Topic: Regulatory Studies

For Affordable Health Insurance, Cross the Delaware

My brother (whose name, no joke, is Eugene) just moved to New Jersey with his wife (Katryce) and the two cutest nieces you ever saw (Helaina and Deaven). 

New Jersey is known as health insurance hell, so I went to eHealthInsurance.com to see how much it would cost Euge to purchase a family policy in New Jersey’s highly regulated individual market.  Answer: a lot.  In fact, some of his options cost more than my mortgage.  Meanwhile, our college buddy in Doylestown (Mike) has over five times as many choices for covering his wife and two daughters in Pennsylvania’s individual market.  And the most expensive policy in PA is about the same price as the least expensive plan in NJ.  If Euge were just to move his family in with his old roommate, he could save thousands on health insurance.

…or, Congress could just tear down the senseless trade barriers that keep New Jerseyites from purchasing health insurance from Pennsylvania.

Get the full story here.

AMA Curing Competition, Part Deux

I’ve received a couple of thoughtful e-mails from Dr. Thomas Davis (the Missouri physician, not the legendary basketball coach) concerning my earlier post criticizing the American Medical Association for wanting to rein in the emergence of retailer-based health care clinics. With Dr. Davis’s permission, I’m posting a few of his comments for readers’ consideration.

First, lest anyone want to straw man Dr. Davis as a pro-regulation, anti-market, rent-seeking weasel, he writes:

I would prefer a world where a patient can get any medication over the counter without a prescription, where doctors are not licensed, there is no insurance and patients paid cash at the time of service. Health care would be far more efficient and transparent in such a world.

He also stresses that he is not a member of the AMA and that he has some serious qualms with the organization.

Dr. Davis raises three concerns with the in-store clinics:

  1. If they are operating without direct physician supervision, the clinics lack important medical expertise, and many customers could suffer unnecessary medical expenses (not to mention pain and suffering) from undetected or misdiagnosed afflictions.
  2. If the clinics siphon off customers who are seeking annual checkups or treatments for minor problems, traditional MD practices will become financially strapped, affecting the care of patients with more complex medical problems.
  3. The in-store clinics’ business model could create perverse incentives for their employees and for tort lawyers, who may likely see the major retailers’ clinics as deep-pocketed malpractice suit targets.

Readers can make up their minds on these points. As with most thoughtful arguments, I believe there is some merit to each, but not enough to change my opinion that the clinics are a welcome addition to the health care marketplace.

Indeed, a comment Dr. Davis makes in his second e-mail supports this idea better than anything I could write:

My point is not that these clinics are “bad.” The competition in the short run is probably a good thing, and I can out-compete Wal-Mart on the delivery of high quality health care any day.

That, I take it, is a sentiment we all want to hear from health care providers.

Well That’s Another Fine Mess You’ve Gotten Us into

AARP and Families USA are screaming about rising prescription drug prices, without and within Medicare Part D. The New York Times is calling for price controls on drugs purchased under Part D.

A 2004 study by the Manhattan Institute estimated that applying the type of price controls found in Medicaid and the Veterans Health Administration to Medicare would reduce pharmaceutical R&D by nearly 40 percent and reduce Americans’ aggregate lifespans by 277 million life-years.

In other words, the logic of “negotiating drug prices” is that everyone under the age of 65 should die one year sooner so 42 million geezers (sorry, Dad) can save a few bucks on Lipitor. But is the logic of opposing price controls that workers should have to pay through the nose to pump these geezers full of drugs?

Part D puts us all in a no-win situation: either pay up and bankrupt the nation or control prices, suppress R&D, and prepare to check out early. It is a trap, set by the Left and sprung by the GOP.

That’s why – if the repeal train has left the station – the only sane option left is a radical overhaul of the entire program. With a little luck, Republicans will come to see the box in which they have put themselves and rediscover their interest in Medicare reform.

AMA: We’ll Cure Those Market Forces

It should have been an invigorating story for free-marketers.

Saturday’s New York Times describes how competition from health care clinics in retailers such as Wal-Mart and CVS is pushing traditional doctor offices to be more responsive to customer needs:

Professional societies for family doctors and internists are urging their members to break with tradition by making it easier to schedule appointments — or even making appointments unnecessary in the case of walk-in patients who need immediate attention.

“It’s a big trend,” said Amanda Denning, a spokeswoman for the American Academy of Family Physicians, which has about 94,000 members.

The academy is spending $8 million on consultants who visit doctors nationwide to suggest improvements in patient care. The advice is meant to “keep them from going to an in-store clinic,” Ms. Denning said, while also benefiting doctors by making office procedures more efficient.

Speedier appointments for patients who need immediate attention, more efficient office operations, and (the article later states) increased doctor office revenues as more (satisfied) patients are treated. American health care would certainly benefit from such a shot-in-the-arm.

So, naturally, the American Medical Association wants to perform a competition-ectomy. The Times goes on to report:

At its annual meeting this month, the American Medical Association called on the clinics to accept a list of principles that would limit their scope to simple services and ensure that a physician oversees the operations.

“Patients want quick and easy access to health care services, but they shouldn’t have to worry about the safety and quality of care provided in these clinics,” said Dr. Rebecca J. Patchin, an A.M.A. board member.

Once again, the AMA is making sure health care providers will do no harm … to AMA members’ bottom lines.

“Cursive Is Illegal”

Evergreen State elementary school teachers, take note: Olympia is moving against some of your more affluent failures.

Everyone knows that doctors’ horrible handwriting causes problems for patients and pharmacists.  As of this month, it is illegal for doctors in Washington state to write prescriptions in cursive.  (Will italics be next??)

The sad thing is that health care markets have become so calcified that this really, really dumb law might actually enhance efficiency.  I just hope we won’t have to wait long before some medicine-socializer argues that this proves that government planning is superior to free-market health care.  (Any takers?)

Common Misconflations

A recent Ezra Klein post is a much more interesting read when decoded using this key:

U.S. health care sector ≠ free market

For-profit ≠ free-market

Non-profit ≠ public provision

Non-profit ≠ tax-exempt

Chuck Grassleyfree-marketeer

Public provision ≠ better medical care

VA ≠ superior care

(Okay, so the Chuck Grassley one is not so common.)

The Common Law Court and Other Myths

I’ve posted my latest law review article on SSRN.  The article argues that some of the same rules that apply to executive branch agencies, like the SEC and EPA, should apply to “class action lawmaking” in ordinary courts.  A warning:  much of it will seem rather dry and esoteric to non-lawyers.   

Even so, I hope it will help highlight a serious blind spot of many Hayek-flavored policy proposals advanced by fellow libertarians.  These flawed proposals go like this:  “Agency A has identified a regulatory problem and offered a command-and-control solution.  But command and control solutions often have unanticipated consequences.  By contrast, the incremental case-by-case approach of common law courts allows regulation to adapt to unexpected problems as they arise. Hence, it’s better not to regulate and leave the issue to the common law process.”  (If you search through Cato policy analyses, you may find a few arguments that fit this mold.) 

Here’s the problem with that argument:  Over the last 50 years, courts have rejected the utility of incremental case-by-case decisionmaking, now seen as too “costly” for a mass industrial economy, and have instead patterned their proceedings after administrative agencies.  Now trial judges use procedures like the class action and mechanisms for case consolidation to put hundreds of thousands of recurring disputes raising similar facts before a single “expert” judge or special master tasked with sheparding these disputes into one global settlement.   As a result, in many cases, a choice between courts and agencies is a Hobson’s choice:  both courts and agencies are forums for the sweeping, centralized, one-shot regulation that Hayek so distrusted. 

Unfortunately, many libertarians ignore the sea change in the way our courts run themselves, envisioning that beyond the hulking canyons of Southwest D.C.’s alphabet gulch, there is a pristine land of 19th century “common law” courts, preserved in amber, waiting to rescue us from our zest for central planning.  The persistence of this myth shields us from the difficult libertarian trade-offs between modern-day judicial and administrative regulation. 

My article doesn’t venture an answer to these complicated trade-offs.  (I’m just a humble caveman lawyer.)  Instead, I  suggest a far more modest first step:  That courts start talking about class action law and administrative law in the same legal language, using the same legal concepts, putting us all on notice about the essential similarity between modern judicially managed and agency-managed regulation.