally, when Medicare decides whether to cover new technologies, it largely defers to local coverage determinations (LCDs) made by private contractors who do not have the capacity or incentives to enforce them.

Instead of equipping CMS to manage Medicare more effectively, Congress has preferred outsourcing administration to private organizations. If CMS is Medicare’s centrifuge, it is a weak one. Again, this is by design. Bagley emphasizes that outsourcing administration “absolves the federal government of direct responsibility for controlling physicians and, in bypassing agency officials, mutes public concerns with government interference.” What makes Medicare palatable also makes it unsustainable.

Another important contribution here is emphasizing the administrative importance of scale. Medicare spends more on private sector services ($502 billion) than all other federal contracts for goods and services combined ($450 billion). It pays for services provided by hundreds of thousands of physicians to almost 50 million beneficiaries, processing 4.8 million claims per day, and 1.2 billion per year. The task of managing anything of this scope is hard to imagine.

CMS is a small, virtually unknown agency, “with a staff about the same size as that of the Smithsonian Institution,” managing “a Medicare budget that exceeds the size of Argentina’s economy.” In turn, Medicare is good at doing one thing: providing prompt payment. It is not good at meaningful oversight, or, more importantly, influencing physician practice patterns. Instead, physicians define and legitimate Medicare, not the other way around, as it is with most agencies (here, Bagley invokes Jerry Mashaw).

Congress designed Medicare to protect private prerogatives, and now genuine reform efforts are hamstrung because of it. Bagley appreciates that Congress cannot simply turn CMS into a massive bureaucracy that suddenly micromanages hundreds of thousands of physicians. Nor can Congress simply morph Medicare into the National Health Service without sacrificing Medicare’s political legitimacy.

Bagley’s answer is politically pragmatic and not entirely obvious: leverage private providers even more. Medicare reforms, Bagley argues, should encourage physicians to join integrated delivery systems, which are better positioned than CMS or private contractors to “adjust physician practice patterns” through things like treatment protocols, disease-specific checklists, and bundled payment systems. Bagley mentions the much-hailed integrated delivery systems of Intermountain, Geisinger, and the Mayo Clinic.

But didn’t these integrated delivery systems inspire several reforms in the Affordable Care Act? And doesn’t the Act contemplate most of these things? Bagley says these reforms will fall short, again because of Medicare’s core design. For example, the Independent Payment Advisory Board (IPAB) is more likely to prefer temporary, short-term spending cuts rather than structural, longer-term ones. Similarly, the new Center for Medicare and Medicaid Innovation will encourage experiments with new payment and delivery models, but CMS still lacks the resources to scale them up as the ACA envisions. The Patient-Centered Outcomes Research Institute (PCORI) is tasked with comparing the clinical effectiveness of alternative treatments, but its recommendations (“Gee, that new treatment costs a lot and adds zero benefits over existing therapies!”) are non-binding. And “Accountable Care Organizations” (ACOs), designed to generate “shared savings,” are not true bundled payment systems.

Bagley argues that Medicare needs bold change, but even the bold changes contemplated by the ACA probably need even further authorization by Congress. Eventually, we will have to reform Medicare again. And when Congress does, it should consider Medicare’s design flaws.

 
 

Finding a Positive Right to Healthcare

A wealth of formidable scholarship has weighed in on the constitutionality of the two aspects of the Patient Protection and Affordable Care Act that were at issue in NFIB v. Sebelius (which recently celebrated the anniversary of the historic decision), and so it can be hard to find a new perspective on either the statutory and constitutional aspects of the ACA. Nevertheless, Professor Rubin has furnished a fresh take by proposing that the ACA expresses a legislative interpretation of positive constitutional rights that articulates a right to healthcare in the United States.

The article begins by positing that the ACA faced an impassioned resistance movement because the law represents a sea change in the way we “think about American citizenship and the nature of our political community.” To prove this point, Rubin offers a consideration of the nature of the Constitution by working through its historical and philosophical origins. The first part may test the endurance of those not in the business of constitutional theory, but stick with it, because the payoff is a theory worth understanding—that the government serves the people, that a constitution is designed to be an instrument that implements the goals of the people, and that the goals of the people reveal themselves to be the “strengthening of the national government, liberty, and equality.” Importantly, this means that the Constitution must serve not only the people who drafted the text but also the subsequent generations bound by the original document’s terms. For this to be true, the meaning of the document cannot be fully understood at its drafting, because every generation will have a hand in its interpretation by acting pursuant to the principles of the document as they become meaningful in a given era. Rubin argues that this purposive view of the Constitution alters the constitutional significance of legislation, because legislation reveals the meaning of the constitution to the people living by the document in their time.

Rubin suggests that newer constitutions in other countries have benefited from the groundwork of the United States’ experiment in representative democracy. Thus, rather than fighting for first-wave struggles such as establishing the form of government and articulating its constraints (as the framers did), newer constitutions present second wave concerns by articulating positive rights that should be protected by modern democracies. In other words, the work has moved from structure to substance. Professor Rubin advocates for moving to a positive rights view of the Constitution and asserts that this evolution is underlined by the core purposes of liberty and equality. Thus, “strong national government, liberty, and equality” should be recognized by the Court as central to a functioning democracy, but these purposes are also reinforced by legislative efforts that serve to declare the importance of positive rights to the citizenry. The Social Security Act, Food Stamp Program, and housing support programs are examined as examples of federal legislation articulating a constitutional baseline for basic human needs such as food, shelter, and protection against the vagaries of aging and disability.

To bring his early observations full circle, Rubin examines the ACA as a “declaration of positive rights” that adds healthcare to the list of basic needs protected by federal legislation. To explain the dogged pushback against the ACA, the article describes three key features of the law. First, the ACA applies to all Americans, rather than certain segments of the population, rendering it more like a right and less like a targeted program for suitable populations. Second, the law is “uniform,” unlike Medicaid, or public housing, or food stamps, and perhaps threatening to those who challenge it because it diminishes the distinctions that have allowed Americans to be parsimonious with social welfare programs. And third, the law was presented as a moral choice, establishing a normative minimum of healthcare access that belongs to all Americans. These three key features, according to Rubin, track constitutional rights, and therefore the ACA legislatively establishes a positive right to healthcare that should challenge courts to reconsider such unfortunate decisions as DeShaney v. Winnebago County Department of Social Services (or even Harris v. McRae).

I found the arguments in this article to be persuasive, though I may be less sanguine than its author. Nevertheless, the strong background section provides a solid foundation for arguing that a right to healthcare can be found in the Constitution and that the ACA is a legislative step in that direction. One minor critique stems from disappointment with the analysis of the ACA itself. The statute played a surprisingly small role in the article, especially given that these arguments could have been even more powerful through deeper engagement with the legislative details of the ACA. For example, Medicaid is addressed only in passing, but the Medicaid expansion provides a strong example of the federal government’s choice to abandon outdated ideas regarding which populations are deserving of government assistance. The federal government deemed expanding Medicaid to all impoverished citizens so important that it will fund the expansion of the program 100% for several years. The expansion of Medicaid may say more about the commitment to the basic human need for healthcare than the article acknowledges.

It is easy to underestimate the role the ACA may play in American lives by minimizing the law to its small patches on the concatenated whole of the healthcare system. Professor Rubin provides a greater sense of coherent, important change by articulating the law as establishing a right within the larger project of discovering positive rights in the Constitution. Though the Court found no “emerging doctrine” in NFIB that shares this view, perhaps in time it will.

 
 

Healthism, Health Care Rights, and the Affordable Care Act

Jessica L. Roberts’s recently published article, “Healthism”: A Critique of the Antidiscrimination Approach to Health Insurance and Health-Care Reform, offers a provocative, thoughtful rebuttal to the antidiscrimination rhetoric surrounding the Patient Protection and Affordable Care Act (“ACA”). Some of the ACA’s most popular reforms, namely, the ban on preexisting condition exclusions, guaranteed issue and renewal, and community rating were touted as eliminating insidious health insurance industry practices that—in then-candidate Obama’s words—“discriminat[e] against those who are sick and need care the most.”1 Roberts cites another commentator who characterized the ACA as a “civil bill of rights for the sick.”2 But, as Roberts aptly notes, the practice of “discriminating” against the insured on the basis of health conditions and expected risk is endemic to commercial health insurance underwriting.3

For her titular concept, Roberts refashions the term “healthism,”4 defining it “as discrimination on the basis of health status.”5 She argues that despite the political rhetoric surrounding federal health reform and ACA provisions intended to eliminate “healthism,” other provisions of the law in fact operate as proxies for health status discrimination. She notes that previous federal statutes intended to eradicate healthism similarly fell short of this goal.6 The ACA, on its face, surely does eliminate discrimination, first, by requiring “guaranteed issue” and, second, by requiring “community rating.” Guaranteed issue means that health insurers must sell a policy to any individual, regardless of preexisting conditions,7 and community rating means that the insurer cannot discriminate in the price of the policy based on preexisting conditions or other health status indicators.8

But Roberts points to four notable exceptions to those requirements, which she concludes operate as subterfuge for “healthism”:  the ACA expressly allows insurers to vary premium rates based on (1) age, (2) geographic area, (3) tobacco use, and (4) participation in approved workplace wellness programs. Each exception, she contends, implicitly represents health status. Older people tend to use more health care than younger people. People in congested urban areas (or medically underserved rural areas) tend to have worse health status. Similarly, allowing rate variation based on tobacco use and wellness program participation, she contends, are proxies for health status discrimination.

That sounds right, but the latter two exceptions seem not so much proxies as express congressional endorsement of “healthism.” Surely the reason that Congress allowed premium rate variation based on tobacco use and participation in wellness programs was precisely because those behaviors do, in fact, strongly correlate with worse (in the case of smoking) or better (in the case of wellness programs) health status. The ACA’s retention of at least those two forms of health status discrimination somewhat undermines Roberts’s starting premise that the goal of the ACA was to eliminate healthism. But setting aside my quibble with Roberts’s characterization, a more interesting question to me (and the focus of my new project on “individual responsibility rating”) is why Congress expressly allowed insurers to continue discriminating based on those particular health-related habits or activities, which seem largely in individuals’ voluntary control. One answer, as Roberts notes elsewhere in her illuminating discussion of discrimination, is that lawmakers tend to treat “mutable” and “immutable” conditions differently.

Roberts’s convincing bottom line is that the antidiscrimination frame is both descriptively inaccurate of the ACA and normatively unproductive for health reform. Instead, she offers a universal rights frame. More accurately, the goal of the ACA, she suggests, should be seen as “ensuring a minimum level of care for all Americans.” Under this frame, she views the ACA’s controversial individual mandate,9 along with the essential health benefits package,10 as embodying a sort of universal right. It is counterintuitive, yet intriguing, to recast the mandate as some type of affirmative right to health care, especially when it compels private purchase of health insurance, rather than guaranteeing that the government will provide health insurance to all. She acknowledges that this “right” falls well below a cognizable, affirmative claim to health care but at least expresses a moral norm that everyone is “entitled” to a certain basic level of health insurance coverage. While I am not entirely convinced that the ACA embodies this rights framework or that the belief in a right to health care is widely accepted, I do agree with Roberts that the antidiscrimination frame is flawed.

The article concludes by briefly suggesting future directions for health reform, consistent with Roberts’ universal rights frame. She points to insurance risk adjustment,11 nonprofit health insurance,12 and publicly financed health care as desirable next steps. With those proposals, Roberts just scratches the surface of deep veins of theory and policy, which she may tap in her later work, including fragmentation of the health care system,13 definition of a universal right to health, and comparative models of social insurance.

In addition to providing rich food-for-thought for other scholars (myself included) and a host of possible further research projects for herself, one of the article’s most welcome, useful contributions is Roberts’s clear, plain-language description of the health insurance market. She methodically and comprehensively explains the operation of commercial health insurance, defining key concepts, such as risk-pooling, adverse selection, the “death spiral,” information asymmetries, community versus experience rating, deductibles, coinsurance, and copayments, providing easy-to-understand examples of each term. This descriptive background portion of the paper, alone, would be a welcome mini-treatise on health insurance for my students, who often struggle to grasp these concepts. All in All, Healthism, is an exciting project from a terrific emerging scholar.



  1. See Jessica L. Roberts, “Healthism”: A Critique of the Antidiscrimination Approach to Health Insurance and Health-Care Reform, 2012 U. Ill. L. Rev. 1159, at 1161. []
  2. Roberts, supra note 1, at 1187 (citing Robert K. Ross, M.D., President and CEO of The California Endowment). []
  3. I might go further to note that requiring insurers to cover persons already diagnosed with illnesses defies the very concept of insurance. Black’s defines “insurance” as: “A contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in the future” (emphasis added). A person who is already sick faces no unknown event and almost certainly needs health care in the present. Because health insurance as it has evolved in the United States operates more as pre-payment for health care than protection against unknown risk, it has been analogized to “insurance for haircuts.” []
  4. Roberts notes that “heathism,” along with the term “medicalization,” has been used pejoratively to characterize stronger government involvement in prescribing and proscribing healthy activities and imposing healthy lifestyle norms.  See generally Robert Crawford, Healthism and the Medicalization of Everyday Life, 10 Int’l J. Health Servs. 365 (1980). []
  5. Roberts, at 1171. []
  6. She discusses the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which eliminates health status discrimination for group health plans, including most employer-based plans, and the Genetic Information Nondiscrimination Act of 2008 (GINA), which prohibits discrimination in health insurance and employment based on genetic information. []
  7. ACA § 2705. []
  8. ACA § 2701. The ACA’s community rating requirement is “modified” because it does allow rate variation based on certain factors, discussed next. The ACA also allows plans to charge different premiums for an individual versus a family policy. []
  9. ACA § 1501. []
  10. ACA § 1302(b)(1). []
  11. See generally Mark A. Hall, Risk Adjustment Under the Affordable Care Act: A Guide for Federal and State Regulators, Issue Brief, The Commonwealth Fund, May 2011 (describing the ACA’s risk adjustment provisions, designed to protect commercial health insurers that attract a disproportionate share of high risk enrollees). []
  12. The ACA’s medical-loss (MLR) ratio aims, to some degree, to rein in health insurance profits. See ACA § 10101, amending PHSA § 2718. Effective January 1, 2011, health insurers in the individual and small group market are required to spend at least 80% of premium revenues on medical care and quality improvement, and only 20% on overhead, profits, commissions, and other non-claim expenses. In the large group market, the ratio is 85% to 15%. []
  13. See generally The Fragmentation of U.S. Health Care: Causes and Solutions (Einer Elhauge, ed., 2010). []
 
 

Does Disclosure Protect Patients from Their Physicians’ Conflicts of Interest?

Empirical research often teaches us that our intuitions are misleading. In an important discussion of her recent studies, Sunita Sah provides good reason to believe that public policy has gone down the wrong track when addressing physicians’ conflicts of interest.

As conflicts of interest for physicians have come under greater scrutiny, regulators commonly turn to disclosure as a remedy for the problem. If patients know about their doctors’ conflicts, the patients can take the conflicts into account when making their health care decisions. Patients can discount a conflicted physician’s advice or seek a second opinion. In addition, disclosure may discourage physicians from accepting payments or making investments that put them in conflicted positions. As it is said, sunshine can be an effective disinfectant.

With these apparent benefits, disclosure has become the most common response to conflicts of interest in medicine. The American Medical Association and the Medicare Payment Advisory Committee emphasize disclosure as a strategy for dealing with conflicts of interest. And the Patient Protection and Affordable Care Act requires manufacturers of drugs, devices and other medical supplies to report consulting fees, honoraria, gifts, grants and other payments to physicians. The Centers for Medicare and Medicaid Services will publish the reported payments online for public access.

However, policies of disclosure have serious drawbacks. For some physicians, disclosure can result in a greater willingness to enter into a conflict of interest. Once physicians disclose their conflicts, they may feel they have met their ethical obligations and therefore are fee to remain conflicted.

In addition, disclosure policies rely on the recipients of the disclosures to police the conflicts, and it may not be realistic to have that reliance. In her research with colleagues George Loewenstein and Daylian Cain, Sah has found that patients may not respond appropriately to the existence of a financial relationship when deciding whether it should affect their willingness to agree to their physicians’ recommendations. For example, studies show that while patients worry when their physicians have conflicts, they also are reluctant to act on their concerns. Patients fear that if they reject their physician’s advice after being told of a conflict of interest, they will signal to their physicians that they do not fully trust the physicians. Ironically, disclosure may make patients less likely to decline their conflicted physicians’ recommendations.

As Sah concludes, the likelihood that disclosure will make things worse should lead regulators to rely less on disclosure and more on prohibition as a remedy for the problem of conflicts of interest in medicine.

In her article, Sah also illuminates other important questions about conflicts of interest. For example, she discusses studies that tell us why physicians engage in conduct that creates conflicts of interest and how second opinions affect the extent to which the first physician will give biased advice. Scholars interested in conflicts of interest will find this article of great value.