an unanticipated consequence of
Jack M. Balkin
Jack Balkin: jackbalkin at yahoo.com
Bruce Ackerman bruce.ackerman at yale.edu
Ian Ayres ian.ayres at yale.edu
Mary Dudziak mary.l.dudziak at emory.edu
Joey Fishkin joey.fishkin at gmail.com
Heather Gerken heather.gerken at yale.edu
Abbe Gluck abbe.gluck at yale.edu
Mark Graber mgraber at law.umaryland.edu
Stephen Griffin sgriffin at tulane.edu
Bernard Harcourt harcourt at uchicago.edu
Scott Horton shorto at law.columbia.edu
Andrew Koppelman akoppelman at law.northwestern.edu
Marty Lederman msl46 at law.georgetown.edu
Sanford Levinson slevinson at law.utexas.edu
David Luban david.luban at gmail.com
Gerard Magliocca gmaglioc at iupui.edu
Jason Mazzone mazzonej at illinois.edu
Linda McClain lmcclain at bu.edu
John Mikhail mikhail at law.georgetown.edu
Frank Pasquale pasquale.frank at gmail.com
Nate Persily npersily at gmail.com
Michael Stokes Paulsen michaelstokespaulsen at gmail.com
Deborah Pearlstein dpearlst at princeton.edu
Rick Pildes rick.pildes at nyu.edu
Richard Primus raprimus at umich.edu
K. Sabeel Rahmansabeel.rahman at brooklaw.edu
Alice Ristroph alice.ristroph at shu.edu
Neil Siegel siegel at law.duke.edu
Brian Tamanaha btamanaha at wulaw.wustl.edu
Mark Tushnet mtushnet at law.harvard.edu
Adam Winkler winkler at ucla.edu
As Congressional committees have begun to specify exactly how "competition" among insurers would lower costs, they've realized that we need to do a lot more than increase regulatory scrutiny and add insurers to the mix. Rather, just as Medicare took care of elderly persons unlikely ever to be profitably covered by private insurers, a new option is needed to address the needs of impoverished or sick citizens unlikely ever to pay profitable premiums to Aetna, Cigna, and their ilk.
Why wasn't this apparent earlier? I think that closer scrutiny for a proposal to repeal the "antitrust exemption" for insurers has led to more serious consideration of what competition can and cannot do in the health care industry. As antitrust expert Tim Greaney explains, "the Supreme Court has narrowly interpreted McCarran-Ferguson requirement that only the 'business of insurance' is exempt; hence insurers’ actions vis a vis providers are not exempt." Lack of antitrust enforcement--and the market competition it's supposed to bring--can't fully explain insurers' failures here. Some commentators believe that application of antitrust laws to physicians and hospitals in the mid-1970s may even have spurred the development of a "medical-industrial complex" capable of displacing professional norms with profit-driven practices.
Mere promotion of competition, without more, also creates other dangers. Enforcing antitrust laws aggressively against insurers, while failing to balance that effort with similar scrutiny of providers, could lead to even higher health care costs. Do we really expect piecemeal antitrust enforcement, played out in fragmented and uncoordinated courts, to manage such balance? It is often the case that both providers and insurers are concentrated, powerful, and earning supracompetitive profits (whatever "supracompetitive" means in a realm so thoroughly marbled with regulation, subsidy, and barriers to entry).
Insurers are competing in many markets--they're just frequently doing so in ways that are socially unproductive. As I have noted before, there are effective competitive strategies for insurers that reduce social welfare overall. Given that the average insured stays in a plan for less than three years, the marketplace rewards insurers who put hurdles in front of expensive preventive care, or scramble to drop those with extensive medical needs. It also exacerbates the coverage crisis that necessitates health reform in the first place.
Genuine health reform will provide incentives for insurers to do things that actually improve individual and public health--programs such as transparent physician rating, preventive and chronic care programs, and intensive data analysis to promote evidence-based medicine. Like the V.A., a public option can be ordered to do such things. Moreover, it can be required to cover the costly or unprofitable individuals that private insurers won't touch. The government might "require" private health insurers to do the same, but I would not count on overwhelmed regulators to enforce such laws adequately.
Sadly, even when competition is exposed as an empty vessel, our language of discussing health care tends to gravitate back to it as an ideal. Fortunately, Daniel Callahan's recent essay on the "common good" as a justification for health reform provides a richer vocabulary of evaluation. Callahan has no illusions about transforming the current debate with a new language of moral evaluation, but his words are worth pondering:
I have not painted a hopeful picture about the common good in American health care. That simply does not seem possible. An abiding suspicion of government, a belief in the free market as an engine of prosperity (and thus, by an illogical leap, as an engine of good health care), and the majority’s fear that they may lose the benefits they already have—all this leaves little room for an embrace of the common good. Solidarity, the value behind European health-care systems, seems to me the best basis for universal care, better than justice or rights. But the sense of solidarity required for serious health-care reform cannot be wished into existence. . . .
Suffering, disease, and death are our common lot. They ought to be dealt with as our common problem. It is a shame that the kind of empathy and mutual support that Adam Smith understood to be a requirement of morality have not, in our culture, been extended to health care—extended to one another in the recognition that we all have bodies that go awry and fail. Instead we are offered a consumer model, a national Walmart of medical choice where we are all sharp-eyed purchasers getting the best possible deal for ourselves. A construal of the common good as the freedom of consumers to get what they want, indifferent to the fate of others, is a cheap substitute for the real thing.
Callahan is too pessimistic about the viability of an appeal he's helped craft. As Catherine Arnst has argued, a moral case for health reform--as either compassion for others or self-interest properly understood--is essential in current debates. Even the most self-centered person can imagine losing a job, a spouse, or another source of insurance. It seems paradoxical to expect the very companies that deny such coverage to offer it under government fiat. A public option is a logical response to our market--and moral--failure to separate the experience of illness from anxiety over potential financial ruin. As the Health Care Experts Bureau at Campaign for America's Future recognizes, a public option is the key to demonstrating that the same commitments to cost containment, universality, and basic fairness evident in Medicare can be brought to Americans not presently served by the private insurance industry.