Author Archive | David Hyman

Is Repealing McCarran-Ferguson Health Reform?

H.L. Mencken once observed that for every human problem, there is a solution that is “neat, plausible, and wrong.”   Exhibit A is the “Health Insurance Industry Fair Competition Act” – also known as H.R. 4626.  This bill seeks to repeal the antitrust exemption granted to health insurance companies by the McCarran-Ferguson Act.  The Obama Administration has thrown its support behind the proposal, and it passed the House of Representatives two days ago by an overwhelming bipartisan vote of  406-19.

The stated purpose of repeal is to increase competition in the health insurance market and thereby lower premiums.  Thus, Senate Majority Leader Harry Reid argued that “there is no reason why insurance companies should be allowed to form monopolies and dictate health choices.”  Rep. Betty McCollum asserts that repeal “will save every family in America who purchases health insurance at least 10 percent” on their premiums.  Representative Tom Perriello, one of the sponsors of H.R. 4626 stated at a press conference last week that “Americans deserve to know who stands with them against the price gouging of middle-class and working-class folks.” In October, 2009, Senator Charles Schumer stated that the exemption “is one of the worst accidents of American history, [and] it deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable.”

Professor (and former Secretary of Labor) Robert Reich argues in the New York Times that exemption is “why a handful of insurers have become so dominant in their markets that their customers simply have nowhere else to go.”  At the health reform summit yesterday, Speaker Nancy Pelosi stated that the overwhelming vote to repeal the exemption was “a very strong message that, yes, the insurance companies need to be reined in.”

Some background is helpful in evaluating [...]

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The Perils of High Public Office: II

National Review Online just posted a piece that I did on the Medicare Catastrophic Coverage Act, and its implications for our latest efforts at health (insurance) reform.

Here’s the conclusion of the piece:

No one can predict whether the latest effort at health-care reform will meet a similar ignominious defeat. But this story does hold lessons for the current debate.

First, health care is personal. If you mess with people’s health coverage, they won’t just write a nasty letter to the editor. They will show up at demonstrations with home-made signs, scream at you, chase you down the street, and maybe vote you out of office. So you’d better have a good reason for doing what you’re doing, and a compelling explanation of how your plan would personally benefit your constituents.

Second, framing is critical. The Obama administration has shifted ground several times, trying to find a frame that will persuade voters. It remains to be seen whether the latest frame — it’s about providing people with insurance; insurers are evil, and the reforms will make them behave — will stick.
Update: today’s new framing is that health reform is “a core ethical and moral obligation.”

Third, don’t assume that people who disagree with you are stupid, misinformed, greedy, or evil. They may just have different preferences about health insurance, taxes, income redistribution, or the role of government in health care. If preferences differ, telling people they can’t understand the complexities won’t help matters. Such condescension just makes aggrieved citizens angrier.

Fourth, be lucky. The administration had better hope that the elderly don’t figure out that reform will be paid for, in part, with hundreds of billions in “savings” from cutting Medicare. (In past years, Democrats routinely savaged Republicans for proposing far smaller Medicare cuts.) If seniors figure this one [...]

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The Perils of High Public Office

CBS News has dug up some video of Rep. Dan Rostenkowski being chased down the street by a crowd of angry seniors. This event took place twenty years ago next Monday — August 17, 1989.

Here’s Rostenkowski starting at 1:35 in the video:

Rostenkowski: I don’t think they understand what the government’s trying to do for them.

Reporter: Do you sympathize with their anger on this?

Rostenkowski: No, I don’t think they understand what’s going on.

As this book makes clear, Rostenkowski was comfortably within the mainstream of Congresssional and elite media opinion in dismissing the objections of his constituents as uninformed, ill-founded, or rabble-rousing. But, the day had long-term consequences. As the New York Times observed in a 2002 article, “the television images of Mr. Rostenkowski under assault struck fear in the hearts of politicians that remains to this day. Few want to be pitted against older people on issues involving Medicare. ‘Politicians were traumatized by the Rostenkowski episode and they remain traumatized,’ said Henry J. Aaron, a senior fellow at the Brookings Institution.”

I devote a few pages of my book on Medicare to the subject. [...]

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Antibiotic Resistance II

Today’s Wall Street Journal has a nice short piece juxtaposing the reaction to swine flu and to antibiotic resistance. It begins as follows:

In March of this year an epidemic of H1N1 influenza virus, otherwise known as swine flu, began in Mexico. It spread to the United States within weeks and has since affected over 100 countries. Between the start of the outbreak and the end of July, a total of 1,154 people worldwide had died of the virus, about one-third of them in the U.S.

The World Health Organization and other public-health agencies have responded to the epidemic with appropriate urgency. International organizations have disseminated information and guidelines and coordinated with public authorities across the globe to ensure an effective response. The pharmaceutical industry is developing antiviral agents and vaccines and producing them on a mass scale.

The U.S. also has responded rapidly and forcefully. Just two weeks after the report of the first case on American soil, President Barack Obama asked Congress to allocate $1.5 billion to fight the virus.

Compare this response to the scant media and political attention that have been given to several silent but no less deadly outbreaks of disease in recent years caused by antibiotic-resistant bacteria. Most such outbreaks are treated as the poor stepsisters of pandemic influenza, even while they have killed far more people than swine flu over the same period.

Per my previous post, I’ve got a new article on the problem of antimicrobial resistance, which is currently out at the law reviews. One of them rejected it in 5 hours, which is a new record for me. My coauthor and I are debating whether this is an example of market efficiency, rational ignorance, or satisficing.

The previous post was headed “Only Two Things Scare Me.” Most commentators got the [...]

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Only Two Things Scare Me:

And one of them is antibiotic resistance. Along with my regular co-author, Bill Sage, I’ve just sent off a new article to the law reviews, titled Combating Antimicrobial Resistance: Regulatory Strategies and Institutional Capacity.

Antibiotic resistance is a major public health problem. Every year, two million Americans acquire bacterial infections in the hospital, and 70% of those infections are resistant to at least one antibiotic. MRSA (methicillin-resistant Staph aureus) has attracted the most media attention: the CDC estimated that MRSA caused 94,000 life-threatening infections, and 18,650 deaths in 2005.

Congress and many states are currently debating legislation to reduce antibiotic resistance. The article blends regulatory theory and comparative institutional analysis to explain how we can use regulation to lower the risk of antibiotic-resistant bacterial infection, rationalize the use of existing antibiotics, and encourage innovation. We canvass the full range of regulatory options that are available, and explain the compatibility or incompatibility of particular regulatory strategies with existing legal and regulatory systems.

Here’s the abstract of the article:

Amnesia is a common, important, but rarely noted side effect of antibiotics. Apart from medical historians, few recall the severe morbidity and mortality once associated with acute bacterial infection. However, decades of antibiotic overuse and misuse have compromised the long-term availability and efficacy of these life-saving therapies. If designed and implemented appropriately, regulation can reduce the risk of bacterial infection, reserve antibiotics for circumstances where they are necessary, and rationalize the use of the most powerful agents. Regulation of antibiotic resistance can be justified, and should be guided, by both efficiency and fairness. A range of regulatory options are available – some information-based, some incentive-based, some command-and-control – each of which has indications, strengths, and weaknesses. A desired set of regulatory strategies must then be matched with the appropriate legal and regulatory

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Grassroots Activism For Me, But Not For Thee

Democratic legislators are complaining vigorously about the push-back they are receiving on health reform during town hall meetings. House Majority Leader Pelosi stated that reform opponents were “carrying swastikas and symbols like that to a town meeting on healthcare” and dismissed them as “Astroturf” rather than a grassroots movement. An editorial cartoon in the Washington Post similarly suggests that the protests are being orchestrated.

Senator Reid views protesters as a “fringe that is trying to mess up our meetings.” The White House Deputy Chief of Staff has advised legislators if “If you get hit, we will punch back twice as hard.” The Administration is asking individuals who hear things that are “fishy” to submit them by email.
Paul Krugman concedes that anti-privatization activists” who opposed social security reforms during the Bush Administration were “sometimes raucous and rude, [but] I can’t find any examples of congressmen shouted down, congressmen hanged in effigy, congressmen surrounded and followed by taunting crowds.” Krugman concludes this is “something new and ugly” – and reforms opponents must be motivated at least in part by racism.

Krugman’s claim that protests of this sort are unprecedented is wrong. A virtually identical scenario played out in 1989. By an overwhelming margin, Congress had enacted the Medicare Catastrophic Coverage Act in 1988. The Act provided more extensive hospitalization benefits and prescription drug coverage, but it imposed the costs of that benefit on the elderly.

Congress was soon flooded with angry letters and there were numerous confrontations with angry constituents when individual congressmen returned to their districts. As Andrea Mitchell observed on ABC News, “the elderly are not against the new benefits – unlimited hospital care, new at-home benefits, prescription drug coverage; they just don’t want to pay for them.”

The turning point came on August 17, 1989, when [...]

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Illinois Admissions Review Commission

The State of Illinois Admissions Review Commission is scheduled to release its report/recommendations tomorrow on its investigation into admissions practices at the University of Illinois. The University of Illinois’ website on the Commission is here. (Former Dean) Heidi Hurd’s written submission to the Commission is here. Those interested in reading her testimony will find it here, along with testimony from (Current Dean) Bruce Smith. [...]

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Paying Health Care Providers: How to Make Agency Problems Worse:

Over the weekend, the New York Times had a nice short piece about how the way we compensate health care providers can create problematic incentives. By and large, Medicare pays providers on a fee-for-service basis – tied to patient encounters and services provided, rather than the results of those interactions. For hospitals, this takes the form of a flat payment for each hospitalization, with the specific amount determined by the discharge diagnosis. (Physicians are paid through a separate system, which creates its own difficulties).

This payment structure for hospitals has advantages compared to the cost-based reimbursement system it replaced, but it is far from perfect. The article focuses on one specific manifestation of the problem – hospital readmissions within a short time (<30 days) of discharge. Unless the readmission is within a very short time frame, or otherwise indicates "gaming" of the reimbursement system, the hospital will be paid for both admissions.

Readmissions may reflect poor quality care, but they need not. However, eliminating readmissions that result from poor quality care results in a better outcome for the patient, lower spending on health care for the payor, and a reduction in income for the provider:

Millions of patients each year leave the hospital only to return within weeks or months for lack of proper follow-up care. One in five Medicare patients, for example, returns to the hospital within 30 days. Over all, readmissions cost the federal government an estimated $17 billion a year.

But even when hospitals find ways to greatly reduce the return trips, saving money for Medicare and other insurers, their efforts go unrewarded. In fact, because insurers typically pay hospitals to treat patients — not to keep them away by keeping them healthy — hospitals can actually lose money by providing better care. Empty beds mean lost revenue.

The article gives two concrete examples of institutions that lowered their readmission rate, but suffered substantial reductions in income as a result. One has discontinued the program, and [...]

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The Duty To Rescue, or How Kind Are Strangers?

The absence of a generalized duty to rescue is a perennial feature of the first year of law school. Generations of law students have learned of the existence of the no-duty rule by reading hypothetical cases of babies who drowned in puddles while Olympic swimmers stood by and did nothing, and real cases, such as Yania v. Bigan and Kitty Genovese in which bystanders did not intervene or notify the police when someone required rescue — with tragic results. The no-duty rule prevails in most of the United States, but it is not popular. As I noted in an 2006 article in the Texas Law Review, incidents of non-rescue seem to result in a predictable cascade of events:

When a case of non-rescue becomes public, newspaper editorials and television commentators will denounce the indifference of bystanders. If the non-rescuers can be identified, they will be held up to public scorn. The responsible district attorney will reluctantly acknowledge that the criminal law is powerless in such cases while condemning the non-rescuers on moral grounds. If a tort case is actually brought against a non-rescuer, the judge will throw it out, but note that the non-rescuer must answer to God for failing to act. Politicians will introduce legislation reversing the common law rule. Comparisons will be drawn to other infamous cases of non-rescue, such as Kitty Genovese.

In short order, academic conferences and symposia will be held at which speakers will criticize the no-duty rule and the indifference of bystanders. Communitarians will suggest that Americans are insufficiently civic minded. Social meaning scholars will suggest that the no-duty rule is sending the wrong

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Health Reform: ERISA and Pay or Play II

San Francisco is not the only place to adopt a pay or play initiative. In the past few years, Maryland, Massachusetts, and Suffolk County, New York have all adopted such statutes. California adopted a pay or play statute in 2003, but it was overturned by Proposition 72 in the 2004 election. These statutes required employers to spend at least a specified percentage of their payroll (Maryland) or a specific amount per worker per hour (Suffolk County) or their [...]

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