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Abstract:
This article explores the hypothesis that the U.S. health care system operates more like a robber baron than like Robin Hood, burdening ordinary payers of health insurance premiums disproportionately for the benefit of industry interests and higher-income consumer-taxpayers. Thus, lower- and middle-income Americans with health coverage pay not only for their own families' health care but also to support a vast health care enterprise that primarily benefits others, including many far more affluent than themselves. The system is able to finance itself in part because U.S.-style health insurance greatly amplifies price-gouging opportunities for health care firms with market power, creating a cost burden that falls ultimately on all premium payers equally, like a severely regressive head tax. Moreover, these same consumers also bear excessive costs for their own health care because, not seeing the costs they bear with any clarity (since the tax system makes those costs appear to fall on their employers rather than themselves), they demand unnecessarily costly coverage and resist efforts to economize - all to the benefit of the health care industry and others with reasons to value high-cost medicine. Lower-income insureds also appear, for several reasons, to get less out of their employers' health plans than their higher-income coworkers, despite paying the same premiums. Finally, insured individuals' lack of cost-consciousness also affects their attitudes and behavior as citizens and as voters, enabling politicians as well as industry interests to make choices on their behalf that systematically raise costs and foreclose economizing possibilities. The burden of excess health care costs and how it is distributed is rarely recognized as the fundamental issue of social justice it is. The purpose of this article is to make the question who pays and who benefits a principal concern of health policymakers.

Abstract:
This article recommends statutory language to establish as a general rule that health plans are vicariously, and exclusively, liable for medical malpractice and other torts committed by health care providers whom they procure to treat their enrollees. Since this would be only the default rule, health plans would be allowed to shift liability risks downstream to subcontractors in a better position to bear responsibility for the quality of care -- who will in most cases also be responsible for the costs of the promised medical services. This new, more nuanced version of what has previously been called "enterprise liability" is predicated on the policy view that health plans should be presumptively accountable for the quality of care just as they are currently accountable for the cost of it. A major theme is that giving managers of care a new, stronger reason to be concerned about quality would go far toward aligning the interests of plans, providers, and patients, reducing severe tensions that have so far caused managed care to fall (far) short of expectations.

After characterizing the managed-care revolution as "half-baked," the article stresses the need for quality improvement throughout the entire health care industry and thus for more acceptance of corporate responsibility for clinical care. It then explains the proposal and advocates its adoption, specifically allaying concerns that vicarious liability would adversely affect the professionalism of physicians. The current law on vicarious liability is examined to show why legislation is needed even though courts are increasingly exposing health plans to various forms of liability. The article also briefly addresses predictable objections to relying on tort law as a source of incentives to improve the quality of care.

Abstract:
This article recommends statutory language to establish as a general rule that health plans are vicariously, and exclusively, liable for medical malpractice and other torts committed by health care providers whom they procure to treat their enrollees. Since this would be only the default rule, health plans would be allowed to shift liability risks downstream to subcontractors in a better position to bear responsibility for the quality of care -- who will in most cases also be responsible for the costs of the promised medical services. This new, more nuanced version of what has previously been called "enterprise liability" is predicated on the policy view that health plans should be presumptively accountable for the quality of care just as they are currently accountable for the cost of it. A major theme is that giving managers of care a new, stronger reason to be concerned about quality would go far toward aligning the interests of plans, providers, and patients, reducing severe tensions that have so far caused managed care to fall (far) short of expectations.

After characterizing the managed-care revolution as "half-baked," the article stresses the need for quality improvement throughout the entire health care industry and thus for more acceptance of corporate responsibility for clinical care. It then explains the proposal and advocates its adoption, specifically allaying concerns that vicarious liability would adversely affect the professionalism of physicians. The current law on vicarious liability is examined to show why legislation is needed even though courts are increasingly exposing health plans to various forms of liability. The article also briefly addresses predictable objections to relying on tort law as a source of incentives to improve the quality of care.

Abstract:
While American policymakers and commentators have traditionally focused on three aspects of the health care system - access, cost, and quality - they have neglected an arguably coequal fourth issue: equity in the distribution of health care costs and benefits. This brief introduction to a symposium volume entitled Who Pays? Who Benefits? Distributional Issues in Health Care suggests that the American health system takes excessive resources from working-class payers of health insurance premiums to finance an industry that serves the interests of others far better than their own. In addition to summarizing several aspects of the unfairness problem, the Foreword urges policymakers and the academic community to pay greater attention to issues of distributive justice in health care, lays out a research agenda for extending the work begun by the symposium's contributors, and expresses the hope that deeper understanding will add to the urgency of reforming American health care.

Abstract:
This short comment suggests a connection, so far unrecognized, between two antitrust cases currently awaiting decision by the Supreme Court. In one case, the Court is likely, though not certain, to overturn the long-standing rule that resale price maintenance is illegal per se. If that should occur, another case on the Court's docket, involving the scope of the implied antitrust immunity enjoyed by underwriters of corporate securities offerings, would (or should) look very different. This comment suggests that, if the law of vertical restraints is finally rationalized so that an issuer of a security may lawfully restrict price and other competition among its distributors, the traditional basis for inferring a congressional intention to exempt securities offerings from the Sherman Act (a "clear repugnancy" between two statutory regimes) would at least arguably disappear. Although the justices are unlikely to see the point in the pending case on underwriter immunity, there might be room for future antitrust challenges to horizontal restraints conceived and implemented by underwriters in IPOs.

Abstract:
Although federal judges have resisted giving due effect to standard antitrust principles in scrutinizing mergers of nonprofit hospitals, the presence of health insurance makes it especially important to oppose monopoly in health services markets. U.S.-style health insurance gives monopolist providers extraordinary pricing freedom, thus exacerbating monopoly’s usual redistributive effects. Significant allocative inefficiencies - albeit not the kind generally associated with monopoly - also result when the monopolist is a nonprofit hospital. Because it is probably impossible to undo past hospital mergers creating undue market power, we suggest another remedy: the application of antitrust rules against "tying" arrangements so that purchasers can more easily frustrate hospitals' profit-enhancing practice of overcharging for large bundles of services rather than separately exploiting each monopoly they possess.

Abstract:
Although health savings accounts (HSAs) and managed health care are often seen as antithetical, they can be integrated in fruitful ways. Moreover, combining these approaches will serve policy objectives by clarifying the payment responsibilities of patients, health plans, and premium payers, thus altering important perceptions about health care decision making. The availability in HSAs of funds that patients can use to pay for services found not covered under insurance contracts should help to re-legitimize predetermination of benefits and enable the public and the legal system to take a more benign view of corporate health plans as agents of their subscribers.

Managed Health Care, Health Savings Accounts, Health Law, Health Insurance

Abstract:
The so-called state-action doctrine is a judicially-created formula for resolving conflicts between federal antitrust policy and state policies that seem to authorize conduct that antitrust law would prohibit. Against the background of recent commentaries by the federal antitrust agencies, this Article reviews the doctrine and discusses its application in the health care sector, focusing on the ability of states to immunize anticompetitive actions by state licensing and regulatory boards, hospital medical staffs, and public hospitals as well as anticompetitive mergers and agreements. Although states are free, as sovereign governments, to restrict competition, the state-action doctrine requires that the state itself make the decision to do so. Partly on the basis of problems in the political environment, the Article criticizes courts for using a mere foreseeability test to decide whether a state legislature sufficiently authorized competitors to act in contravention of clear federal policy: Few things are more foreseeable than that a trade or profession empowered to regulate itself will produce anticompetitive regulations.

Abstract:
Beginning in the 1970s, some reformers envisioned something like a true revolution in American health care, one that would install "a truly democratic regime based on competition and real consumer choice." This article explains why that revolution never achieved its most ambitious goals. After noting some ground gained by consumers as a result of antitrust enforcement and other reforms leading to the managed-care movement, it considers the complex reasons why modern health plans ultimately failed (1) to effectively integrate the provision of health care with its financing, enabling them to manage trade-offs in the interest of their subscribers; (2) to offer consumers a full range of health care options, including not only expensive, ostensibly high-quality care and coverage but also appreciably cheaper versions of possibly lesser quality; and (3) to earn consumers' trust as their post-revolutionary representatives and allies in the battle against high health care costs and entrenched professional power.

The article then turns to an appraisal of the political economy of American health care law and policy to show why the health care revolution never had a realistic chance to empower ordinary consumers. Whereas most analysts believe that health care markets are doomed to fail because consumers are ignorant concerning the quality of care, the article argues that a much greater problem is consumers' ignorance concerning the cost of their health coverage – an ignorance that is not inevitable but is instead fostered by the way government subsidizes health care (either through direct public financing or indirectly through the tax system). The result of this contrived ignorance, at least in the private sector, is a special kind of moral hazard – not the unavoidable kind inherent in third-party health insurance but the "one that operates when employers, government, and the legal system write prescriptions [with hidden costs] which consumers must pay." The article includes an innovative model of majoritarian and interest-group politics that explains not only "over-regulation" – that is, cost-increasing legal requirements that benefit the majority at the expense of the (lower-income) minority – but also "hyper-regulation," which (once hidden costs are counted) diminishes the welfare of the great majority of voters while benefitting only the health care industry and its upper-income patrons.

The article then identifies some additional respects in which the American health care system, especially since the successful counter-revolution against managed care, appears to be scandalously regressive. Among other likely sources of systematic regressivity – besides regulatory standards biased against low-income consumers – are the following: employers' tendency to design benefits to serve the interests and preferences of their higher-income employees; providers' tendency to tailor clinical choices according to patient expectations, which may vary according to income; discrepancies in the ability of higher- and lower-income patients to "work the system," especially now that consumers possess extensive appeal rights (e.g., Rush-Prudential HMO, Inc. v. Moran); the probable disparate impact of cost sharing on high- and low-income individuals' consumption of insured services; and the way the tort system distributes its costs (equally) and benefits (unequally, at least insofar as it compensates for lost income). To be sure, empirical evidence is lacking concerning how much more or less care certain income groups consume than they pay for. But the article observes many respects in which the American health care system appears to serve elite interests at the expense of the majority of ignorant consumers/employees/voters, who are not only denied by law the chance to opt for cheap health coverage (with public subsidies ensuring basic adequacy) but often forced to forgo health coverage altogether. The article concludes by speculating about the (mostly discouraging) prospects for restarting the health care revolution, so that the American health care system can finally serve all Americans well.

Abstract:
In this lecture, the author attributes the political backlash against managed care to a health care marketplace in which consumers have virtually no autonomy or sense of participation in choosing a health plan. Because choices are made either by consumers themselves in ignorance concerning the true costs and trade-offs involved or collectively through employment groups, market outcomes -- whatever people find themselves stuck with ex post -- cannot plausibly be said to be validated, even presumptively, because people had a reasonable opportunity to choose ex ante. Lacking the legitimacy that choice, deliberately exercised, confers in a democratic system, managed care firms cannot reasonably hope to deflect criticism when their practices cause discontent. Likewise, the signals seemingly being sent by the public to policy makers are misleading as indicators of the true nature of the health care system's problems.

The author then provides a formal demonstration of the likelihood that democratic government will take excessive regulatory measures to appease unhappy consumers, erring systematically in the direction of protecting upper middle class consumers at the expense of middle- and lower-income ones. Further observations lead to an indictment of a political system that "remains wedded to providing health coverage through regressive tax subsidies, employment-based groups, and highly regulated health plans, all mechanisms through which the expensive tastes of [the elite minority] are invisibly subsidized by persons with either lower expectations or less ability to command attention to their health problems."

The lecture concludes by suggesting some non-prescriptive policies, including candid disclosure, better contracts, and greater legal accountability, that would enable managed care plans to achieve the legitimacy they need to serve (all) consumers well.

Abstract:
The plaintiffs in pending consumer class-action lawsuits against health maintenance organizations (HMOs) contest the legality of certain practices of managed care plans and seek far-reaching relief, including both money damages and injunctions shaping the way modern health plans conduct their businesses. The plaintiffs should fail in their claims for damages for consumer fraud under federal racketeering legislation because the circumstances in which HMOs introduced cost controls into a market previously lacking them suggest motives not deserving punitive sanctions. But courts could easily find that HMOs violated the Employee Retirement Income Security Act (ERISA). Not only have HMOs arguably breached their duty as ERISA fiduciaries to disclose their business methods (including their relationships with physicians), but they also have not strictly honored their generous contractual promises with respect to coverage. Injunctive relief compelling more extensive disclosures and clearer contracts with subscribers might legitimize HMOs' methods and generally improve the performance of the health care marketplace.

health maintenance organizations, class actions, consumers, health law, ERISA