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Federal Funding with State Flexibility: A Timely Look at Federalism and Health Care Reform

Nicholas Bagley, Federalism and the End of Obamacare, 127 Yale L.J. F. 1 (2017).

In our era of increasingly divisive politics and fiery rhetoric, particularly around Obamacare and efforts to repeal it, Nicholas Bagley’s article, Federalism and the End of Obamacare, is a rare treat. It is a thoughtful, balanced look at the arguments for the respective roles of federal and state governments should play in the financing and regulation of health care.

Professor Bagley’s article makes three key points that are highly relevant to the current debate about the future of Obamacare: First, only the federal government has the fiscal capacity to fund health care; second, states should be granted significant flexibility in regulating their health care markets, even if that means that they’ll sometimes get it wrong; and third, current reform proposals do not empower states, but rather take power away from the states by deregulating (and defunding) health care.

Professor Bagley makes a strong case for the necessity of federal funding of health care. Providing health care to low-income individuals tends to be countercyclical; the need for such care is greatest when the economy is not doing well. For state governments, which must balance their budgets, this creates significant difficulty in funding health care for the low income because costs are likely to be highest when state revenues are depressed. The federal government is not constrained by balanced budget requirements and therefore can deficit spend in times of need.

Recognizing that the structural fiscal argument may not satisfy those who strongly favor state authority, Professor Bagley considers whether states that want to provide health care to their citizens could simply tax residents in order to pay for such care, even if such needs may be countercyclical. He argues, however, that taxing individuals to pay for such health care is problematic because some of the individuals taxed already receive lower take-home pay because they are offered employer-provided health care coverage. Essentially, a worker who has employer-provided coverage would pay twice: once to cover her own health care costs, and once to cover the costs of fellow state residents who do not receive employer-provided coverage and therefore enjoy higher wages as a result. The obvious answer to this inequity is to either require employers to offer employees coverage, or at least to tax those that do not. States, however, are largely powerless to do so, because the federal Employee Retirement Income Security Act of 1974 (ERISA) broadly preempts state laws that “relate to” employee benefit plans. As a result, only the federal government is able to level the playing field by requiring employers to either offer coverage or pay a tax.

The second significant contribution this article makes is to push back against the notion that states cannot be left to determine the terms of their health care markets because they will make suboptimal choices. For example, Professor Bagley discusses the ACA’s strict rules regarding the premiums that health insurers may charge, noting that the ACA provides that older people may be charged no more than three times what younger people pay for coverage. Without this rating restriction, young people would pay less for coverage, while old people would pay more. It is in this type of normative judgment that he argues states should have more flexibility and input. He acknowledges in this discussion that states might get it wrong. They might make decisions that are harmful to some groups. But, he argues, this is the price we pay for federalism (which we should tolerate unless states’ bad ideas turn on views about the inferiority of minority groups). As he succinctly puts it, “Sometimes federalism means letting the states wave their crazy flags.” Professor Bagley does not, however, argue that the states should simply be given federal funding without limitation. He argues that the federal government can (and should) set broad conditions on the use of the federal funding but, particularly where there are so many unknowns about how best to achieve universal coverage within our existing system, and so many disagreements about what burdens should be born and by whom, there is merit in letting fifty flowers bloom.

After making this case for increased state authority, Professor Bagley turns to examine current proposals to “repeal and replace” the ACA. And it is here that Professor Bagley makes one of his most important contributions because he explains that, while reformers rely heavily on states’ rights rhetoric, current proposals actually strip authority from states. In particular, reform efforts that seek to authorize interstate sale of health insurance prevent a state from regulating the health insurance market for its own residents, because those residents can simply opt out of that regulation by purchasing in another state. The home state no longer controls health insurance markets for its own citizens. Professor Bagley argues that this is an even greater infringement on state authority than federal regulation. It is, he argues, a clear attempt to deregulate health insurance, rather than shift regulatory control back to the states. He makes similar arguments regarding Medicaid block grants, which, under current proposals, would entail shrinking Medicaid to a degree that would prevent states from exerting much meaningful control of the program.

Professor Bagley’s article deserves attention and praise for many reasons. First of all, it is legal scholarship that is directly relevant to one of the major policy debates currently underway in our country, and it is written in a format, length, and style that can actually be read and digested by all stakeholders. But I also think it is powerful precisely because it is legal in orientation and not political. Professor Bagley’s arguments are likely to cause both sides of the political spectrum to bristle. The article may cause Democrats to rethink their assumptions that tight federal regulation of all aspects of health care markets is the only way to accomplish health care reform. And it may cause Republicans to rethink their arguments that the ACA must be dismantled in order to return power to the states.

Cite as: Amy Monahan, Federal Funding with State Flexibility: A Timely Look at Federalism and Health Care Reform, JOTWELL (June 23, 2017) (reviewing Nicholas Bagley, Federalism and the End of Obamacare, 127 Yale L.J. F. 1 (2017)), https://health.jotwell.com/federal-funding-with-state-flexibility-a-timely-look-at-federalism-and-health-care-reform/.

Unpacking the Shortcomings of the Vaccine Injury Compensation Program

Nora Freeman Engstrom, A Dose of Reality for Specialized Courts: Lessons from the VICP, 163 U. Penn. L. Rev. 1631 (2015).

The National Childhood Vaccine Injury Act of 1986 established the Vaccine Injury Compensation Program (“VICP”) as a replacement regime for vaccine-related injuries. The VICP is funded by a seventy-five cent tax on each vaccine dose. Individuals alleging vaccine-related injuries file a petition, which is adjudicated by a special master of the U.S. Court of Federal Claims. Petitioners may seek damages for, inter alia, health care and rehabilitation costs (past and anticipated), though damages for pain and suffering or death are capped at $250,000. The law provides broad legal immunities for vaccine manufacturers, including preemption of tort claims for design or warning defects. In 2011, the U.S. Supreme Court interpreted the preemption provision to include design defects where the vaccine manufacturer failed to incorporate a safer alternative design.

The VICP maintains a Vaccine Injury Table that lists compensable injuries—these are deemed “on-table” injuries, and causation is presumed. All other injuries are deemed “off-table” injuries, and petitioners have the burden of proving causation. This distinction is significant; between 1999 and 2014, six vaccines were added to the table, and none had an on-table injury. During that same time period, the percent of petitions alleging off-table injuries increased from 25% to 98%. Importantly, the statute does not mandate that the data needed to meet the causation bar be collected by manufacturers or disclosed to the public; moreover, FDA regulations have not filled this legal gap. To the contrary, as officials from the FDA and CDC explain, “no active effort is made to search for, identify and collect information [on vaccine adverse events], but rather information is passively received from those who choose to voluntarily report.” Given the challenges in demonstrating causation and the lack of data to analyze causation, the net result is a large decrease in awarded claims and a large increase in uncompensated harms.

There can be no question that vaccines are a public health triumph. At the same time, however, with statistical certainty a small number of vaccinees will suffer catastrophic injuries or death. As health policy expert Michelle Mello has argued, vaccinations involve a high stakes gamble where the overwhelming majority will benefit but no one knows (or can predict with reliable certainty) who will suffer harm. Over the past three decades the VICP has adjudicated over 14,000 petitions, and thus there is ample data from which to evaluate the VICP. Herein steps Nora Freeman Engstrom. Her article, A Dose of Reality for Specialized Courts: Lessons from the VICP, is an elegant and comprehensive investigation of the VICP, and her findings highlight several troubling trends.

As Engstrom details, “[t]he picture is bleak. The VICP has simply failed to offer compensation as consistently, as quickly, as easily, or as simply as it proponents had predicted.” (P. 1675.) For example, the average vaccine-injury petition takes longer to adjudicate that the average tort claim alleging medical malpractice. The Government Accountability Office has underscored the fact that the expectations of the VICP “have often not been met,” while patient advocacy groups have lambasted the VICP as “a betrayal of the promise that was made to parents about how the compensation program would be implemented.” (Pp. 1675-76.) Even the VICP’s Chief Special Master, who served in that role for over two decades, publicly stated that “litigating causation cases has proven the antithesis of Congress’s desire for the Program.” (P. 1676.) Moreover, due to the structure of the law (particularly, the preemption provisions), in cases where an injury resulted because a vaccine manufacturer failed to use a safer alternative design, the manufacturer “is not in any way affected if a decision is made to compensate the petitioner.” (P. 1671.) Compensation awards are derived entirely from the Vaccine Injury Trust Fund (not from the vaccine manufacturer), and special masters do not have the legal authority to require a new vaccine design.

The adversarial nature of the petitions is particularly troubling, and not just for questions of causation. This is despite the fact that Congress directed that the VICP “provide for a less-adversarial, expeditious, and informal proceeding.” (P. 1711, n.376.) As Engstrom details, government attorneys dig into the minutia of claims; in one case the government argued that $150 was too much to spend per year on wheelchair maintenance, while in another the government argued that a 14-year old girl with vaccine-related “profound mental retardation and severe spastic quadriplegia” was not entitled to $40 high-top tennis shoes. (P. 1692.) In a case where a child was crippled by the Hepatitis B vaccine, the government haggled over whether a competent nurse could be obtained for $50 or $60 per hour, and tried to limit the hours that the child could be assisted by a nurse to five hours per day (the family indicated they needed the nurse for eight hours). Meanwhile, the vaccine injury trust fund has a “bulging surplus” of over $3.6 billion, and in many years the interest on the trust fund is sufficient to pay out all awarded claims.

Replacement regimes like the VICP, Engstrom explains, “are the go-to weapon in serious tort reformers’ collective arsenals.” (Pp. 1640-41.) Such regimes—which jettison tort law in favor of some version of a “no-fault” compensation mechanism—have been proposed for dozens of scenarios, including injuries resulting from medical malpractice, motor vehicles, firearms, lead paint, and nuclear accidents. By closely examining the VICP, Engstrom sounds the alarm bells for specialized courts, particularly specialized health courts. As she highlights, “before the traditional tort system is abandoned . . . there must be substantial grounds to ensure confidence in an alternative institutional mechanism that would serve as its replacement.” (P. 1717.) Engstrom’s arguments are compelling, and must be taken seriously.

Cite as: Efthimios Parasidis, Unpacking the Shortcomings of the Vaccine Injury Compensation Program, JOTWELL (May 25, 2017) (reviewing Nora Freeman Engstrom, A Dose of Reality for Specialized Courts: Lessons from the VICP, 163 U. Penn. L. Rev. 1631 (2015)), https://health.jotwell.com/unpacking-the-shortcomings-of-the-vaccine-injury-compensation-program/.

Cost Containment—Global Budget Caps

Nelson Sabatini, Joseph Antos, Howard Haft & Donna Kinzer, Maryland’s All-Payer Model—Achievements, Challenges, And Next Steps, Health Affairs Blog (Jan. 31, 2017).

While the Affordable Care Act has done much to improve access to care—20 million more Americans carry health care insurance as a result of ACA—the Act’s ability to contain health care spending is less clear. Accordingly, efforts to identify effective policies for limiting health care costs are critical.

Unfortunately, the experience with many cost-containment strategies has been disappointing. What seems promising in theory may not pan out in practice. That makes a recent review by Nelson Sabatini and colleagues especially worth reading. They highlight a model in Maryland that has shown very encouraging results so far.

As observers have long noted, fee-for-service reimbursement leads physicians and hospitals to provide excessive care. When insurers base pay on the amount of care provided, lots of care will be provided, and much of it will be unnecessary. Public and private insurers have implemented quality-based measures, bundled payments, and other strategies to counter the incentives from fee-for-service reimbursement. As Sabatini et al. discuss, Maryland draws on an important approach common in other countries—global budget caps.

Three years ago, Maryland modified its already innovative policy for payment of hospital bills. For a long time, Maryland had set hospital reimbursement rates that were the same for all payers. Private insurers, Medicare, and Medicaid paid for services at the same rates. While much good came from this approach, hospitals still pushed spending higher by increasing the quantity of services provided. In response, Maryland instituted more quality-based measures for payment. More importantly, Maryland is in the midst of a five-year trial of caps on the total reimbursement each year for the state’s hospitals. With a global budget cap, hospitals are forced to become more efficient. If they run up the tab, they’ll hit or exceed their budget cap, and will have to eat any losses.

As Sabatini et al. report, hospitals have responded to their new limits in desirable ways. For example, they have worked to prevent the need for hospitalization by expanding their chronic care management programs for diabetes, heart disease, lung disease, and other conditions. They also have provided more support for patients after discharge to smooth the transition to less acute health care facilities or to home and reduce the need to return to the hospital for additional care. Though readmission rates still are higher in Maryland than the national average, the gap has narrowed considerably, to less than half of its previous size.

With the improvements in quality of care have come reductions in costs of care. Maryland’s global budget policy caps the growth in hospital revenues to no more than the long-term growth rate of the state’s economy, which is 3.58 % per year. Hospitals have come in comfortably below their target each of the three years during which the global budget caps have been in effect, with revenue growing only 0.35 % in 2016, 2.31 % in 2015, and 1.47 % in 2014. (The data for 2016 are partial-year to date, through September 2016.) Thus, while Maryland hoped to save $330 million in Medicare hospital costs over five years, it has already saved Medicare $429 million in spending for inpatient care.

Of course, reducing inpatient spending need not lead to a reduction in overall spending. Care that used to be provided in a hospital might shift to an outpatient setting. Hence, as Sabatini et al. observe, Maryland monitors overall health care spending to make sure its budget caps are truly effective. To some extent, savings in hospital-based care have been offset by increased spending on home health care, the chronic care management that the hospitals provide, and care at rehabilitation facilities. This increased spending for Medicare patients has totaled $110 million, for a net reduction in Medicare hospital spending of $319 million. To fully judge the effectiveness of Maryland’s budget caps, we would need to see data for spending on patients insured privately or by Medicaid.

Global budget caps have much to offer. They bring more predictability to budget planning, they make it harder for providers to evade efforts to contain spending, and they give providers the freedom to decide how they will lower their costs.

There also is good reason to think that budget caps can be implemented without compromising care. Not only is that the experience in Maryland to date, it also is the experience in the European countries that employ budget caps and are able to deliver good quality care at much lower cost than in the United States. It seems that physicians, hospitals and other providers can adjust their manner of practice to their fiscal environment and preserve quality of care even as they reduce the quantity of care delivered.

Since policies that promise much in theory need not pan out in practice, it is critical for policymakers to test their ideas on a trial basis and move forward only after they have been able to demonstrate effectiveness. As Sabatini et al. indicate in their important analysis, the evidence from Maryland’s use of hospital budget caps supports more trials with global budget caps in the U.S. health care system. Indeed, Maryland is planning to expand global budgeting beyond the hospital setting.

Cite as: David Orentlicher, Cost Containment—Global Budget Caps, JOTWELL (April 27, 2017) (reviewing Nelson Sabatini, Joseph Antos, Howard Haft & Donna Kinzer, Maryland’s All-Payer Model—Achievements, Challenges, And Next Steps, Health Affairs Blog (Jan. 31, 2017)), https://health.jotwell.com/cost-containment-global-budget-caps/.

An Opportunity for Demand Side Innovation

Rebecca S. Eisenberg & W. Nicholson Price II, Promoting Healthcare Innovation on the Demand Side, Oxford Academic J.L. & Biosciences (2017).

The intersection of healthcare information goods, resulting products, and the legal system is frequently reduced to unhelpful binary generalizations such as “regulation (particularly drug safety and data laws) impedes innovation.” Eisenberg and Price helpfully consign such caricatures to the past, substituting far more nuanced (and a lot more interesting) reflections on healthcare and innovation.

Their primary contribution is to describe a different idea of innovation; one based on the demand side rather than the supply side. This is to be contrasted with the “Innovation Law Beyond Intellectual Property (IP)” literature which has examined non-IP mechanisms such as grants, prizes, or insurance to incentivize innovation without utilizing exclusionary patent rights. Those approaches, while they may have been shaped on the demand side, are executed on the supply side (such as a government subsidy paid to a drug company to encourage production of an unprofitable drug). In contrast, Eisenberg and Price are interested in true demand-side innovation based on the data accessible to payers; providers or insurers and, optimally, vertically integrated stakeholders such as large HMOs. These payers, the authors argue, could leverage the enormous clinical and prescribing data sets they can access “to develop new information about drug toxicity, comparative effectiveness, precision medicine, and to perform other forms of innovation.” If successful, “[t]he incentives of payers to cut costs… could be a corrective counterweight to the incentives of product sellers to maximize their own patent-protected profits.”

This counterbalancing idea is a smart one given the poorly functioning marketplace that is healthcare’s fate. Currently, supply-side pharmaceutical companies can transfer their information goods into IP-protected profit centers. Thereafter, even major payers such as private insurance companies have difficulty negotiating down drug prices while federal law embarrassingly prohibits price negotiation for Medicare Part D drugs. Essentially, Eisenberg and Price are encouraging payers to undertake roles such as “new technology assessment” (NTA) that in other healthcare systems are undertaken by regulatory or independent agencies. For example, the UK’s National Institute for Health and Care Excellence and the German Institute for Quality and Efficiency in Health Care evaluate new drugs on the basis of their comparative or cost effectiveness. Their findings determine whether such drugs are included in the national formulary (UK) or subject to reference pricing (Germany). There are few regulatory analogs in the U.S. and the closest one, the Patient-Centered Outcomes Research Institute (PCORI), is expressly prohibited from using the classic NTA outcome measure, the quality-adjusted life year.

The authors recognize that the opportunity for demand-side innovation faces practical barriers. The data required is often hopelessly fragmented; payers may have the opportunity to innovate but, the vertically integrated aside, few will have the incentive; and (because no paper on innovation is complete without a criticism of dear HIPAA) they argue that data laws may hinder access to or use of clinical data. Equally, the examples the authors give of government programs that could help demand-side innovation (Meaningful Use, the FDA Sentinel System, and PCORI) are hardly shining examples of regulatory home runs. However, maybe some of the provisions of the recently enacted 21st Century Cures Act will turn those around. That legislation also raises the interesting question whether those on the supply side increasingly will be interested in demand-side data given the increasing role of patient experience and clinical data in the drug approval process.

The decline in the number of breakthrough drugs suggests supply-side innovation is slowing, and the authors also note the pharmaceutical industry’s ambivalence to a successful precision medicine initiative. Equally, we may not yet have reached the inflection point for data-driven analysis on the demand side, and we are a long way from realizing the benefits of patient access to useful information built on such data. However, although the balance of innovation power remains on the supply side, Eisenberg and Price provocatively suggest that should change. If the authors’ predictions play out it will be interesting to see whether the result will be demand-led safer and cheaper products, or whether the supply side will demand increased IP and other rewards to reassert the supply-side imbalance.

Cite as: Nicolas Terry, An Opportunity for Demand Side Innovation, JOTWELL (March 28, 2017) (reviewing Rebecca S. Eisenberg & W. Nicholson Price II, Promoting Healthcare Innovation on the Demand Side, Oxford Academic J.L. & Biosciences (2017)), https://health.jotwell.com/an-opportunity-for-demand-side-innovation/.

Targeted, Concise Treatments for the American Health Care System

  • David Orentlicher, Controlling Health Care Spending: More Patient “Skin in the Game?", 13 Indiana Health L. Rev. 348 (2016), available at SSRN.
  • Barbara A. Noah, The (Ir)rationality of (Un)informed Consent, 34 Quinnipiac L. Rev. 691 (2016), available at SSRN.

From a health law and policy perspective, the recent presidential election results have undoubtedly ushered in a new period of tremendous uncertainty. With President-elect Trump ascending to the office this year, it is likely that the health care delivery and financing system—to say nothing of the numerous health law syllabi in health care law courses across the country—will look radically different in the years to come. As I write, policymakers and prognosticators are debating which—and how many—pieces of the Affordable Care Act will survive. Nevertheless, no matter the makeup of American health care system in the future, many challenges the system currently faces will endure—and likely intensify. Chief among those concerns revolves around the strangling cost of American health care.

Examining the issue in two separate manifestations and focusing on patient decision-making in two separate contexts, David Orentlicher and Barbara Noah provide practical and succinct suggestions in well-written, recently-published essays, Controlling Health Care Spending: More Patient “Skin in the Game?” and The (Ir)rationality of (Un)informed Consent, respectively. Both tackle problems that contribute to the nagging challenge of cost—Orentlicher largely with an eye on influencing patient decision-making through coverage incentives and penalties, and Noah with an eye on improving patient clinical decision-making at the end-of-life. As overutilization and cost are a focus of much of my scholarship, I was delighted to discover both pieces and to engage with their insights as we overlook a new period of yawning uncertainty in health law and policy.

First, in his insightful essay, Professor David Orentlicher paints a dark picture of American health care cost and quality before diving into a few suggested policy changes. Orentlicher focuses on two main solutions: (1) recalibrating patient cost-sharing, and (2) using employer wellness programs to address inefficiencies and incentives. On improving patient cost-sharing, Orentlicher rightly observes the main challenge: if the insurance’s cost-sharing amount is too high, patients are deterred from seeking care (especially those of lower economic means), and if the cost-sharing is too low, patients will seek too much health care and waste resources.

After identifying this challenge, Professor Orentlicher presents targeted solutions. First, he notes that aggressive cost-sharing must be reserved for lower-value care; this way, patients are appropriately steered to the doctor when it is most efficient for them to visit. Second, Orentlicher notes the importance of reference pricing to standardize the cost of a given procedure or product, pushing patients to lower-cost providers. And third, he highlights “scaled” cost-sharing, in which he suggests that deductibles and other cost-sharing mechanisms be scaled to one’s familial income, and not a raw dollar amount. This would address the problem of those without disposable income avoiding the doctor too much, and those with more disposable income visiting the doctor too often.

Finally, Professor Orentlicher highlights the upside of employer wellness programs in cutting the cost of health care. Within this section, after describing some of the limitations and threats facing wellness programs, he encourages program designers to think about three main features for incentives: first, programs should reward short-term progress; second, programs should structure incentives indefinitely; and finally, programs must carefully consider the benefits and downsides of a system with either built-in rewards or penalties (Professor Orentlicher seems to suggest that rewards may work better).

Second, in her artfully titled essay, Professor Barbara Noah tackles the inadequacies of informed consent. She starts by highlighting the size and scope of the problems raised by dying in America—most notably that we overutilize certain care and that we underutilize other types of care—and forecasts that it is likely to worsen due to shifts in population. Referencing everyone’s different conception of, and approaches to, end-of-life decision-making, Professor Noah notes that a substantial amount of end-of-life care provides no measurable benefit. She laments the “default model” that pushes doctors to continue to provide care unless the patient undertakes a burdensome effort to opt out of often needless treatment.

Professor Noah does a masterful job of describing the difficulty facing patients at the end-of-life. After highlighting a number of other complicating factors, including cultural challenges (both of physicians’ concerns about liability and of society’s conception of death) and payment incentives, Noah attacks as impossible the idea of a “perfect” decision at the end-of-life in the face of a number of unconquerable obstacles. To explain this complication, Professor Noah effectively relies on recent work by philosophers to observe that clinical decision-making at the end-of-life is characterized by “necessary fallibility,” and is defined by unknowable and unpredictable variables. Sneakily, “unknown unknowns” may impact the real likelihood of survival, but cannot be fully understood during the clinical decision-making process. As a result, Noah argues, there is no “best” approach or treatment for a patient who may be facing the end of his or her life. This uncertainty swamps the abilities of both the provider and patient to come to a rational “best” clinical decision.

Noah finishes by pointing out a number of pressures that impact the decision-making process—from optimism bias, to a false belief that patients can achieve a perfect and rational end-of-life decision, to an inability to convey the hard edges of what can be known. She notes that we must continue to strive for informed consent, but must recognize that the doctrine is limited and imperfect. In the end, it comes down to patients being able to face the situation with as much knowledge as possible while understanding this imperfection of the decision-making process, and, above all perhaps, the fragility of life.

Both Orentlicher and Noah provide clear and focused works geared toward improving the delivery of American health care with an eye toward building a more just and efficient system. Their pieces remind all Americans—during this time of remarkable uncertainty—that some of the same old challenges will remain in need of adequate legal and policy-based solutions.

David Orentlicher, Controlling Health Care Spending: More Patient “Skin in the Game?", 13 Indiana Health L. Rev. 348 (2016); Barbara A. Noah, The (Ir)rationality of (Un)informed Consent, 34 Quinnipiac L. Rev. 691 (2016).

Reconciling the First Amendment with the Regulation of Professional-Client Communications

Claudia E. Haupt, Unprofessional Advice, 19 U. Pa. J. Const. L. (forthcoming 2017), available at SSRN.

The application of First Amendment principles to professional speech raises a seemingly irresolvable challenge. On the one hand, a core First Amendment principle is that government should not discriminate against speech based solely on its content. On the other hand, it is well settled that physicians and other professionals can be subject to malpractice liability for giving “unprofessional” advice—despite the fact that doing so depends precisely on the sort of content discrimination that the First Amendment normally does not allow. In light of this discrepancy, some have suggested that professional-client interactions should be treated as an exception to normal First Amendment principles, in order to preserve the law’s ability to protect clients from unprofessional advice.

Rejecting that approach, Claudia Haupt’s forthcoming article, Unprofessional Advice, argues that efforts to limit unprofessional advice are entirely consistent with “the claim that “[p]rofessional speech should receive robust First Amendment protection.” The article builds on Haupt’s previous work, Professional Speech, which set out a comprehensive theoretical and doctrinal framework for understanding professional speech. Taken together, the two pieces provide a coherent and convincing approach to resolving several ongoing policy debates.

Haupt’s argument rests on a novel understanding of what it means to be a professional. She argues that the professions are not simply occupational categories defined by state licensing requirements, but instead “are best conceptualized as knowledge communities whose main reason for existence is the generation and dissemination of knowledge.” Although these knowledge communities are not “monolithic,” they are defined by “shared notions of validity” that “limit the range of opinions that may be found valid within the profession.” Based on this conceptualization, she argues that the First Amendment’s protection of professional speech extends only to “assessments based on the profession’s shared ways of knowing and reasoning.” Individuals who purport to provide professional services while “refusing to follow the shared ways of knowing and reasoning due to exogenous beliefs” have thus forfeited any First Amendment protection by “plac[ing] themselves outside the knowledge community.”

Haupt justifies this distinction by pointing to the “asymmetry of knowledge” that typically characterizes the professional-client relationship, which makes it impossible for most clients to independently assess the validity of professional advice. In light of this asymmetry, clients must simply trust that the professional is providing “competent and comprehensive professional advice in accordance with the professional’s insights.” Professionals who fail to provide advice grounded in the profession’s shared ways of knowing and reasoning have therefore violated the patient’s trust.

This understanding of the scope of First Amendment protection of professional speech has several important implications. For example, it suggests that professional advice based on ways of knowing and reasoning external to the knowledge community—such as a pharmacist’s religiously-motivated refusal to advise clients on the availability of certain contraceptives—should receive no First Amendment protection. Indeed, Haupt goes further by criticizing even voluntary governmental efforts to accommodate these outsider perspectives against accepted professional positions. For example, she criticizes the Department of Education’s attempt to persuade the American Psychological Association’s Committee on Accreditation to maintain an exemption for religious programs that classify homosexuality as a mental disorder. Such efforts, she argues, constitute inappropriate “state interference endorsing the outlier status of certain professionals against the rest of the profession.”

Haupt’s approach also supports robust First Amendment protection for advice grounded in the professional community’s “shared ways of knowing and reasoning,” even for members of the profession whose “alternative assessments based on a shared methodology” lead to recommendations that are not embraced by the profession as a whole. As an example, she cites the Ninth Circuit’s decision in Conant v. Walters, which invalidated a federal policy under which physicians who recommended medical marijuana to their patients could lose their licenses to prescribe controlled substances. The Ninth Circuit’s decision “protected the scope of professional advice consistent with the knowledge community’s emergent knowledge, despite ongoing scientific debate.”

Haupt’s scholarship appears at an important moment in the application of First Amendment jurisprudence to physician-patient communications. In addition to numerous cases challenging compelled physician disclosures in the abortion context, the Eleventh Circuit is soon expected to issue an en banc decision in a case challenging a Florida statute prohibiting physicians from routinely asking their patients if they own firearms. The Florida statute is inconsistent with recommendations of numerous professional medical associations, including the American Academy of Pediatrics, which “recommends that pediatricians incorporate questions about the presence and availability of firearms into their patient history.” Yet, a panel of the Eleventh Circuit determined that these professional opinions are irrelevant, on the ground that “Florida may regulate professional standards of medical care within its borders—regardless of what medical associations may recommend.”

By grounding First Amendment protection of professional speech in the protection of knowledge communities, Haupt provides a powerful basis for resisting efforts to prevent physicians from asking the kind of questions that their professional standards require. At the same time, it leaves ample room for regulating professional communications that fall outside professional norms.

Cite as: Carl Coleman, Reconciling the First Amendment with the Regulation of Professional-Client Communications, JOTWELL (January 27, 2017) (reviewing Claudia E. Haupt, Unprofessional Advice, 19 U. Pa. J. Const. L. (forthcoming 2017), available at SSRN), https://health.jotwell.com/reconciling-the-first-amendment-with-the-regulation-of-professional-client-communications/.

Living with Alzheimer’s: A Fate Worse than Death?

Rebecca Dresser, A Fate Worse than Death? How Biomarkers for Alzheimer's Disease Could Affect End-of-Life Choices, 12 Ind. Health L. Rev. 651 (2015), available at SSRN.

According to the Alzheimer’s Association’s 2016 Alzheimer’s Disease Facts and Figures, one in nine persons in the U.S. over the age of 65 suffers from Alzheimer’s disease, with the prevalence rising to one in three persons over the age of 85. With lengthening life spans and the Baby Boom generation’s aging, the number of Americans with Alzheimer’s is projected to increase dramatically in the coming decades, from 5.2 million in 2016 to somewhere between 13.8 and 16 million in 2050. The sheer enormity of this projected number sobers medical researchers and health policy makers, inspiring initiatives to develop preventive and curative therapies and humane and sustainable care financing and delivery models.

By contrast, just one case of Alzheimer’s haunts most members of the public: the case they, or a loved one, might develop in the future. The title of Rebecca Dresser‘s article acknowledges this fear. In A Fate Worse than Death? How Biomarkers for Alzheimer’s Disease Could Affect End-of-Life Choices, Dresser considers how knowledge of an increased personal risk of developing Alzheimer’s, gained from biomarker tests, might prompt persons to take steps aimed at avoiding a prolonged course of illness. Wishing to act before symptoms of the disease render them incapable of action, persons fearful of their relatively high risk of developing Alzheimer’s might commit pre-emptive suicide. Less drastically, they might execute advance directives instructing that they should not receive life-saving medical care—or even food and water—once the Alzheimer’s manifests and erases their competency. They might even seek to take advantage of laws in the handful of jurisdictions sanctioning physician-assisted death by executing an advance request for assisted death. For each of these potential responses, Dresser cogently and concisely considers the feasibility and legality of the particular strategy for avoiding “a fate worse than death.”

This analytical part of the article is useful and thought provoking, but what I really love about this short piece is Dresser’s examination of policy responses to the increasing number of people who may be terrified by the results of their Alzheimer’s biomarker tests. These responses include the obvious need for adequate disclosure protocols and counseling of persons considering the testing, but Dresser emphasizes the need to address people’s fears head on by developing a deeper medical and public understanding of what it is actually like to live with Alzheimer’s. According to Dresser, empirical evidence suggests that many Alzheimer’s patients have a good quality of life, and that the effects of the disease may be more distressing for family members than for patients themselves. If indeed the fear associated with anticipating Alzheimer’s is often worse than having the disease, people who receive positive biomarker results should know that before they make decisions to shorten or end their lives.

The other reason I appreciate Dresser’s latest article so much, though, is that it reminded me of a longer article she wrote more than two decades ago. I first read Missing Persons: Legal Perceptions of Incompetent Patients, 46 Rutgers L. Rev. 609 (1994), years ago, and it made a strong impression on me. Reading A Fate Worse than Death? prompted me to go back to and reread Missing Persons. The earlier article explored how the autonomy model for end-of-life decision making fails, in many cases, to provide a reliable resolution of cases involving incompetent patients. It challenged the largely unquestioned primacy of autonomy as the North Star for deciding on treatments for incompetent patients, a challenge that I do not believe has been adequately answered in the past two decades.

In both articles, Dresser stresses the need to understand the lived experience of persons with dementia. Rather than assuming that their earlier, dread-inspired projections of their future wishes should control medical decisions, we should ask how those persons might subjectively experience different treatment options available today. This approach accords with the disability community’s insistence that decisions about people with disabilities be informed by their actual lived experience, instead of being infected with cultural biases against disability. Dresser does not insist that continued life will always be valuable for a person with severely compromised cognitive faculties, but she contends that the appropriate inquiry involves the subjective value of continued life to the person whose life is at issue. In short, A Fate Worse than Death? reminds readers that uninformed stereotypes are a dangerous basis on which to make life-shortening decisions.

Cite as: Mary Crossley, Living with Alzheimer’s: A Fate Worse than Death?, JOTWELL (December 14, 2016) (reviewing Rebecca Dresser, A Fate Worse than Death? How Biomarkers for Alzheimer's Disease Could Affect End-of-Life Choices, 12 Ind. Health L. Rev. 651 (2015), available at SSRN), https://health.jotwell.com/living-with-alzheimers-a-fate-worse-than-death/.

Yes, Cross-Market Hospital Mergers Can Really Drive Up Costs

Leemore S. Dafny, Katherine Ho & Robin S. Lee, The Price Effects of Cross-Market Hospital Mergers (NBER Working Paper No. w22106, 2016).

The Price Effects of Cross-Market Hospital Mergers, by economists Leemore S. Dafny, Kate Ho, and Robin S. Lee is a must-read for anyone interested in healthcare price and competition. Now, don’t get scared off by the fancy equations and economic terms like “concavity”—there is more than enough substance in plain English to make this paper accessible to an interested non-economist. The paper provides a missing link in current antitrust enforcement efforts by providing both theoretical and empirical evidence demonstrating that cross-market mergers can harm competition in ways that could violate both state and federal antitrust laws. Despite anecdotal claims to the contrary, antitrust enforcers have argued for years that cross-market mergers could not drive up the price of healthcare. Yet, we have continued to see significant consolidation in the healthcare system, both within and across geographic and product markets, along with the price increases that tend to accompany that consolidation.

Cross-market mergers have gone entirely without scrutiny from federal and state antitrust enforcers, who have argued that causes of action based on such mergers lack both a theoretical and empirical basis. However, a handful of scholars and international regulators—e.g. Vistnes & Sarafides and the European Commission—have begun to argue more forcefully that cross-market mergers can drive up costs even in markets that lack overlapping product and geographic markets, by creating what they call “portfolio power.” But, until now, there has been a lack of empirical evidence to demonstrate that cross-market hospital consolidation could drive up costs.

Dafny, Ho & Lee offer both theoretical explanations of how cross-market mergers can harm competition, as well as the empirical data to back up their ideas. Their theoretical model is based on insight from Ho & Lee’s 2015 paper, Insurer Competition in Healthcare Markets, which demonstrated that the merger of hospitals in different markets could influence insurer reimbursement rates, if those insurers had customers (employers) who employed workers in both markets. Employers would be looking to identify insurance plans whose networks provided the greatest value across all markets. As a result, an insurer’s network would not be as attractive to the employer if it did not include both hospitals, even if they were not in the same geographic market. So the merger would make the utility loss of both hospitals greater than the sum of the losses of each hospital independently in the absence of the merger. As a result, the merger provides the merging hospitals more bargaining power despite their lack of shared product or geographic markets. This directly contradicts current thinking in antitrust enforcement.

What Dafny, Ho & Lee argue in this article is that this principle extends beyond just employers looking to insure employees in different geographic markets, and holds true for consumers in the same geographic market looking to purchase different products and for insurers looking to build a network across markets. Imagine that you are deciding between health plans for your family and you care most about a network that covers both your kids’ pediatrician and your cardiologist. A plan that includes both is the most desirable, a plan that includes one or the other is slightly less, but a plan that includes neither is probably out of the question. Dafny et al. call this the “Common Consumer Effect.” The main idea is that a merger that includes both the pediatrician and the cardiologist would give the merged provider organization more utility, and therefore more bargaining power, than the sum of their independent utilities. Importantly, the common consumer effect results from a change in the parties’ outside options, not from increased negotiating skill, which opens the door to antitrust enforcement.

The same theory also applies when there are no common customers, but instead common insurers—The Common Insurer Effect. Dafny et al. hypothesized that cross-market mergers can enable a hospital system to recoup revenues lost due to political or legislative constraints in one market (caps on increases) by acquiring a hospital in a non-constrained market, and then increasing rates in the non-constrained hospital and requiring all insurers to include both hospitals in their network.

To test their theories, Dafny, Ho & Lee examined two distinct samples of acute care hospital mergers over the period of 1996-2010, and examined the price trajectories after those mergers for three groups of hospitals: (i) hospitals acquiring a new system member in the same state, but not in the same narrow geographic market (adjacent treatment hospitals); (ii) hospitals acquiring a new system member out of state (non-adjacent treatment hospitals); and (iii) hospitals that are not members of target or acquiring systems.

Their research found that the prices for adjacent treatment hospitals increased 6 – 9% relative to controls, while non-adjacent treatment hospital price changes tended to be negative and statistically insignificant. Further, when they examined the degree of insurer overlap between the merging hospitals—it absorbed the entire price effect for adjacent hospitals, meaning that a common insurer is required for there to be a cross market price effect, which is consistent with their theoretical model. It also suggests that consolidation in the insurance market may enhance these effects. They also found a small effect showing that the distance to different hospitals also had an impact (within the common insurer) suggesting a common customer effect as well.

This research calls into significant question a common assumption in antitrust enforcement- that insurers’ willingness to pay for a particular provider is linear. This assumption of linearity means that only mergers with overlapping product and geographic markets can result in anticompetitive price increases. Instead, the research suggests that both within-market and cross-market mergers between hospitals sharing a common consumer can result in higher willingness to pay by insurers and price increases. Further, merging hospitals with no common consumer or geographic market may be able increase prices via a common insurer effect through the use of double marginalization and use of an unconstrained market to alleviate price constraints in another market. Based on these findings, antitrust enforcers should more carefully scrutinize the potential impacts of cross-market mergers for harm to competition and actionable antitrust offenses.

Cite as: Jaime King, Yes, Cross-Market Hospital Mergers Can Really Drive Up Costs, JOTWELL (November 15, 2016) (reviewing Leemore S. Dafny, Katherine Ho & Robin S. Lee, The Price Effects of Cross-Market Hospital Mergers (NBER Working Paper No. w22106, 2016)), https://health.jotwell.com/yes-cross-market-hospital-mergers-can-really-drive-up-costs/.

A Definitive Primer and Prescription on Social Determinants of Health

Wendy K. Mariner, Beyond Lifestyle: Governing the Social Determinants of Health, 42 Am. J.L. & Med. 284 (2016).

I recently received a call from my university’s general counsel’s office, looking for health law advice about patient no-shows at a campus community health clinic. We discussed tort theories, including establishment of the physician-patient relationship and patient abandonment, as well as privacy issues with respect to contacting patients via email, phone, or a friend or relative. I then offered that the clinic might consider looking more deeply at the reasons for the patients’ lack of follow-through with appointments and treatment, including various social, economic, transportation, childcare, and other lifestyle barriers. I roughly described the concept of “social determinants of health,” which captures the problems to which I was referring. I explained how our law students working with medical-legal partnership clinics face similar challenges: clients may initially present with significant legal needs, which they are highly motivated to address, but then fail to keep follow-up appointments. The attorney was intrigued and asked me to forward some relevant literature on the various issues that I had identified.

It was easy enough to find cites for the torts and privacy topics, but surprisingly more difficult to identify a clear, definitive article describing the essential concept of social determinants of health. Given the increasing prevalence of the term within not only public health but also health law circles, I was surprised at my difficulty finding literature that explained this now-essential concept in a way that the uninitiated could understand. Thus, I was delighted last week to come across Wendy K. Mariner’s Beyond Lifestyle: Governing the Social Determinants of Health.

In her succinct article, Professor Mariner places the concept in a broader context that the specific application that I described to the attorney who called me. Social determinants of health is not a local or national problem but a global concern that calls for global solutions, on the level of other, more clearly recognized and accepted public health strategies to address the spread of infectious diseases. Although public health measures at various times have been challenged as overly coercive and paternalistic, the public now mostly accepts the need for vaccination, sanitation, quarantine, and even compelled treatment as strategies to control disease outbreaks, including highly salient recent examples of Zika and Ebola.

Despite the acceptance of those traditional public health strategies, Professor Mariner explains that health policy needs to broaden, or perhaps shift, its focus to more prevalent causes of poor health. With compelling data, she demonstrates that chronic diseases, including heart disease, stroke, and chronic obstructive pulmonary disease, have well surpassed communicable diseases as the leading causes of death internationally. The article then clearly defines the concept of social determinants of health, situating it along with biomedical and environmental causes of health, as identified in scholarly literature and international health policy declarations. Professor Mariner examines competing models of social determinants, some linear and others more interactive and layered. Regardless of the model, the essential point is the same: Health is impacted by a wide range of factors, including but not limited to discrimination, education, gender, political participation, poverty, housing, access to health care, occupation, and agricultural practices. Thus, the prescription for improving population health must address far more than contagious disease outbreaks.

Professor Mariner notes that even where health policymakers have embraced the prevalence of chronic diseases as a significant problem, their interventions have often missed the mark. The current approach to chronic, non-communicable diseases is to focus on individual lifestyle “choices,” such as substance use, diet, and physical activities. I place “choices” in quotations to emphasize Professor Mariner’s next significant point, which is that, by looking through the social determinants of a health lens, one recognizes that social, economic, and environmental factors greatly constrain individuals’ opportunities to engage in healthy behaviors. With that insight, health policy can be appropriately redirected to the underlying causes of inequality and redistribution of societal resources.

To that end, Professor Mariner proposes a human rights approach. The first step is recognizing the wider range of fundamental causes of illness and injury, as the social determinants concept does. The second step requires political forces to align in recognizing health as a fundamental human right, as a number of international covenants and treaties already do. Combining these two steps means turning policymaking attention to inequalities in access to income, education, employment, housing, political voice, clean environment, and health care, while proceeding cautiously with respect to wellness programs and other interventions that focus on individual responsibility instead of underlying causes of poor health.

The article concludes on a cautionary note, noting significant obstacles to addressing social determinants of health through the human rights approach. For one, many international human rights declarations and health policy recommendations lack enforcement mechanisms. Also, countries often resist adopting policies that would seem to impede economic progress and international trade. Those two obstacles are particularly salient in the United States, where we have yet to ratify a number of international declarations recognizing health as a human right and continue to prioritize commercial trade over social policies. But despite the challenges of implementing her prescription, Professor Mariner’s article boldly and clearly outlines an essential concept for health policy going forward. The particulars of how specific countries will incorporate social determinants into their health law and policy agendas remains to be seen.

Cite as: Elizabeth Weeks Leonard, A Definitive Primer and Prescription on Social Determinants of Health, JOTWELL (October 17, 2016) (reviewing Wendy K. Mariner, Beyond Lifestyle: Governing the Social Determinants of Health, 42 Am. J.L. & Med. 284 (2016)), https://health.jotwell.com/a-definitive-primer-and-prescription-on-social-determinants-of-health/.

The Case for Integrating Health Care and Social Services

Elizabeth H. Bradley & Lauren A. Taylor, The American Health Care Paradox: Why Spending More is Getting Us Less (2013).

Although the U.S. spends far more per person on medical care than any other nation, the results have been less than impressive. Relative to other developed nations, the U.S. consistently performs worse on a wide range of health measures, including infant mortality, premature deaths, life expectancy, and prevalence of heart disease, diabetes, and other chronic illnesses. Many health care experts have pointed to inefficiencies in our health care system as the cause for this paradox. Bradley and Taylor identify another culprit — too little attention to the social, environmental, and behavioral factors that impact health.

The book begins with a summary of the authors’ previous research comparing spending on health care and social services among OECD countries. This research found that when spending on health care is combined with spending on social services, the U.S only ranks in the middle of OECD countries. More importantly, the U.S. is an outlier when comparing the ratio of a nation’s social to health spending, with the U.S. allocating a far greater share of its gross domestic product to health care than to social services. This suggests that the U.S. is shortchanging the social services that help people live healthier lives, including public health, housing, education, community safety, and income support. The authors’ conclusion finds support in their recently published study comparing state spending, Variation in Heath Outcomes: The Role of Spending on Social Services, Public Health, and Health Care, 2000-09, 35 Health Affairs 760 (May 2016), which found that states with a higher ratio of social to health spending had better health outcomes. Chapter 3 of the book brings the data to life by profiling three individuals who incurred significant (and expensive) health problems when their social and behavioral health needs went unmet.

But Bradley and Taylor do not simply argue that the U.S. could get more bang for the buck if it rebalanced spending between health care and social services. Rather, they make the equally important and often overlooked point that the U.S. must do a better job of integrating health and social services. Chapter 2 provides a historical overview of the U.S. health care and social services sectors, highlighting the fragmentation plaguing both sectors. Chapter 4 compares the health and social services systems of the U.S. and Scandinavian countries. The authors make a not wholly convincing argument that cultural and political differences between the U.S. and Scandinavian countries are smaller than generally believed and that the U.S. therefore can learn much from these countries. More usefully, the Scandinavian examples concretely illustrate the value of coordinating health and social services, as well as the importance of assigning accountability for a population’s health to a centralized entity (with locally elected government officials serving this role in Scandinavian countries). Chapter 5 further underlines the potential for synergy between the health care and social services sectors with a description of four organizations in the U.S. that are successfully coordinating health care and social services.

The book also provides some useful lessons for those seeking to better integrate health care and social services. Chapter 6 analyzes previous efforts in the U.S. to integrate health care and social services, namely the push for neighborhood health centers in the 1960s and health maintenance organizations in the 1970s and 80s. The authors explain how both efforts were undermined by powerful interests opposed to these developments and an American culture that values personal responsibility. Chapter 7 highlights other challenges, most importantly how the fragmentation of health care and social services is reinforced by a political system that primarily makes decisions about social services at a local level while decisions about health care services are made at the state and federal levels. Proponents of future efforts to integrate health care and social services will need to consider how best to overcome these political forces.

While the authors do not offer specific prescriptions for how to correct the paradox they identify, their insights teach us that reforming the health care sector in isolation from the social services sector is not the solution. In doing so, they help reframe the conversation about how to improve Americans’ health.

Cite as: Jessica Lind Mantel, The Case for Integrating Health Care and Social Services, JOTWELL (September 16, 2016) (reviewing Elizabeth H. Bradley & Lauren A. Taylor, The American Health Care Paradox: Why Spending More is Getting Us Less (2013)), https://health.jotwell.com/the-case-for-integrating-health-care-and-social-services/.