Elizabeth Y. McCuskey, Agency Imprimatur & Health Reform Preemption
, 78 Ohio St. L.J.
1099 (2017), available at SSRN
With the future of health law and policy shifting on a nearly daily basis, producing clear and stable health law scholarship has become a daunting task, risking leaving the field adrift during a period of vexing uncertainty. Evocatively handling this challenge, one piece of esteemed scholarship that has boldly filled a gap—and, I would submit, one of the best articles of health law scholarship over the last year—is Agency Imprimatur & Health Reform Preemption by Elizabeth Y. McCuskey. The article was a pleasure to read and review for this Jot.
No matter the future of specific features of the Affordable Care Act (ACA)—as many truly hang in the balance—McCuskey’s piece takes on a core principle and likely enduring feature of health care reform: the federal statute’s waiver mechanism. Her piece places the ACA’s “big” state innovation waiver (housed in Section 1332 of the Act) in the larger context of murky preemption doctrine and highlights its ultimate impact on judicial review, substantive policy expertise, and communicative federalism. McCuskey’s masterful treatment of a complicated topic is valuable not only given the instability in federal health reform, but given the fact that the ACA’s state-empowering waiver process is likely to only increase in importance and focus under the Trump administration. In short, her topic is likely to become only more significant, and her analysis more indispensable.
Starting by painting the picture of preemption doctrine as it relates to health law and policy, Professor McCuskey begins by describing a “particularly complicated” landscape of health law regulation and an “enormously complex preemption picture.” Preemption doctrine—clouded by Congress’s statements (or non-statements)—has undoubtedly been impacted by inconsistent treatment in the courts, and, consequently, a muddled understanding of preemption doctrine has impacted health law and regulation. Citing ERISA as one example, McCuskey captures the complexity in health and policy as it relates to preemption, noting that the “regulatory landscape before the ACA was … littered with various preemptions that established some uniformity, but which also under-enforced important initiatives, undermined experimentation, and stymied coherent health care regulation.” Preemption has obstructed a substantial portion of health law and policy for decades.
Into this fragmented landscape entered the massive ACA, seeking to expand access and improve insurance policies “by making law incrementally in nearly every sphere of health care regulation,” as she notes. Here, Professor McCuskey’s article does a nice of job of providing a quick summary of various types of preemption, and she notes that the ACA contemplates these issues with an express but “muddled” preemption statement. The remainder of the article focuses on the major feature of the ACA in this space, its “State Flexibility to Establish Alternative Programs” under section 1332.
This “big waiver,” also known as the state innovation waiver, allows states to suspend a number of components of the ACA’s most notable reforms that govern the private insurance marketplace—from the individual and employer mandates, to essential health benefits requirements, to the calculation and structure of tax subsidies under the law. The Centers for Medicare and Medicaid Services (CMS) is vested with the power to approve state waivers, and states must show that their proposed programs are similar to the ACA in coverage and affordability.
McCuskey calls the waiver a “giant” waiver because it “has enormous potential to undo the statute’s seminal provisions based on speculative evidence.” Indeed, the waiver operates to allow CMS to suspend the application of major parts of the ACA—not just those provisions based on the Spending Clause, but also those based on Commerce and Taxation powers—and “preapprove” proposed state legislation. Professor McCuskey also briefly discusses recent proposed reforms that would have expanded the waiver mechanism even further.
The most interesting part of Professor McCuskey’s contribution is her analysis of how, exactly, this “big waiver” within the ACA radically changes the operation of health law and policy. Most notably, she argues that due to the ACA’s structure, which is reliant on “preemptive federal health insurance law, coupled with the big-waiver power to officially sanction state-law variations,” it “creates a preemption-diffusion mechanism favoring agency expertise regarding whether state variations serve federal purposes and objectives.” To this end, she presents the agency imprimatur model, which she illustratively notes, “pushes state law out of the regulatory space with preemption, then invites state law into that space if the agency determines state law will serve federal objectives.”
Indeed, CMS retains discretion and supervision over the waiver approval process, which, in theory, eliminates the necessity of employing the judiciary to determine difficult and thorny preemption questions in court. This evinces a major shift from “post hoc judicial application of preemption doctrine to an ex ante federal agency approval of potentially conflicting state law,” as she notes. And, CMS must adhere to the waiver requirements under the ACA, ensuring that “federal regulatory infrastructure and priorities” retain power. McCuskey calls this “pre-preemption.”
The article then evaluates the structure of the ACA’s big waiver, and its shift “from judicial preemption doctrine to agency imprimatur,” addressing the waiver’s delegation and discretion, as well as looking at agency institutional competence as compared to judicial expertise. While noting that empowering the agency makes for a potentially more “fresh” and “nimble” executive body, Professor McCuskey also looks at three relevant metrics—preemption analysis, substantive health law issues, and federalism—to evaluate the shift.
McCuskey leaves the reader with fascinating points on reviewability and review. First, the agency imprimatur model may diffuse and divert preemption litigation in the first place, and, second, where challenged, the agency imprimatur model likely requires courts to defer to CMS’s decision-making authority unless the agency determination was arbitrary and capricious, a major shift from the now utilized de novo review on preemption questions. Third, the agency imprimatur model here theoretically invites additional transparency (given the notice and comment period for wavier applications) and communicative federalism (insofar as the structure of the waiver makes the federalism debate more “engaged” and perhaps, more informed).
In sum, Professor McCuskey’s work is measured and incisive. It addresses a complicated topic with skillful ease. And given the pervasive uncertainty facing health law and policy in this era, it is an appreciated respite of clarity on an increasingly important topic.
The non-stop growth of employee wellness programs presents a rich teaching (and scholarly) opportunity for health law faculty. We can interrogate the employers’ continued embrace of wellness programs, despite the absence of proven cost savings, and consider concerns about the programs’ purported voluntariness and the heavier burdens they place on workers who find meeting program demands difficult or objectionable. We can explore the evolution of laws (HIPAA and the ACA) establishing the legal parameters of wellness programs and how federal agencies have issued regulations seeking to reconcile their incentive structures with the anti-discrimination principles found in the ADA, GINA, and the ACA itself.
A new article by philosophy professor Gordon Hull and law professor Frank Pasquale offers a critical perspective on what wellness programs do accomplish for employers, even if they don’t produce health plan cost savings. The authors’ basic thesis is that wellness programs serve as a vehicle for employers to exercise increasing control over employees’ non-work lives and in the process to “entrench the idea that one belongs to one’s workplace, extending market relations … into the home and other spaces.” By drawing on philosophy (primarily Foucault) and neoliberal economic theory (for example, Gary Becker’s human capital theory), Hull and Pasquale unveil harms associated with employer wellness programs that go beyond concerns about worker privacy and their disparate impact on unhealthy or disabled employees. Integrating aspects of health law, political philosophy, and data analytics, the article offers a fresh, and troubling, view of wellness programs.
After outlining the legal environment of wellness programs, their origins, and the lack of evidence that they generate savings from employees’ improved health, Hull and Pasquale describe how wellness programs exemplify a neoliberal vision of the employer-worker relationship by making individual workers responsible for pursuing “wellness” for their employer’s benefit. An employer implementing a program communicates to a worker that she should invest in her own wellness as part of her human capital, while at the same time “unravel[ing] the risk-pooling aspects of insurance” by shifting the risks of medical costs onto the workers most likely to generate them. In short, wellness programs provide financial incentives and penalties in an effort to convince employees that health risks are something for which the employee is individually accountable, in stark contrast to a risk-spreading conception of insurance.
Hull and Pasquale tease out additional troubling aspects of wellness programs, particularly how they serve to create a “social truth” about what “wellness” even means. Notwithstanding the limitations of current knowledge about what actions truly promote individual health in the long term, programs adopt approaches to “wellness” that rely on employer surveillance and place responsibility squarely on the shoulders of individual workers, while ignoring and even exacerbating factors that lie beyond those workers’ ability to control. A telling example is employment practices that diminish workers’ job security, even though the stresses of job insecurity may contribute to disease. Hull and Pasquale highlight the irony of some employers’ implementing wellness programs that “reward displays of happiness and laughter” while simultaneously and deliberately making employees more insecure.
The article concludes by considering harms associated with wellness programs that go beyond shifting risk to employees for health-related outcomes often beyond their control and reinforcing the idea that workers are obliged – in all aspects of their lives – to invest in themselves in order to benefit their employers. From a public policy perspective, wellness programs also obscure the value of public health measures that could address health-related matters – like clean air, clean water, safe streets, and limits on the availability of dangerous products – that lie beyond individual workers’ control. In contrast to wellness programs’ privatized and individualized vision of health, public health supplies a vision of health as a matter of public concern, subject to empirical validation and democratic policy development.
Hull and Pasquale’s article presents important insights in a manner that is accessible even to readers who may be relatively unschooled in philosophy or political theory. I’ll admit that (after spending the semester telling students to use simple and direct words in their papers) I found off-putting some of the jargon used. (Phrases like “apparatus of neoliberal biopower” and “individual responsibilization” come to mind.) That said, I found the article tremendously valuable in helping to unravel the puzzle of employers’ seemingly illogical ardor for wellness programs and suggesting their broader implications. As Hull and Pasquale conclude: “Those concerned about the substantial burdens imposed by wellness programs on workers must address … politico-economic theory directly, rather than just continuing to point to the dubious outcomes of wellness programs. Because they work to establish the truth of wellness, these programs are difficult to discredit on empirical grounds. For the neoliberal, there is nearly always a rationale for ‘just one more study’ of a private alternative to public service….” I recommend the article highly.
Anya E. R. Prince & Arlene M. Davis, Navigating Professional Norms in an Interprofessional Environment: The 'Practice' of Healthcare Ethics Committees
, 15 Conn. Pub. Int. L.J.
115 (2016), available at SSRN
Following the New Jersey Supreme Court’s endorsement of healthcare ethics committees (HCECs) in its 1976 decision, In the Matter of Karen Quinlan, HCECs have become ubiquitous features of health care institutions throughout the United States. In addition to developing policies and providing education about ethical issues in medicine, HCECs play a central role in resolving ethical conflicts related to the care of particular patients. While most HCECs do not purport to issue binding determinations, the manner in which they frame ethical issues and present options for consideration can have significant impacts on how disputes are resolved.
In a thoughtful and comprehensive article published in the Connecticut Public Interest Law Journal, Anya Prince and Arlene Davis consider “whether participation in ethics consultations could be considered the practice of law.” The consequences of characterizing ethics consultations as a type of legal practice are potentially significant. Non-attorney HCEC members, or attorney members who are not licensed in the HCEC’s jurisdiction, could be subject to civil or criminal penalties for the unauthorized practice of law. Even attorneys who are licensed in the HCEC’s jurisdiction might run into problems when serving as HCEC members, as they might find it difficult to comply with professional legal obligations “that may be at odds with the expectations and professional rules of the ethics committee itself.”
As Prince and Davis explain, many of the most common issues that HCECs address have clear legal dimensions. For example, HCECs may be involved in disputes over whether a patient has decision-making capacity, or, for patients determined to lack capacity, the identification of an appropriate surrogate decision-maker. They also may be called upon when patients or surrogates insist on treatment that a health care provider considers ineffective or “futile.” The appropriate resolution of these questions requires not only on ethical analysis but also familiarity with the legal parameters established by applicable caselaw and legislation.
Prince and Davis identify five tests that have been used to determine when an activity constitutes the “practice of law.” The first, which they describe as the “most expansive” of the five, asks whether an activity “affects legal rights.” They argue that many aspects of HCECs’ work could be considered the practice of law under this definition, “especially given that one of the initial motivations of HCECs was to avoid litigation of complicated medical-ethical issues.” The second test is whether the activity in question is “commonly understood in the community to be the domain of attorneys.” Here, too, they suggest that HCECs could “cross the line into the practice of law” if they “engage in problem-solving” with respect to “complex issues that are commonly associated with law.”
The third test involves a distinction between providing legal information — which does not constitute the practice of law — and “applying law to specific facts,” which could be considered to “jump into the realm of [legal] opinion and advice.” Prince and Davis note that the distinction between providing information and giving legal advice has arisen in debates over the scope of activities that may be performed by non-attorney mediators. For example, guidance in Virginia prohibits non-attorney mediators from offering “legal advice,” which is defined under state law as “the application of legal principles to facts ‘in a manner that (1) in effect predicts a specific resolution of a legal issue or (2) directs, counsels, urges, or recommends a course of action by a disputant or disputants as means of resolving a legal issue.’” They argue that HCEC members could potentially cross this line “through detailed analysis of how case law may apply to a specific consult or what the outcome of potential litigation may be.”
The final two tests that Prince and Davis discuss are whether an individual believes she is receiving legal services (the “client reliance” test), and whether the activity results in the creation of “a relationship that looks like the attorney-client relationship.” Both tests could potentially pose problems for HCEC members, particularly those who are also attorneys. In this regard, Prince and Davis cite a survey of physicians in Maryland in which two-thirds of respondents thought that “providing legal advice” was an appropriate HEC function. They argue that these results “suggest that physicians may expect a certain amount of legal analysis and opinion from ethics consultations.” Even if these expectations are mistaken, in some circumstances they could be sufficient to form “an implicit attorney-client relationship.”
Having concluded that “HCE consultants may be held as engaging in the practice of law under several of the five common legal tests,” Prince and Davis make several practical recommendations for HCEC members. For example, they counsel HCE members to “limit in-depth analysis and application of the facts of the consultation to case law and potential litigation outcomes,” and to “make explicitly clear when interacting with individuals as part of the consult that they are not providing legal services and that the parties may want to seek outside legal advice.” They also call on professional associations, including the American Bar Association, to issue guidance on the distinction between engaging in ethics consultations and practicing law, similar to guidance the association has already issued in the area of mediation.
Price and Davis recognize that, unlike many other professional turf battles — such as the conflict between dentists and non-professional teeth whitening services at issue in the Supreme Court’s 2015 decision in North Carolina State Board of Dental Examiners v. FTC, or disputes between lawyers and online legal document services like LegalZoom — there is little economic incentive for the legal profession to bring actions against HCEC members for the unauthorized practice of law. It is not as if there is a lucrative market for hospital-based ethics consultations, which private attorneys are eager to exploit. Nonetheless, they argue that HCEC members should still be careful about overstepping their bounds because “[i]ndividuals who are providing legal services should be competent to do so or the public may be harmed.”
Prince and Davis’ article makes an important contribution to the literature on the practice of healthcare ethics consultation. It is highly recommended for both members of HCECs and policy-makers charged with defining the concept of the unauthorized practice of law.
Cite as: Carl Coleman, When Does Healthcare Ethics Consultation Constitute the Practice of Law?
(December 12, 2017) (reviewing Anya E. R. Prince & Arlene M. Davis, Navigating Professional Norms in an Interprofessional Environment: The 'Practice' of Healthcare Ethics Committees
, 15 Conn. Pub. Int. L.J.
115 (2016), available at SSRN), https://health.jotwell.com/healthcare-ethics-consultation-constitute-practice-law/
Republican efforts to “repeal and replace” the Affordable Care Act have generated heated debate over the Medicaid program. Underlying this debate is a fundamental question: How should we define Medicaid’s core mission? In his article Medicaid, Managed Care, and the Mission for the Poor, Professor John Jacobi provides a possible answer to this question: raising the health status of the poor and vulnerable by improving their access to both medical care and the social goods and services whose absence impede health. His vision of Medicaid deserves serious attention by policymakers.
As Professor Jacobi explains, the health-related needs of the poorest Americans differ significantly from the non-poor. An enormous body of research documents the impact that social, environmental, and economic conditions have on individuals’ health. Indeed, poor quality housing, food insecurity, the stress of social inequalities, and other non-medical factors likely exert a greater influence on health than access to health coverage and medical care. Because these determinants of health disproportionately affect the poor and vulnerable populations served by Medicaid, their health care needs are far more fragile and complex than those of other populations. Many experts therefore have concluded that medical care should no longer be provided in isolation from social services, but instead should be part of a delivery system that coordinates clinical and non-clinical services and interventions. As Jacobi explains, “[t]his coordination requires not only the purposeful interaction of previously separate public services, but also coordination of the funding that flows to and through the providers of those services.”
State Medicaid programs, however, have done little to promote this broader vision of the health care system (with a few notable exceptions). Jacobi explains that this unfortunate state of affairs stems from Medicaid’s traditional mission of simply providing its beneficiaries with medical coverage. This narrow focus has culminated in states relying on commercial managed care plans. Because commercial insurers operate their Medicaid plans largely in the same manner that they do their commercial plans – connecting enrollees to medical care through the formation of provider networks and claims payment functions – they are ill-equipped to address the non-medical barriers to improving Medicaid beneficiaries’ health.
Jacobi somewhat overstates his case, however, as some states do contract with niche Medicaid managed care plans that focus exclusively on poor and vulnerable populations and the social determinants that impact their health. Nor does Jacobi distinguish among different Medicaid subpopulations, some of whom may closely resemble the non-Medicaid population. For example, the health care needs of low-income adult students and temporarily unemployed individuals typically are less complex than those of the homeless or disabled. Medicaid managed care plans may be sufficient to meet the health care needs of the former groups even if inadequate for the latter. Nevertheless, many Medicaid beneficiaries with complex health needs remain enrolled in commercial or managed care plans that primarily focus on narrow payment functions, and Jacobi rightly questions whether we should continue to mainstream care for these individuals.
Consistent with his broader vision of a Medicaid program that promotes coordination of medical and social interventions, Jacobi advocates for new forms of health care delivery and finance. His article highlights two such models – Medicaid accountable care organizations (ACOs) and Health in All Policies (HiAP) networks. He also cautions against federal regulatory policies that limit states’ ability to experiment with innovative health delivery and financing models to address Medicaid beneficiaries’ clinical and non-clinical health needs.
Although Jacobi’s article was published prior to Congress’s repeal and replace efforts, his concerns nevertheless remain instructive for federal policymakers seeking to reform Medicaid. In particular, proposals to both roll back Medicaid coverage of low-income adults and reduce Medicaid funding would constrain the program’s ability to raise the health status of the poor. With reduced funding to support transformation of the health delivery system, states would abandon any movement toward a Medicaid program consistent with Jacobi’s vision and would continue their narrow focus on providing coverage of medical care, albeit with a narrower scope of benefits.
Kimani Paul-Emile, Blackness as Disability, 106 Geo. L. J (forthcoming, 2017).
“This is how a myth becomes reality: how contingent social choices and practices can create the disabled subject.”
What counts as healthy and what counts as disability are not necessarily biologically determined, but rather can be socially constructed. Kimani Paul-Emile’s forthcoming paper, Blackness as Disability, calls our attention to this truth, and does so in a way that shows how our chosen constructions could not have higher stakes for any given individual, or for the fate of our collective life.
Any definition of health, even the most biomedical, depends on a conception of “normal” functioning, as I have written of before. Wendy Parmet puts it thus: “[T]he questions of whether the capacity to stay focused in a classroom or to see well at night are [part of normal functioning depend] . . . on what is expected in a given society of people and their interactions with their environment.”
The ADA’s definition of disability is similarly littered with socially contingent parameters, such as whether the individual has a “physical or mental impairment,” which is defined to include any “physiological condition,” that “substantially limits” one’s ability to perform any “major life activity.” Of course, what our way of life prioritizes as a “major life activity” or “normal” functioning is variable, not necessary or given. Indeed our current economic structure may well shape the designation of sleeping patterns as functional or disordered.
As the social model of disability teaches us, the physiological conditions themselves do not produce disability, until they meet social structures, institutions, and norms that “substantially limit” a person in what we have rendered “a major life activity.” One could view some mobility impediments as stemming not from individual physical characteristics, but from the architectural choice of steps over ramps. If the so-called “actual” disability prong of the ADA definition already harbors these many layers of social construction, then surely the “regarded as” prong of the definition even more explicitly extends ADA protection to those whom society has stigmatized as less able, due to certain physiological and other markers, despite those markers’ irrelevance to functional abilities.
So how have we as a society made “blackness” disabling to those with the physical, cultural, and linguistic characteristics that Americans have constructed into that racial label? What, as Paul-Emile phrases it, are the “social structures, institutions and norms” that “substantially limit” a black person in such dimensions as 1) in basic mobility through public space, 2) overall health prospects, 3) choice of housing, 4) ability to work and 5) ability to pursue schooling? We know the litany, but not in this particular frame. Police stops and other racially disparate law enforcement practices limit the basic ability to navigate territory, much as door jambs and stairs might limit someone in a wheelchair. Disparate housing opportunities, resulting from government-sponsored discrimination in part, disproportionately expose Black Americans to substandard living conditions and environmental hazards, contributing to increased health risk factors and disadvantages in accessing care. These circumstances lead to physical health outcomes that may themselves be disabling conditions. Unequal access to jobs and education limit a person’s ability to work, no less then the failure to accommodate an employee in taking their epilepsy medication, or refusal to adjust for hearing loss, would pose barriers.
Paul-Emile’s article is plainly a pragmatist, not an essentialist, project. She is hardly saying that the nature of race is like the nature of disability, because she does not believe we get very far viewing either of these things as having “natures” at all. We are the ones who have chosen to dub them one or another through the manner by which our social institutions and norms respond to certain clusters of circumstance. I believe this point could be foregrounded even more. The piece could have been entitled “How We Render Blackness Disabling,” because the polemical title, “Blackness as Disability” does not cue the reader to what we can never be reminded of enough: that “blackness” and to a great extent, “disability,” are as real or as unreal–as salient or not to a person’s life opportunities–as we decide in any historical moment.
Given the malleability of each of these constructed categories, why have we chosen to treat them distinctly, and might it be fruitful to trouble the boundary between the two?
Paul-Emile usefully recounts the differing conceptions of equality reflected by our race-related and disability-focused civil rights regimes. The disability regime envisions affirmative obligations such as reasonable modification/accommodation, it focuses on disparate impact rather than intent in recognition of structural causes of discrimination, and it prohibits reverse discrimination claims. The cramped principles and doctrines that have arisen around race law lack these equality-enhancing features. Why? The juxtaposition Paul-Emile proposes helps to, as she says, “center our attention on the aspects of Blackness that really matter, revealing its purpose as being to disable ….” Paul-Emile uses her article to pose the question of whether the civil rights paradigm could be harnessed to address the disadvantage imposed upon Black Americans.
Another fruitful result of her re-mapping is to expose the radical potential at the core of disability law, in particular its conception of remedy. If particular physiological conditions themselves do not necessarily bear any inherent valence, and our social institutions, practices, and norms are what often render any characteristic “disabling,” disability law’s virtue is that it forthrightly calls for a change of that social structure, in other words, a “reasonable modification.” Disability law envisions not mere deterrence of individual wrongdoing, or compensation for rogue behavior. It assumes that social institutions and norms can and should be changed. Paul-Emile reminds us that Samuel Bagenstos has characterized disability law thus: the “greater part of disadvantage is best addressed through attempts to change the environment.”
The paper asks big questions and therefore prompted me to mull over all sorts inquiries related and tangential (such as thinking over what if any significance attaches to Wesley Hohfeld’s designation of “power” and “disability’ as jural opposites). However, what captivates me most about this paper, about the disability law regime, and indeed about the possibilities of collective action afforded by law in any context, is this point: here is the world we have made, un-made, and can re-make again. Will we?
Nudging Health: Health Law and Behavioral Economics is essential reading for anyone interesting in moving the health reform ball forward. The insights are especially important amid United States lawmakers’ persistent emphasis on individual responsibility and market-based solutions for health care. In their edited volume, esteemed authors I. Glenn Cohen, Holly Fernandez Lynch, and Christopher T. Robertson draw together canonical threads of legal theory, applying them to timely, essential health law and policy topics. The forty-five essays included in Nudging Health explore various ways that behavioral science may be applied to nudge health law and policy in the direction of better health and better health care spending. The book builds on a deep and provocative foundation of earlier scholars, including Kenneth Arrow, Cass Sunstein, and Richard Thaler.
Anyone who has spent even a little time around health law and policy is well aware that neoclassical economic models fail to accurately depict modern health care. Viewed through that lens, health care is a highly imperfect market, as Kenneth Arrow’s timeless 1963 essay, Uncertainty and the Welfare Economics of Medical Care, describes. Arrow accurately depicts a market characterized by, among other features: the uncertain nature of demand for health care; imperfect information and information asymmetries between buyers (patients) and sellers (health care providers); distorted trust, or fiduciary, relationships between health care providers and patients; barriers to entry and other supply limits on medical care; and third-party payment (insurance) leading to moral hazard and pooling of unequal risks.
More recently, legal theorists have questioned the accuracy of the neoclassical economic model in law and policy generally, observing that, even in less flawed markets, individuals often fail to act as rational “homo economicus.” Applying cognitive psychology and behavioral economics, those theorists observe various ways in which individuals make choices based on reasons other than maximizing their own welfare, rely on various shortcuts and heuristics in decision-making, and operate under limited willpower and self-control. Cass Sunstein’s 1998 edited volume, Behavioral Law and Economics, provides an authoritative survey of those insights, noting various implications for legal analysis and policymaking across contexts, including taxation, labor and employment law, voting, corporate governance, personal injury law, and constitutional law.
Building on that volume and decades of research on behavioral law and economics, Sunstein in 2009 joined with University of Chicago colleague Richard Thaler to publish Nudge: Improving Decisions About Health, Wealth, and Happiness. Nudge became a best-seller in both academic and trade presses, introducing the concepts of “libertarian paternalism” and “choice architecture” to the public through numerous detailed, salient examples. The book takes issue with the rational actor model, which generally presumes that individuals will make decisions that promote their own best interests. Under this model, paternalistic policies, such as mandatory seatbelt laws, are disfavored, on the theory that individuals should be permitted to make their own decisions as long as those choices do not directly harm others. Behavioral law and economics points out the problems with relying on the expectations underlying the rational actor model, revealing the various ways in which individuals may act other than for their own best interests. Thus enters Sunstein & Thaler’s notion of “libertarian paternalism,” which accepts the various predictable ways in which individuals err in their judgment and allows for greater government involvement in shaping individual choice.
The approach advocated by Sunstein and Thaler is called choice architecture, referring to the way that choices are packaged and presented to consumers, thus influencing decisionmaking. For example, simply placing “green” healthy labels, and “red” unhealthy labels, on food in the cafeteria line may influence diners’ choices, without limiting their autonomy. Likewise, some email programs, such as Gmail, send users a pop-up reminder if the text mentions an attachment but none has actually been attached. Changing default rules also operates as choice architecture. For example, workers might be automatically enrolled in, and required to take steps to opt out of, employer-sponsored health insurance, instead of being required to take steps to sign up for those benefits. Or we might address the shortage of donor organs by adopting a presumed consent rule, instead of requiring individuals to affirmatively opt-in to becoming a donor.
Those and additional suggestions are explored in-depth in Nudging Health. The book opens with an introduction by Sunstein himself, laying out the essential theoretical framework. What follows is a masterful collection of in-depth discussions and specific examples, including the use of penalty nudges via the Affordable Care Act’s individual mandate and employer shared responsibility payments; reward nudges via financial incentives for individuals’ adopting healthy behaviors, or physicians’ prescribing lower-cost generic or follow-on drugs; default rules around end-of-life care and surrogate decision-makers, as well as the aforementioned automatic insurance enrollment; choice architecture to guide consumers’ decisions among health insurance plans, and physicians’ recommendations around treatment alternatives; and strategies to address other cognitive biases, including patients’ unchecked deference to physicians’ recommendations.
The book does not, however, does not operate as an untempered valentine to the behavioral law and economics school of thought. Rather, a number of the contributors offer critical, skeptical, or cautionary notes about the theory’s ability to operate effectively in health care. Criticisms include the possibility that choice architecture may be overly coercive, obscure individuals’ true preferences, backfire with unintended results, serve social aims at the expense of individual rights, or be the result of law- and policymakers’ own biases and judgment errors. Including those voices gives the overall volume greater credibility and balance than if the book had neglected them. In sum, Nudging Health deserves its own place in the cannon of health law and policy, and health economics, literature. I anticipate that the conversations and suggestions that it sparks will find their way into many important academic and lawmaking circles.
Jessica L. Roberts & Elizabeth Weeks Leonard, What Is (and Isn't) Healthism
, 50 Ga. L. Rev.
833 (2016), available at SSRN
As we are all aware, the current political time is one of great upheaval and unsureness in numerous areas, with health care and the health care system repeatedly taking center stage. The change in the presidential administration coupled with the Republican majority in both houses of Congress have led to many new approaches to the health care system being proposed, debated, hurriedly being voted on, amended, withdrawn, and subjected to a hot and passionate debate. As this is going on, recent polling has made it clear that a significant percentage of the voting population in this country had no or minimal understanding about how health care laws affect them and their loved ones, leading to a pattern of voting in the 2016 elections that often appeared to be against voters’ self-interest.
As we grapple with analyzing and communicating the ramifications of proposed changes, the analytic approach to assessing the effect of health care policy delineated in Roberts’ and Weeks Leonard’s article, What is (and isn’t) Healthism, has much to offer in a climate wildly different than the one in which it was written. Healthism, as this article and a forthcoming book define it, is a form of discrimination based on a person’s health status. As the article states in the introduction, the passage of the Affordable Care Act in 2010 created significant protections for persons with health problems. For example, that law prevents discrimination in the health insurance market against those with preexisting conditions. Taking the question of disparate treatment further, the authors consider the possibility that a person’s health status could be the basis for disparate treatment in a number of other areas, such as employment and the provision of services, privileges, or opportunities. In light of the possibility of multiple arenas for this type of discrimination, the article asks when, if at all, the law should intervene to protect persons from these wrongs, and then presents a framework for answering that question.
The article is excellent, and gives an engaging analysis of this issue. Of particular interest to me in the current environment is the authors’ analytic framework for determining if healthism has occurred. There are seven different elements to guide the analysis, and health status distinctions that meet one or more of these elements are healthist and deserving of legal or policy intervention. The elements are as follows: If a distinction is 1. Driven by animus, 2. Stigmatizes individuals unfairly, 3. Punishes people for their private conduct, 4. Impedes access to health care, 5. Cuts off resources or otherwise limits the ability to adopt healthy life choices, 6. Produces worse health outcomes, or 7. Maintains or increases existing disparities, it is likely healthist.
One can add an examination of intersectionality as it relates to these elements, and to healthism, generally. Numerous groups of people are already at risk of baseless disparate treatment due to ethnicity, religion, gender, sexual or gender identity, disabilities, and numerous other criteria. Healthism can become much more harmful when it is combined with these unjust burdens.
Utilizing this framework to identify healthism and to pinpoint the occurrence of intersectionality that compounds injustice gives a crisp and comprehensible framing for the analysis of proposed changes to the health care system, and does so in a way that I think helps people outside of health policy understand more clearly what the proposed changes mean to them.
For example, the changes to Medicaid proposed in current Congressional legislative proposals include changes that are extremely damaging to people who are vulnerable to healthism. The proposed changes cut off access to health care by gradually eliminating Medicaid benefits. The changes impede people’s capacity to pursue a healthy lifestyle by imposing rigid work requirements as a prerequisite to receiving care. Analyzing the law through a lens of intersectionality, it becomes clear that it would have a disparate impact on the elderly who live in nursing homes, on women who rely on Medicaid for access to family planning and to maternity care, and on those who have disabilities, who often receive the bulk of their therapy, home care and health care through this program. Data already consistently show that minorities have poorer health outcomes and lesser access to care in the current system, and the changes would exacerbate those problems.
I highly recommend this article, and this method for analyzing future proposed systemic changes in an effort to educate and give voice to those who will suffer the most.
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.
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.
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
(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/