Health Law and Policy Commons^™

The Irony Of Health Care’S Public Option, Allison K. Hoffman

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The idea of a public health insurance option is at least a half century old, but has not yet had its day in the limelight. This chapter explains why if that moment ever comes, health care’s public option will fall short of expectations that it will provide a differentiated, meaningful alternative to private health insurance and will spur health insurance competition.

Health care’s public option bubbled up in its best-known form in California in the early 2000s and got increasing mainstream attention in the lead up to the 2010 health reform, the Patient Protection and Affordable Care Act (ACA). The …

Compliance Management Systems: Do They Make A Difference?, Cary Coglianese, Jennifer Nash

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Regulatory compliance is vital for promoting the public values served by regulation. Yet many businesses remain out of compliance with some of the regulations that apply to them—presenting not only possible dangers to the public but also exposing themselves to potentially significant liability risk. Compliance management systems (CMSs) may help reduce the likelihood of noncompliance. In recent years, managers have begun using CMSs in an effort to address compliance issues in a variety of domains: environment, workplace health and safety, finance, health care, and aviation, among others. CMSs establish systematic, checklist-like processes by which managers seek to improve their organizations’ …

The Paradox Of Insurance, Gideon Parchomovsky, Peter Siegelman

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In this Article, we uncover a paradoxical phenomenon that has hitherto largely escaped the attention of legal scholars and economists, yet it has far-reaching implications for insurance law: loss-creation by uninsured parties caused by the presence of insurance. Contrary to the conventional wisdom, we show that insurance can create significant negative externalities by inducing third parties to engage in antisocial, illegal and unethical activities in order to extract money from insureds or insurers. Moreover, as the amount and scope of insurance grows, so does its distortionary effect on third parties. We term this phenomenon the paradox of insurance. The risk …

How Liability Insurers Protect Patients And Improve Safety, Tom Baker, Charles Silver

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Forty years after the publication of the first systematic study of adverse medical events, there is greater access to information about adverse medical events and increasingly widespread acceptance of the view that patient safety requires more than vigilance by well-intentioned medical professionals. In this essay, we describe some of the ways that medical liability insurance organizations contributed to this transformation, and we catalog the roles that those organizations play in promoting patient safety today. Whether liability insurance in fact discourages providers from improving safety or encourages them to protect patients from avoidable harms is an empirical question that a survey …

Unlocking Access To Health Care: A Federalist Approach To Reforming Occupational Licensing, Gabriel Scheffler

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Several features of the existing occupational licensing system impede access to health care without providing appreciable protections for patients. Licensing restrictions prevent health care providers from offering services to the full extent of their competency, obstruct the adoption of telehealth, and deter foreign-trained providers from practicing in the United States. Scholars and policymakers have proposed a number of reforms to this system over the years, but these proposals have had a limited impact for political and institutional reasons.

Still, there are grounds for optimism. In recent years, the federal government has taken a range of initial steps to reform licensing …

Health Care's Market Bureaucracy, Allison K. Hoffman

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The last several decades of health law and policy have been built on a foundation of economic theory. This theory supported the proliferation of market-based policies that promised maximum efficiency and minimal bureaucracy. Neither of these promises has been realized. A mounting body of empirical research discussed in this Article makes clear that leading market-based policies are not efficient — they fail to capture what people want. Even more, this Article describes how the struggle to bolster these policies — through constant regulatory, technocratic tinkering that aims to improve the market and the decision-making of consumers in it — has …

En-Gendering Economic Inequality, Michele E. Gilman

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We live in an era of growing economic inequality. Luminaries ranging from the President to the Pope to economist Thomas Piketty in his bestselling book Capital in the Twenty- First Century have raised alarms about the disparity between the haves and the have-nots. Overlooked, however, in these important discussions is the reality that economic inequality is not a uniform experience; rather, its effects fall more harshly on women and minorities. With regard to gender, American women have higher rates of poverty and get paid less than comparable men, and their workplace participation rates are falling. Yet economic inequality is neither …

The Developmental Effect Of State Alcohol Prohibitions At The Turn Of The 20th Century, Mary F. Evans, Eric Helland, Jonathan Klick, Ashwin Patel

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We examine the quasi-randomization of alcohol consumption created by state-level alcohol prohibition laws passed in the U.S. in the early part of the 20th century. Using a large dataset of World War II enlistees, we exploit the differential timing of these laws to examine their effects on adult educational attainment, obesity, and height. We find statistically significant effects for education and obesity that do not appear to be the result of pre-existing trends. Our findings add to the growing body of economic studies that examines the long-run impacts of in utero and childhood environmental conditions.

The Effect Of Any Willing Provider And Freedom Of Choice Laws On Prescription Drug Expenditures, Jonathan Klick, Joshua D. Wright

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Any Willing Provider and Freedom of Choice laws restrict the ability of managed care entities, including pharmacy benefit managers, to selectively contract with providers. The managed care entities argue this limits their ability to generate cost savings, while proponents of the laws suggest that such selective contracts limit competition, leading to an increase in aggregate costs. We examine the effect of state adoption of such laws on total state healthcare spending, finding that any willing provider/freedom of choice laws are associated with cost increases of at least 3 percent. These results suggest that these laws are harmful from a spending …

Conditional Spending And The Conditional Offer Puzzle, Mitchell N. Berman

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No abstract provided.

Health Care Spending And Financial Security After The Affordable Care Act, Allison K. Hoffman

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Health insurance has fallen notoriously short of protecting Americans from financial insecurity caused by health care spending. The Patient Protection and Affordable Care Act (“ACA”) attempted to ameliorate this shortcoming by regulating health insurance. The ACA offers a new policy vision of how health insurance will (and perhaps should) serve to promote financial security in the face of health care spending. Yet, the ACA’s policy vision applies differently among insured, based on the type of insurance they have, resulting in inconsistent types and levels of financial protection among Americans.

To examine this picture of inconsistent financial protection, this Article offers …

A Vision Of An Emerging Right To Health Care In The United States: Expanding Health Care Equity Through Legislative Reform, Allison K. Hoffman

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When asked to write a chapter on how litigation has advanced a right to health in the U.S., I responded skeptically, both because evidence of the existence of any such right is weak and the role of litigation in promoting its development is small at best. A snapshot of the U.S. health care system evinces the absence of even a more narrow right to health care – a guarantee of equitable access to basic medical care. Instead, it reveals a fragmented picture of public and private financing that leaves many people lacking meaningful access to care. More so, the places …

Anticompetitive Patent Settlements And The Supreme Court's Actavis Decision, Herbert J. Hovenkamp

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In FTC v. Actavis the Supreme Court held that settlement of a patent infringement suit in which the patentee of a branded pharmaceutical drug pays a generic infringer to stay out of the market may be illegal under the antitrust laws. Justice Breyer's majority opinion was surprisingly broad, in two critical senses. First, he spoke with a generality that reached far beyond the pharmaceutical generic drug disputes that have provoked numerous pay-for-delay settlements.

Second was the aggressive approach that the Court chose. The obvious alternatives were the rule that prevailed in most Circuits, that any settlement is immune from antitrust …

Can Consumers Make Affordable Care Affordable? The Value Of Choice Architecture, Eric J. Johnson, Ran Hassin, Tom Baker, Allison T. Bajger, Galen Treuer

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Starting this October, tens of millions will be choosing health coverage on a state or federal health insurance exchange as part of the Patient Protection and Affordable Care Act. We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most cost-effective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement. Without interventions, respondents perform at near chance levels and show a significant bias, overweighting out-of-pocket expenses and deductibles. Financial incentives do …

Coercion, Compulsion, And The Medicaid Expansion: A Study In The Doctrine Of Unconstitutional Conditions, Mitchell N. Berman

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The Supreme Court’s decision in National Federation of Independent Business v. Sebelius regarding the constitutionality of the Patient Protection and Affordable Care Act produced three main holdings concerning two critical provisions of the Act. The first two holdings concerned the “individual mandate” that requires most Americans to maintain “minimum essential” health insurance. The third holding concerned “the Medicaid expansion,” which expanded the class of persons to whom the states must provide Medicaid coverage as a condition for receiving federal funds under the Medicaid program. By a vote of 7-2, the Court struck down this provision as an impermissible condition on …

An Optimist's Take On The Decline Of Small-Employer Health Insurance, Allison K. Hoffman

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In their Article, Saving Small-Employer Health Insurance, Amy Monahan and Dan Schwarcz contend that the Patient Protection and Affordable Care Act (“ACA”) could be the death of small-group health insurance by incentivizing many small employers not to offer coverage. While their prediction that the ACA, after implemented, will destabilize the small-group insurance market may prove true, I argue why their prescription that it should be saved is flawed and why we may be better off without small group insurance.

Tontines For The Invincibles: Enticing Low Risks Into The Health-Insurance Pool With An Idea From Insurance History And Behavioral Economics, Tom Baker, Peter Siegelman

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Over one third of the uninsured adults in the U.S. below retirement age are between 19 and 29 years old. Young adults, especially men, often go without insurance, even when buying it is mandatory and sometimes even when it is a low cost employment benefit. This paper proposes a new form of health insurance targeted at this group—the “Young Invincibles”—those who (wrongly) believe that they don’t need health insurance because they won’t get sick. Our proposal offers a cash bonus to those who turn out to be right in their belief that they did not really need health insurance. The …

Oil And Water: Mixing Individual Mandates, Fragmented Markets, And Health Reform, Allison K. Hoffman

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With momentum toward national health reform, there is wide support for legislation to include an individual mandate that would require all Americans to carry health insurance. Discussion of the individual mandate has relied largely on whether the mandate will generate universal coverage as a gauge for success. This article challenges the notion that an individual mandate is successful if it leads to universal coverage, revealing a critical problem the individual mandate will face even if all Americans were to have health insurance. To uncover this problem, this article sets out a novel framework that disentangles the three different policy objectives …

Contingent Valuation Studies And Health Policy, Matthew D. Adler

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This short comment argues that both cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA) should be seen as imperfect tools for evaluating health policy. This is true, not only for extra-welfarists, but even for welfarists, since both CBA and CEA can deviate from the use of social welfare functions (SWF). A simple model is provided to illustrate the divergence between CBA, CEA, and the SWF approach. With this insight in mind, the comment considers the appropriate role of contingent-valuation studies. For full text, please see: http://www.law.upenn.edu/cf/faculty/madler/workingpapers/578A59B6d01.pdf.

Allowing Patients To Waive The Right To Sue For Medical Malpractice: A Response To Thaler And Sunstein, Tom Baker, Timothy D. Lytton

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This essay critically evaluates Richard Thaler and Cass Sunstein’s proposal to allow patients to prospectively waive their rights to bring a malpractice claim, presented in their recent, much acclaimed book, Nudge: Improving Decisions about Health, Wealth and Happiness. We show that the behavioral insights that undergird Nudge do not support the waiver proposal. In addition, we demonstrate that Thaler and Sunstein have not provided a persuasive cost-benefit justification for the proposal. Finally, we argue that their liberty-based defense of waivers rests on misleading analogies and polemical rhetoric that ignore the liberty and other interests served by patients’ tort law rights. …

The Effects Of Tort Reform On Medical Malpractice Insurers’ Ultimate Losses, Patricia Born, W. Kip Viscusi, Tom Baker

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Whereas the literature evaluating the effect of tort reforms has focused on reported incurred losses, this paper examines the long run effects using a comprehensive sample by state of individual firms writing medical malpractice insurance from 1984-2003. The long run effects of reforms are greater than insurers' expected effects, as five year developed losses and ten year developed losses are below the initially reported incurred losses for those years following reform measures. The quantile regressions show the greatest effects of joint and several liability limits, noneconomic damages caps, and punitive damages reforms for the firms that are at the high …

Torts And Innovation, Gideon Parchomovsky, Alex Stein

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This Essay exposes and analyzes a hitherto overlooked cost of the current design of tort law: its adverse effect on innovation. Tort liability for negligence, defective products, and medical malpractice is determined by reference to custom. We demonstrate that courts’ reliance on custom and conventional technologies as the benchmark of liability chills innovation and distorts its path. Specifically, the recourse to custom taxes innovators and subsidizes replicators of conventional technologies. We explore the causes and consequences of this phenomenon and propose two possible ways to modify tort law in order to make it more welcoming to innovation.

Risk Equity: A New Proposal, Matthew D. Adler

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What does distributive justice require of risk regulators? Various executive orders enjoin health and safety regulators to take account of “distributive impacts,” “equity,” or “environmental justice,” and many scholars endorse these requirements. But concrete methodologies for evaluating the equity effects of risk regulation policies remain undeveloped. The contrast with cost-benefit analysis--now a very well developed set of techniques --is stark. Equity analysis by governmental agencies that regulate health and safety risks, at least in the United States, lacks rigor and structure. This Article proposes a rigorous framework for risk-equity analysis, which I term “probabilistic population profile analysis” (PPPA). PPPA is …

Review Of Jonathan Baron, Against Bioethics, Chad Flanders

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This is a short review of a recent book by Jonathan Baron, entitled "Against Bioethics."

Diabetes Treatments And Moral Hazard, Jonathan Klick, Thomas Stratmann

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In the face of rising rates of diabetes, many states have passed laws requiring health insurance plans to cover medical treatments for the disease. Although supporters of the mandates expect them to improve the health of diabetics, the mandates have the potential to generate a moral hazard to the extent that medical treatments might displace individual behavioral improvements. Another possibility is that the mandates do little to improve insurance coverage for most individuals, as previous research on benefit mandates has suggested that mandates often duplicate what plans already cover. To examine the effects of these mandates, we employ a triple-differences …

Medical Malpractice Reform And Physicians In High-Risk Specialties, Jonathan Klick, Thomas Stratmann

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If medical malpractice reform affects the supply of physicians, the effects will be concentrated in specialties facing high liability exposure. Many doctors are likely to be indifferent regarding reform, because their likelihood of being sued is low. This difference can be exploited to isolate the causal effect of medical malpractice reform on the supply of doctors in high-risk specialties, by using doctors in low-risk specialties as a contemporaneous within-state control group. Using this triple-differences design to control for unobserved effects that correlate with the passage of medical malpractice reform, we show that only caps on noneconomic damages have a statistically …

Subsidizing Addiction: Do State Health Insurance Mandates Increase Alcohol Consumption?, Jonathan Klick, Thomas Stratmann

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A model of addiction in which individuals are forward looking implies that as the availability of addiction treatment options grows, individuals will consume more of an addictive good. We test this implication using cross-state variation in the adoption of mental health parity mandates that include substance abuse treatments. We examine the effects of these mandates on the consumption of alcohol and find that parity legislation leads to an increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, we perform an instrumental variables analysis and find that the ordinary least squares estimation …

Qalys And Policy Evaluation: A New Perspective, Matthew D. Adler

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“QALYs” (Quality-Adjusted Life Years) are a metric for health and longevity very widely employed by health researchers. Surveys are used to assign health states a quality ranking on zero-one scale, with zero representing a health state no better than death and one perfect health. The total QALY value of a health profile is calculated as the time spent in its component health states, each weighted by its quality. Until a few years ago, despite the huge academic literature on QALY measurement, this approach was seldom used by policymakers in the U.S. But there have been recent signs of governmental interest …