Abstract

http://ssrn.com/abstract=1849873
 


 



Who Pays? Who Benefits? Unfairness in American Health Care


Clark C. Havighurst


Duke University School of Law

Barak D. Richman


Duke University - School of Law

June 13, 2011

Notre Dame Journal of Law, Ethics and Public Policy, Vol. 25, p. 101, 2011

Abstract:     
In several ways, traditional health care financing has long been unfair to middle- and lower-income insureds. A major problem is monopoly pricing of many services and goods. Although the point is seldom recognized, American-style health insurance greatly aggravates the redistributive effects of monopoly by weakening the usual constraints on sellers’ pricing freedom. Moreover, lucrative monopoly is often tolerated as an expedient instrument of public finance through which seemingly desirable spending on health care or health-related innovation is financed by the equivalent of an unfair head tax on individuals with private coverage.

Other underappreciated unfairnesses are specific to employer-sponsored health coverage and to the distorted incentives and perceptions spawned by the tax subsidy encouraging it. Because employer-sponsored coverage effectively hides premium costs from the employee-voters who ultimately bear them, middle- and lower-income employees regularly bear the unjustifiably high and uncontrolled costs of health coverage designed principally to accommodate the values and economic interests of the health care industry and other elites. These same consumers also appear to get less, as a group, out of their employers’ health plans than their higher-income coworkers, despite bearing equivalent premium costs.

The Patients Protection and Affordable Care Act (PPACA) does little to alter the framework of employer-sponsored coverage and thus represents a missed opportunity to rectify its unfairness to the working class. Although the law’s main purpose is to ensure that nearly all individuals either have employer coverage or procure “essential health benefits” through an Exchange, it defines the latter new entitlement in such a way as to perpetuate, not correct, the distortions engendered by the tax subsidy. In addition, the new law not only has no answer for the provider monopoly problem but is likely to increase wealth transfers from consumers to providers.

Number of Pages in PDF File: 34

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Date posted: May 26, 2011 ; Last revised: August 3, 2012

Suggested Citation

Havighurst, Clark C. and Richman, Barak D., Who Pays? Who Benefits? Unfairness in American Health Care (June 13, 2011). Notre Dame Journal of Law, Ethics and Public Policy, Vol. 25, p. 101, 2011. Available at SSRN: http://ssrn.com/abstract=1849873

Contact Information

Clark C. Havighurst
Duke University School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
919-613-7061 (Phone)
919-613-7231 (Fax)
Barak D. Richman (Contact Author)
Duke University - School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
919-613-7244 (Phone)
919-613-7231 (Fax)
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