Getting Specific About the Financial Security Aspects of Health Insurance

Allison K. Hoffman, Health Care Spending and Financial Security After the Affordable Care Act, N.C.L. Rev. (forthcoming), available at SSRN.

Too often, discussions about health insurance coverage are one-dimensional, and focus solely on whether someone has coverage (good) or not (bad). Having health insurance coverage is undeniably a good thing and an important policy goal. However, as Professor Hoffman’s article points out, simply focusing on health insurance coverage, without examining the type of protection it provides, gives us an incomplete picture of an individual’s protection against health-related financial risks.

One of the primary goals of health insurance, after all, is to protect individuals from the financial insecurity that can result from medical spending. What is perhaps less obvious to the casual observer is that health insurance can provide very different levels of protection against financial insecurity depending on the plan’s premiums, cost-sharing structure, and coverage terms. In her article, Professor Hoffman first provides a taxonomy of the types of financial risk health insurance could attempt to reduce. She then uses stylized examples of three health insurance consumers to examine how various forms of post-ACA coverage provide financial security. Her examination leads to some surprising results.

The types of financial security identified include: low baseline spending (where premiums for coverage are low); low variability in spending (where spending on covered benefits is not widely variable from year to year); no catastrophic risk (where variable spending is within an individual’s capacity to absorb while maintaining a decent income level and living standards); and transparency (where an individual is aware of the range of possible spending under her health insurance policy).

The article then examines how three different types of health care consumers will fare under the ACA’s regulatory structure, using currently available cost estimates and median income levels to flesh out the examples. The first consumer is one who purchases average silver-level coverage on the individual market. This consumer is well protected against catastrophic risk, but faces potentially high baseline costs and some variability in spending. The second consumer is one covered by an employer-sponsored plan. As Hoffman points out, individuals covered by employer plans have historically been well protected against nearly all types of financial risk. She also acknowledges that the ACA provides no guarantees that such protections will continue. It’s likely that employer-provided coverage will continue to provide low baseline spending, but going forward it may subject individuals to increasing amounts of variability and catastrophic risk. Finally, the article examines a retiree with Medicare and Medigap coverage. The retiree example is particularly interesting, as it illustrates that an individual with only Medicare coverage will benefit from low baseline spending but face significant variability and catastrophic risk. By electing Medigap coverage, however, the retiree can shift into a high baseline spending model that involves low variable spending and low catastrophic risk.

As I read through the analysis of various types of risk protection in each market segment, I couldn’t help but think that perhaps we need not be concerned about the variation present because of the ability post-ACA for many individuals to move between market segments. For example, if your employer offers you a lousy plan that doesn’t provide you with the financial protection you require, you can simply buy coverage on the individual market. Hoffman easily handles this concern, by explaining that moving between markets (1) is not always possible (an individual can’t simply opt in to employer-provided coverage if none is offered) and (2) requires the individual to be fully aware of the financial risk protection of various forms of health insurance and to make a rational decision on the basis thereof. Given what we know about how people make complex decisions, she is right to suggest that the type of high-level analysis and decisionmaking is not likely to be the norm.

The article concludes by attempting the difficult task of trying to make sense of this mixed-model of health insurance as financial security. My own sense is that the inconsistent approach to the financial security aspects of health insurance were likely driven by the varied political forces at play in the lead up to the ACA. But regardless of why we ended up with these divergent models of financial security, the article provides an important contribution to all who are interested in health policy. It is not enough to focus on whether an individual has or does not have health coverage. In order to evaluate whether health reform satisfies our policy goals, we must first have an understanding of what we want health insurance to do, and what risks we want it to protect against, and evaluate outcomes within that framework. Hoffman’s article not only draws attention to this important issue, it also gives policymakers important areas for monitoring and further study by identifying potential sources of financial insecurity among the insured.

 
 

Can Information Technology Save Health Care?

Nicolas P. Terry, Information Technology’s Failure to Disrupt Health Care, 13 Nev. L.J. 722 (2013).

The massive stimulus bill of 2009 included the HITECH Act, by which Congress pledged roughly $30 billion to encourage providers to adopt electronic health records and other health information technologies (HIT). The bill cited a long list of familiar but elusive policy goals—improve health care quality, reduce medical errors, reduce health disparities, control costs, reduce inefficiencies, improve public health, promote competition, increase consumer choice. If the health policy literature had a fantasy genre, the HITECH Act solving our health system’s problems through a new nationwide HIT infrastructure would feature prominently.

But a few years later, as Nicolas Terry observes, and “HIT still appears to be a large rock that only a few dedicated converts are pushing up a steep and expensive hill.” Why is that? Why wouldn’t our lumbering, dysfunctional, and fantastically expensive health care system be transformed by information technology like so many other industries? Doesn’t our health care system practically beg for the efficiencies of information technology? Terry’s article, Information Technology’s Failure to Disrupt Health Care, tries to answer these questions.

The framework he uses is the idea of “disruptive innovation.” Coined by Harvard Business professor Clayton Christensen, a disruptive innovation is a novel product, technology, or business practice that undermines and ultimately displaces existing products, firms, or even entire industries—usually by being much less expensive and more accessible than incumbents. Terry cites familiar examples, like iPods undermining traditional music distribution, web sites undermining the traditional newspaper industry, and Wikipedia undermining Encyclopedia Britannica’s print editions.

Of course, it didn’t take long for the idea to hit health care. Out of the roughly 48 articles on Westlaw that cite one of Christensen’s publications on “disruptive innovation,” roughly half appear in health law articles. (See here at note 7.) Christensen himself applies disruption theory to health care in The Innovator’s Prescription: A Disruptive Solution for Health Care. Again, our GDP-devouring health system would seem ripe for “disruption.” This notion is not limited to business theorists. Leading medical thinkers like Eric Topol think that health care is primed for some creative destruction.

The disruption formula fits health care so well, it seems like a matter of when HIT will transform our health care system, not if. This makes Terry’s sober, rigorous review of HIT in health care so timely and valuable. For example, Terry tells the familiar story of Google Health—perhaps the poster child for Silicon Valley’s conceits—which aimed to transform health care (not modest) by creating web-based personal health records (pretty modest). Before that, Healtheon had tried something similar. Both failed. Were they simply ahead of their time?

Terry astutely observes that HIT innovation to date has not been radical enough—it has been largely “sustaining” innovations, made by incumbents to slightly improve incumbents, rather than truly “disruptive” innovation, per Christensen’s framework. The problem with outsiders like Healtheon and Google Health is that they didn’t offer much in the way of a new “value proposition.”

Another important contribution is identifying structural reasons why HIT has not transformed our health system for the better. First, Terry argues that HIT suffers from the same market failures that plague the health care system—too numerous here to cite. Second, he observes that the health system itself creates barriers for HIT with byzantine organizational and reimbursement schemes more tailored to episodic care, not process-oriented care. Third, he notes that HIT itself suffers from a lack of standardization, which inhibits data interoperability, exchange, and transparency.

So is all this HIT spending for naught? Terry argues that we would need to reform the things that make health care inhospitable to disruption. In Part V: The Value of Waiting, Terry explains that HIPAA’s privacy rules, the HITECH Act’s meaningful use requirements, and perhaps even the Affordable Care Act’s insurance and delivery reforms introduced even more fog to a health care system that was already menacingly complex.

But Terry also notes that a potentially disruptive category of HIT products already exists, though it may not be mature enough yet—mobile health technologies, including medical apps for smartphones and tablets. These products allow, for example, diabetics to track their blood glucose levels, or cardiac patients to perform mobile electrocardiograms. Mobile apps allow us to do other previously unimaginable things because we carry powerful computers around in our pockets or purses.

Per the disruption model, Terry argues that mobile health technologies might be “smaller, simpler, and more convenient,” introducing a new value proposition to the market by making health care available wherever you can carry a smartphone, unbundled from far more expensive health professionals and facilities. In fact, Terry notes, mobile phones are smaller and more accessible even than retail medical clinics, which Christensen singles out as a “disruptive innovation” in The Innovator’s Prescription.

The scope of the mobile device market also points toward genuine disruption. Today there are more than six billion mobile devices in the world, and by 2017 the number of mobile devices (nine billion) might exceed the world population. Downloads and users of medical apps are skyrocketing as Apple, Google, and Samsung rush to add even more sensors and hardware with potential medical uses to their devices. All the fervor makes one wonder whether HIT is a real solution to our health care problems, or mere technological solutionism.

Terry has always had a keen eye for the new and unusual in health care. And he has become one of the most well-respected voices on the legal and regulatory complications of HIT, particularly on patient privacy. At its base, Terry notes that HIT must go beyond simply storing, receiving, and sending health data to actually doing something with it. The promise might reside in innovative ways to use clinical decision support (CDS), algorithms, artificial intelligence (AI), and process-oriented improvements, perhaps using “big data.”

So many want so badly for HIT to transform health care. But Terry’s appraisal shows that all this disruption talk does not fit reality—yet.

 
 

The Public-Private Enforcement Regime: Does the False Claims Act Work?

Pharmaceutical companies represent the poster-child defendant for whether public-private enforcement works. While subject to FDA prosecution for violation of the Food Drug Cosmetic Act, they more often face qui tam suits by private relators, usually but not exclusively for off-label promotion. DOJ may or may not choose to intervene, but if it does jump in, the Department operates with the advantage of a 90% success rate (frequently as a result of settlement because the companies can’t risk debarment). Before the case is concluded, it may have been joined by some combination of the Veterans Administration, state Medicaid Fraud Units or relators under mirror state-law False Claims Acts for recovery of Medicaid dollars, as well as by private insurance companies under RICO, and states’ attorneys general under consumer protection laws. The Department of Health and Human Services Office of Inspector General (HHS OIG) will likely be at any settlement negotiations to hammer out a 100-page Corporate Integrity Agreement (CIA). If the company’s activities are really offensive, DOJ may throw in a mail or wire fraud charge. When the fines are announced, and the CIA is signed, shareholders will file a derivative suit against the directors seeking reimbursement, claiming that if they weren’t asleep on the job the company would have avoided what often exceed billion dollar fines. And that’s just for off-label activity. The enforcement regime currently policing the life sciences industry is mind-bogglingly complex, representing a new and clearly unimagined era in “public-private enforcement.”

A must-read for health academics is David Freeman Engstrom’s trilogy of articles about public-private enforcement, focusing specifically on the False Claims Act (FCA), the “gold standard” of hybrid enforcement: Harnessing the Private Attorney General: Evidence from Qui Tam Litigation, found in Columbia Law Review, Public Regulation of Private Enforcement: Empirical Analysis of DOJ Oversight of Qui Tam Litigation Under the False Claims Act, appearing in Northwestern Law Review, and Agencies as Gatekeepers, published in Yale Law Journal. Unsurprisingly, healthcare cases comprise a disproportionate share of FCA cases, thereby making Engstrom’s work extremely important to the health law academy. These articles represent a breath-taking amount of work, providing a theoretical framework from which to analyze the balance and effectiveness of a public-private enforcement regime as well as empirical data to assess both fans’ and critics’ perspectives of FCA prosecution as well as relators’ and DOJ’s roles.

Readers lacking familiarity with the False Claims Act would do well to start with Harnessing the Private Attorney General, which provides an accessible summary of how the FCA is structured, and how the cases proceed. Engstrom’s ultimate question is whether the Act’s combination of reward and procedural barriers achieves the right balance in incentivizing efficient deployment of DOJ’s resources in prosecuting fraud cases reflecting the right priorities, while avoiding socially undesirable enforcement efforts. More specifically, he seeks to test the most common claims of FCA critics and proponents in order to determine which if any of the on-going calls for further amendments to the FCA are empirically supportable. Engstrom’s findings upend most of the claims of FCA critics, including those directed at repeat relators and law firms that specialize in FCA cases. He finds that “former DOJ prosecutors turned private sector relator counsel…are far more likely to persuade the DOJ to exercise its powerful authority under the FCA to intervene in qui tam cases and push them to resolution.” “And yet,” he writes, “when they win, former DOJ insiders achieve impositions that are $10.6 million and $3.4 million smaller on a per-win and per-filing bases, respectively, than those achieved by their non-insider counterparts.” These findings, says Engstrom, “strengthen concern about ‘revolving door’ dynamics.”

Public Regulation of Private Enforcement is a bigger article essentially comprising two parts. Part one presents a theoretical framework for thinking about whether agencies are effective gatekeepers of private litigation, factoring an agency’s ability to avoid inefficient enforcement activity, police collusive settlements, and leverage deficient but socially desirable enforcement. Engstrom creates a taxonomy by which to consider agency behavior: welfare maximizer (optimize deterrence), rent-seeker (maximize recoveries), politicker (maximize public recoveries), and belt-notcher (win-loss ratio). Part two offers Engstrom’s empirical analysis of FCA cases, from which he 1) concludes that DOJ too rarely uses its termination authority (4% of qui tam cases); 2) rejects claims that the DOJ’s intervention decisions are politically motivated; 3) decides that DOJ’s interventions (in about one-quarter of cases) do not appear arbitrary but evidence an ability to screen cases on the merits, although DOJ also appears to factor in its resource constraints and the power of the defendant. Engstrom’s research confirms that DOJ intervention results in recoveries 90% of the time while declined cases more frequently result in no recovery. However, he rejects what he identifies as a too-frequent assumption by judges that declined cases are meritless. This latter conclusion rebuts calls for amending the FCA to preclude relators from going forward with cases declined by DOJ. On the other hand, Engstrom concludes that DOJ should affirmatively act to terminate relator cases more frequently.

The Yale article, Agencies as Litigation Gatekeepers, drives home the point that the public-private enforcement balance is not about choosing between the two models, but determining how optimally “to coordinate multiple, overlapping, and interdependent enforcement mechanisms”. Engstrom analyzes whether the rise of private enforcement is good or bad, as well as whether administrative agencies are effective litigation gatekeepers, using zealousness, coordination, and legislative fidelity as his criteria. Engstrom uses this taxonomy to assess the effectiveness of the tools embedded in, inter alia, the FCA to reach the optimal balance between public and private enforcement, ultimately suggesting that the FCA is a comparatively well-constructed statute to achieve this end.

Professor Engstrom has made a significant contribution to our understanding of the FCA enforcement regime, suggesting that it mostly works. However, his analysis focuses on all FCA cases, and it is not clear whether it would yield the same results had it looked exclusively at FCA cases in the healthcare sector. In this arena, a public-private enforcement regime is even more complicated, not the least because of the ever-present threat of debarment.

It is impossible to do justice to Engstrom’s work in a jot. Hopefully, this review has convinced you of the importance of his work, and its contribution to our understanding of the FCA landscape, so that you will be enticed to read his work yourself.

 
 

Farewell, School House Rock (Understanding Legislative History through the Lens of the ACA)

The legislative history of the Patient Protection and Affordable Care Act (ACA) is dizzyingly complex and maddeningly opaque. Happily, a guide to this law’s history was published recently and undoubtedly will become an essential piece of understanding the puzzle of the ACA. Though John Cannan wrote the article to instruct law librarians in the modern methods of tracking increasingly intricate legislative history, anyone engaged in studying the implementation of the ACA and the ongoing challenges to that law will benefit from the meticulous detail this article provides.

Traditional sources of legislative history will thwart the casual researcher seeking to understand the provisions of the ACA. At one end of the spectrum, the United States Code Congressional and Administrative News (USCCAN), an ordinarily reliable source of legislative history, has no documentation for the ACA and one unrelated committee report for the ACA’s companion legislation, the Health Care Education and Reconciliation Act (HCERA). At the other end of the spectrum, THOMAS contains more legislative history than could possibly pertain to the subject matter of the ACA, yet it provides no guideposts for wading through the legion of amendments that appear to have applied to the ACA. The Justices called the legislative history impenetrable during the severability oral arguments in NFIB v. Sebelius. Cannan makes the impenetrable understandable by diligently tracking the genesis and progress of two House bills and three Senate bills that became the ACA so that we can understand how to find the history that exists between these extremes.

Cannan’s first point is that legislating is dynamic, non-linear, and often subject to the unknowable rules imposed by each house of Congress on its legislators. Historically, the life-cycle of a bill was capable of being tracked through committee reports and amendments that were published in public sources such as the USCCAN. Now, however, much of the drafting and amending process occurs behind closed doors. Cannan explains why and how Congress’s reliance on lateral and vertical maneuvers to ensure that a bill gets drafted, debated, and voted on dictates the modern availability of legislative history.

The article then walks the reader through the separate drafting, amending, and voting on the individual House and Senate bills that ultimately led to the ACA. These sections of the paper are quite dense, and the reader may find it useful to chart the progress of each bill to fully grasp how a handful of separate bills became one public law. This is not a criticism of the paper, simply a suggestion for thoroughly understanding the detailed history of each bill as it traveled through Congress.

If you seek to understand the congressional reasoning for drafting a particular aspect of the ACA, this article will not answer your question. But, this “bibliographic essay” will point to the sources that may answer those legislative questions and explain why those sources are dependable. Ongoing challenges to the ACA and its implementation make this procedural and structural map invaluable. In particular, as plaintiffs continue to dispute the availability of tax credits for private insurance premiums in federally run exchanges, more people have begun to wonder how and why the law does not make clear the universal availability of tax credits. This is where the fourth substantive section of the article is most helpful. Cannan explains that the reconciliation process was fraught with pitfalls, given the disconnect between the various House and Senate healthcare reform bills and given how the rules for reconciliation limit the types of bills and amendments to those bills that can be brought to vote through reconciliation. According to Cannan, a conference committee would have resulted in more transparent legislative history by virtue of negotiating and combining the House and Senate bills, but such a conversation became politically infeasible when Scott Brown was elected to the Senate. Additionally, the article explains why reconciliation led to the creation of the HCERA, which contained amendments to the ACA that could not be added to the bill being reconciled given the procedural limitations of reconciliation.

Cannan’s final point is a practical warning to think both broadly and carefully when studying legislative history. For example, the negotiations that occur behind closed doors may still result in leaks reported in national media. Floor debate may be broadcast on C-SPAN or on YouTube. The Congressional Budget Office provides detailed reports that can be hard to find.Reliable nonprofit organizations track bills as they progress and often attempt to make them understandable for the polity.Or, the long list of amendments for a bill may hide the moment in which the Service Members Home Ownership Act of 2009 became the Senate proposal for nationwide healthcare reform, which was named the Patient Protection and Affordable Care Act only after the substance of the bill had been debated and passed.

If we can’t have the good old days of School House Rock, at least we have this fine description of the new school of legislative history and a lesson in the complex history of the ACA.

 
 

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. []