Volume 159, Issue 6 
June 2011

Health Insurance, Risk, and Responsibility after the Patient Protection and Affordable Care Act

Tom Baker
The Affordable Care Act embodies a new social contract of health care solidarity through private ownership, markets, choice, and individual responsibility, with government as the insurer for the elderly and the poor. The new health care social contract reflects a “fair share” approach to health care financing. This approach largely rejects the actuarial fairness vision of what constitutes a fair share while pointing toward a new responsibility to be as healthy as you can. This new responsibility reflects the influence of health economics and health ethics. There are challenges to achieving the solidarity through individual responsibility envisioned in the Act—most significantly ”risk classification by design” and non-compliance with the mandates—but the Act contains regulatory tools that the states, the new Exchanges, and the Department of Health and Human Services can use to address these challenges. This Article provides a high level overview of the distribution of health insurance risk and responsibility after the Affordable Care Act and describes how the Act reforms the key institutions that perform that distribution: Medicare, Medicaid, the large-group health insurance market, and the individual and small-group health insurance market.

The Individual Mandate, Sovereignty, and the Ends of Good Government: A Reply to Professor Randy Barnett

Patrick McKinley Brennan
People who are politically “conservative”or “libertarian” in the way those terms are often deployed in contemporary American public discourse almost universally regard the Patient Protection and Affordable Care Act (PPACA) as objectionable and, in a related but distinct vein, unconstitutional. The favorite focus of such conservative and libertarian protest is the Act’s so-called individual mandate—the requirement that individuals buy health insurance from a private market. As of the time of writing, federal district courts in Florida and Virginia have held the Act unconstitutional on account of the individual mandate. In each case Republican presidents had appointed the district judge. The two district judges that have upheld the Act against constitutional challenge Regardless of whether one approaches the issue from the right, the left, or the middle, however, the individual mandate merits a hard look: a statutory requirement that an individual spend his or her money on health insurance unsettles many entrenched American moral, political, and legal expectations. Whether this requirement does so for good or for ill remains to be seen.

The conservative and libertarian objections to the individual mandate implicate some of the deepest and most contested questions concerning our Constitution, constitutionalism in general, and the relation of positive law—including constitutional law—to the ends of good government. It is no exaggeration to say that it even implicates questions about who we are. Professor Randy Barnett has recently argued that the mandate raises questions about the sovereignty of “We the People.” Specifically, Barnett contends that the mandate is unconstitutional because it violates the people’s sovereignty by “commandeering” them into buying health insurance. Why, one must therefore ask, is it wrong for a government to commandeer its own people?

From Health Care Law to the Social Determinants of Health: A Public Health Law Research Perspective

Scott Burris
Research over the past three decades has demonstrated that population health is shaped powerfully by “[t]he contexts in which people live, learn, work, and play”—also called “social determinants of health” or “fundamental social causes of disease.” The World Health Organization (WHO), the Centers for Disease Control and Prevention (CDC), and the Robert Wood Johnson Foundation (RWJF), have all launched major initiatives aimed at addressing the social influences on health. Neither the research nor the calls for action, however, have penetrated common knowledge, as a recent RWJF report recounts:

Americans, including opinion elites, do not spontaneously consider social influences on health. They tend to think about health and illness in medical terms, as something that starts at the doctor’s office, the hospital, or the pharmacy. They recognize the impact of health care on health, and spontaneously recognize the importance of prevention, but they do not tend to think of social factors that impact health.

They do, however, recognize social factors and see their importance when primed. Raising awareness of social factors is not difficult, although people more readily recognize voluntary behaviors that cause illness (e.g., smoking, overeating) than arbitrary or social factors (e.g., race, ethnicity, income).

In these tendencies, health lawyers may not differ from everyone else. Even health lawyers who are attuned to the social determinants of health—a phrase, by the way, that this RWJF report advises is just too wonky for general public consumption—often do not find themselves in a position to actively address them in their research. Yet even as health lawyers and health care policy experts celebrate the enactment of the Patient Protection and Affordable Care Act—a landmark policy achievement, no matter its ultimate fate—we have at least two good reasons to keep social determinants in mind: first, the relatively dismal state of population health in the United States is not caused primarily by a lack of health care, and second, even universal health care access will not make us substantially healthier as a society. Health care is a huge part of the American economy and undeniably a public good, but the stakes are too high for the public—and health law scholars—to continue neglecting the robust social structures that are shaping America’s well-being. Compared to other countries with our resources, and even some countries without them, we are doing poorly, and it is well past time we all got sick of it.

Government as the Crucible for Free Market Health Care: Regulation, Reimbursement, and Reform

Robert I. Field
Political debates over economic policy commonly pit the virtues of the free market against those of government oversight. Regulatory policy then becomes an ongoing contest between the public and private sectors, infusing policy debates with a sense that it is necessary to choose between them. On closer examination, this duality is false. On a fundamental level, free-market entrepreneurs and government regulators are not opponents, but are, on the contrary, partners in a common enterprise. Across a range of major industries, one party could not exist without the other.

In no industry is this interplay more important than in health care. A series of government programs, most initiated during the latter half of the twentieth century, literally created the health care system as it exists in the United States today. Hospitals grew to their present size and technological complexity because of funding provided by the Hill-Burton Act and Medicare. Medicare also funds physician training, as well as reimbursement for many physician-provided services. Pharmaceutical manufacturers rely on the National Institutes of Health to support basic biomedical research that leads to the development of new drugs. A huge tax subsidy for employer-sponsored coverage finances, in large part, the health insurance industry. Without these programs, none of these health care industry segments could have approached its present size or vitality. To ignore this dynamic is to ignore the true nature of American health care and to fundamentally misunderstand the opportunities for reform.

The Patient Protection and Affordable Care Act (PPACA) continues and extends this paradigm. It will expand coverage in large part by facilitating broader demand for individual policies, which will revitalize private insurance markets. It will also extend Medicaid, a program that in most states is administered by private managed care plans, to millions more beneficiaries. Far from representing a government takeover or novel incursion into the health care system, PPACA extends the underlying arrangement that has built and sustains the structure of American health care as it exists today. In the American health care system, private innovation and government intervention represent not opposing forces, but rather partners in a common enterprise.

Regulating Patient Safety: The Patient Protection and Affordable Care Act

Barry R. Furrow
Patient injury is a predictable feature of health care, particularly in hospitals, in the United States and elsewhere. Since publication of the Institute of Medicine (IOM) report To Err Is Human in 2000, patient safety has come to the forefront of U.S. health care. The IOM’s projection of 44,000 to 98,000 deaths per year due to hospital errors, and hundreds of thousands of avoidable injuries and extra days of hospitalization, fueled the patient-safety movement in the United States. Ten years after the IOM report, the level of adverse events in hospitals has not improved in any major way. A recent HealthGrades analysis of Medicare data estimates that more than 230,000 hospital deaths from 2007 to 2009 could have been prevented within the Medicare population alone. A study of ten North Carolina hospitals concluded that the rate of patient harm from medical care had not decreased substantially over a six-year period ending in December 2007.

Analysis of patient safety rests on four basic propositions. First, patient injury (ranging from minor injuries to death) is a recurring feature of health care and negatively affects roughly one in every ten patients, according to a systematic review of the literature. Findings by the Inspector General within the Medicare context support this estimated patient-injury rate. As these statistics attest, patient injury eludes easy solutions.

Restoring Health to Health Reform: Integrating Medicine and Public Health to Advance the Population’s Well-Being

Lawrence O. Gostin, Peter D. Jacobson, Katherine L. Record & Lorian E. Hardcastle
It is hard to overstate the intense political and media attention given to health care. New medical discoveries and technologies are front-page news stories. In many communities, health care is either the largest or a substantial employer, and rising employee health care costs are a major concern for individual families and employers alike. That we, a wealthy society, invest more in health care than in subsistence goods signifies the value we place on high technology and specialized health services. The United States spends nearly 17% of its gross domestic product (GDP) on health care (a combination of public and private financing), or over $7000 on each American annually. This amount of health care financing is nearly double the investment made in any other highly developed country. As such, economic and political factors explain the salience of health care in American society.

Given the expansion of the health care enterprise, it is not surprising that the American political community is deeply focused on it. For a generation, health reform has been a dominant domestic political issue. The nation recently went through the politically grueling passage of the first comprehensive health care reform since the 1960s, with cavernous political divides on the role of government in financing and delivery of care. Critics portrayed modest proposals for cost-effectiveness comparisons—routinely accepted in other advanced democracies—as “death panels,” and the final law inhibits the use of quality cost-effectiveness analysis in coverage, reimbursement, and incentive structures. Within weeks of the law’s passage, twenty states filed lawsuits challenging the constitutionality of the individual mandate—a fundamental component of the reform.

Commerce Clause Challenges to Health Care Reform

Mark A. Hall
When Congress drafted the Patient Protection and Affordable Care Act (PPACA), Democratic lawmakers and most legal scholars had good reason to be confident of its constitutionality. Under long-established precedent, Congress clearly has the authority, if wanted, to enact a single-payer socialized insurance system using its powers to tax and spend for the “general welfare.” Far short of this, PPACA’s complex blend of regulations, subsidies, and an individual mandate is vastly more protective of insurance markets and individual freedoms than any “Medicare for All” scheme would have been. The idea for an individual mandate originated with Republican lawmakers, who never questioned its constitutionality until now. Congress has nearly unbridled authority to regulate products sold in or affecting interstate commerce, and health insurance is clearly one such product. Further, considering the well-understood economics of health insurance, a mandate to obtain insurance is obviously part and parcel of regulating how insurers design, price, and sell their products.

Something went wrong on the way to the courthouse, however. District courts in Virginia and Florida have ruled that Congress lacks the constitutional authority to require legal residents to obtain health insurance. Three other federal judges have upheld federal authority in cases that special interest groups and individual litigants brought.

Despite the split outcomes (which fell along the party lines of the judges’ appointing presidents), these courts agreed on several issues. No court thus far has found a violation of individual rights protected by the Bill of Rights, and no court so far has accepted (or indicated much support for) the government’s position that Congress’s tax power supports the mandate. In Florida ex rel. McCollum v. U.S. Department of Health & Human Services, the Northern District of Florida rejected the states’ arguments that forcing them to implement key PPACA provisions violates the Tenth Amendment. Thus the Commerce Clause and the ancillary Necessary and Proper Clause will be the primary focus of ongoing litigation over the constitutionality of health care reform. Conservative legal scholars who have previously criticized the expansive scope of federal commerce power see in this litigation the opportunity to impose new limits on its capaciousness. Accordingly, the Commerce Clause arguments merit close attention in order to understand their strengths, weaknesses, and implications for other areas of constitutional doctrine and public policy.

Three Models of Health Insurance: The Conceptual Pluralism of The Patient Protection And Affordable Care Act

Allison K. Hoffman
What risks should health insurance mitigate? American health scholars, politicians, and the public at large answer this question ambivalently. This Article defines three dominant conceptions of health insurance that weave throughout popular and academic discourse and that echoed in the 2010 health reform debates. The first conception is that health insurance should primarily serve to mitigate harms to health. This “Health Promotion” theory relies on using health insurance to pay for medical care that most cost-effectively preserves and improves health. Alternately, health insurance might primarily mitigate risks to wealth from high medical care costs. This “Financial Security” theory demands that health insurance limit financial insecurity from these costs. Finally, the “Brute Luck” theory, highly sensitive to the possibility of adverse-incentive effects arising from moral hazard, demands that health insurance protect primarily against unavoidable or “chance” health risks that do not arise from individual behavior. This last theory thus seeks to preserve incentives for insureds to prevent risk themselves, while insurance neutralizes harms from random poor health. Each theory implies distinct principles to guide premium pricing and allocation of premium dollars toward medical care.

The new health reform law, the Patient Protection and Affordable Care Act of 2010 (PPACA), manifests this “conceptual pluralism.” It evokes all three of these notions of the types of risks Americans should share—now more collectively post-reform—through insurance. While the goals of these three theories dovetail at times (e.g., promoting health will in some cases also reduce medical care costs), at other times they are at odds. Conceptual pluralism thus complicates implementation of PPACA as regulators must manage tensions and make tradeoffs among these goals.

Health Insurance Reform And Intimations Of Citizenship

Nan D. Hunter
Sometimes what is implied and inferred can be as important as what is stated. In this Article, I argue that the political debate that preceded the enactment of the Patient Protection and Affordable Care Act (PPACA), as well as the legal debate that now swirls around the question of its constitutionality, mask a foundational question about national identity. PPACA, of course, does not literally constitute or reconstitute citizenship (although it does require legal residence as the price of admission). But it creates the potential for broad public conversation—as has never before occurred in the United States—regarding the question of what the relationship should be between membership in the American community and meaningful access to health care.

At face value, PPACA primarily seeks to make the individual and small-group health insurance markets rational and workable, to fill the enormous gap that has existed in coverage, and to create insurance exchanges to regulate quality and police access. Upon full implementation, it will achieve nearly universal, but also probably quite uneven, coverage and will perpetuate a deeply fragmented model of social insurance. If one imagines the health care system as a political domain, with the various institutions and subsystems as components, PPACA is less like our Constitution and more like a reinvention of the Articles of Confederation. Under PPACA, health insurance in the United States will remain a federated collection of risk pools, located in workplaces, public systems, and the new exchanges.

Nonetheless, the debate that has accompanied PPACA’s adoption is about something bigger than spending curves, comparative effectiveness, or even medical-loss ratios (not that any of those should be considered trivial). The deep structure of this hyper-technical statute gestures to the existence of a health care universe that, in Habermasian terms, could be its own lifeworld. For persons with chronic diseases, the health care system truly becomes a world unto itself. For others, it may be more like a foreign country visited for an intense but brief period of time, or perhaps one to which we pay little attention. Although the internal operations of the health care universe are seldom thought of as political, its power is such that, upon entry, it may bring us life or death, profit or poverty, autonomy or dependency.

Convicts and Convictions: Some Lessons From Transportation for Health Reform

David A. Hyman
It wasn’t supposed to go this way. The Democrats had taken both houses of Congress in 2006 and the presidency in 2008. With a
filibuster-proof majority in the Senate and a sizeable majority in the House, the decades-long road to Democratic delivery of comprehensive health reform had finally come to an end (along with conservatism and the Republican party). President Obama had promised to deliver health reform—although he allowed that if you liked your existing arrangements, you could keep them. Polls indicated that Democrats had maintained their traditional edge over Republicans in public trust to handle health care. Pharmaceutical companies and insurers had been bought off or intimidated into silence, ensuring there would not be a repeat of the “Harry and Louise” commercials that helped sink the Clinton health reform effort. The path to success was clear, as long as the Administration let Congress write the bill. Once Congress enacted the Patient Protection and Affordable Care Act (PPACA), Democrats would receive the thanks of a grateful nation, and their electoral dominance would be assured. The only real question was whether to include a public option to placate the left; everything else appeared to be a done deal.

Reality intruded, as it always does. The enactment of PPACA was an excruciating and extended process, with twists and turns that a novelist would have been embarrassed to include in a work of fiction. Former Senate Majority Leader Tom Daschle, the President’s first choice to lead the Department of Health and Human Services and run the health reform effort, was forced to withdraw his nomination after it emerged that he had underpaid his taxes by more than $100,000. Opposition to PPACA led to loud and rancorous public meetings between legislators and their constituents during the summer of 2009. Opponents accused proponents of lying about whether people could keep their health care coverage and whether PPACA would cut Medicare; proponents accused opponents of lying about “death panels” and the “government takeover” of health care. The “public option” was in, then out, then (maybe) back in again. Medicare for the near-elderly was in, then out.

Reflections on the National Association of Insurance Commissioners and the Implementation of the Patient Protection And Affordable Care Act

Timothy Stoltzfus Jost
One of the most common criticisms of the Patient Protection and Affordable Care Act (PPACA) is that it constitutes a government takeover of America’s health care system. By this, of course, is meant a federal government takeover. PPACA will certainly increase the federal government’s presence in health care. It imposes new federal regulations on insurers, creates a new federal program for funding health insurance for uninsured middle-income Americans, dramatically expands the Medicaid program, and in all likelihood will increase the influence of the Medicare program on the organization of the overall health care delivery system.

Yet PPACA also expands the responsibility and authority of the states. The states, for example, are primarily responsible for enforcing PPACA’s insurance regulatory reforms. They are also responsible for establishing the exchanges—the entities through which Americans will purchase insurance and apply for subsidies—and for managing reinsurance and risk adjustment programs. According to the Act, states will be responsible for reviewing health insurance premiums and for assisting consumers with complaints against their insurers.

However, PPACA not only increases the authority of the federal and state governments, it also empowers and assigns significant responsibility to a private agency: the National Association of Insurance Commissioners (NAIC). The NAIC is a private, nonprofit organization that has coordinated the activities of the nation’s state and territorial insurance commissioners since 1871. Its members are the insurance commissioners of the states and territories. Traditionally, the NAIC has drafted model statutes and regulations for the states, served as a clearinghouse for insurance data, and provided a forum for insurance commissioners to discuss and address regulatory issues.

The Freedom of Health

Abigail R. Moncrieff, Symposium Scholar
What would have happened if the Patient Protection and Affordable Care Act (PPACA)1 really had authorized government “death panels” that would decide whether or not an elderly patient could get treatment? Leaving aside the Commerce Clause and other constraints particular to Congress, would that kind of direct health care rationing be a constitutional exercise of governmental power in the United States? I think not. I argue here that an emergent substantive due process constraint would invalidate such an exercise; the phantom death panels would violate a constitutional “freedom of health” that is nascent in Supreme Court precedent. Based on that logic, I argue further that the substantive due process analysis of PPACA’s “individual mandate”—the requirement that all Americans carry health insurance—may be more complicated than most scholars have recognized. The existence of a freedom of health implies that we cannot merely dismiss substantive due process challenges to the mandate on the ground that Lochner is dead.

Particularly since 2006, when a three-judge panel of the D.C. Circuit recognized a fundamental liberty interest in obtaining experimental drugs (later overturned en banc), health law scholars have debated the usefulness and propriety of protecting individuals’ liberty in medical decisionmaking. Unlike the international “human right to health,” this American “freedom of health” would operate primarily as a restriction on—rather than as an obligation for—governmental regulation of medical decisionmaking. That is, in the somewhat disputed parlance of constitutional law, the right would be a negative one rather than a positive one, protected alongside other negative
liberties under the Fourteenth Amendment’s guarantee of substantive due process.

Health Reform and Public Health: Will Good Policies but Bad Politics Combine to Produce Bad Policy?

Harold Pollack
The enactment of the Patient Protection and Affordable Care Act (PPACA) was an incomplete victory and will remain so even if the new Republican congressional majority does not curtail its provisions. The legislation has many shortcomings and compromises. Most importantly, it could have brought help sooner to millions of uninsured or under-insured Americans.

Despite these compromises, public health researchers and practitioners have reason to celebrate. Simply put, PPACA fundamentally altered and improved the public health infrastructure of the United States. Fully implemented, PPACA promises to markedly improve clinical preventive services and transform our nation’s response to traditional centerpiece public health concerns, including HIV/AIDS, substance abuse, mental health disorders, and other conditions.

Of Stars and Proper Alignment: Scanning the Heavens for the Future of Health care Reform

Arnold J. Rosoff
On March 23, 2010, the United States took a giant step toward achieving universal health care, an elusive goal it has pursued for almost a century. The legislative fight was bitter and divisive, pitting Republicans against Democrats. It revealed, as effectively as any issue in recent years has, how difficult it is to achieve bipartisan cooperation when tackling America’s biggest problems. Nonetheless, the product of that contest, the Patient Protection and Affordable Care Act—referred to herein as the Affordable Care Act, the Act, or, as its detractors call it, “Obamacare”—fed the hopes of many Americans that we could finally come to recognize an adequate level of health care as a right of all our citizens and thus shake the dubious distinction the United States has long held of being the only major, industrialized nation on earth that has not committed to this noble goal.

But as this is written, in March 2011, the Affordable Care Act’s future, and the future of health care reform more broadly, is far from certain. Two federal district courts have ruled that what many regard as the Act’s keystone provision, the individual mandate to purchase health insurance, The first court concluded that the offending provision can be excised from the law and the remainder left intact; the second held that the provision is so integral to the overall legislative scheme that the entire law must fail. Since three other district courts have already rejected challenges to the Act’s constitutionality, it is virtually certain that the Supreme Court will ultimately review the Act. If the case takes the traditional route through the courts of appeals, then it should reach the Supreme Court around the time of the national elections in November 2012. On a parallel track, the newly installed 112th Congress has begun to consider a repeal of the law. Despite the formidable obstacles that a repeal attempt would have to overcome—unlikely passage in the Senate and a likely presidential veto—the winds of opposition are blowing so strongly that a repeal is at least within the realm of possibility. Setting aside these challenges and assuming the Affordable Care Act survives, it is an open question whether the Act can deliver on its very ambitious promise to secure basic health care coverage for almost our entire population without bankrupting the nation’s health care financing system or reducing the quality of care those who are now covered enjoy. Clearly the road to universal health care is a difficult one for the United States. Like previous trips, this one may again prove to be a road to nowhere.

Brand New Law! The Need to Market Health Care Reform

William M. Sage
The most serious problem with the Patient Protection and Affordable Care Act (PPACA) is not its contents but its packaging. Because it requires significant departures from business as usual in health insurance, health care delivery, and health behavior, PPACA is unlikely to succeed unless Americans feel a shared stake in its success. Unfortunately, the new law has been branded only by its opponents. Neither the Obama Administration nor its congressional allies have effectively communicated the law’s key elements to the public. Most surprisingly, the groundbreaking program of near-universal health coverage that PPACA creates does not have a name. This Article explores the process of branding major American social legislation such as PPACA and suggests a strategy for improving public understanding and building loyalty. Legal brand equity, like its commercial counterpart, implies a functional, emotional, and expressive relationship between the law and its intended beneficiaries. Accordingly, an effective marketing strategy for PPACA entails creating consistent expectations regarding the law’s goals and performance, and ensuring that those expectations are met.

Health Care Reform’s Wild Card: The Uncertain Effectiveness of Comparative Effectiveness Research

Richard S. Saver
Comparative effectiveness research (CER) stands out as the intriguing wild card of health care reform. CER compares competing treatments against each other to determine which interventions work best, supplying critical information for medical decisionmaking and health policy. If CER works as planned, it may be one of the few reform measures in the final health care legislation that could flatten the cost curve while also improving quality. Unfortunately, health care reform has so far failed to bet smart and play the CER wild card effectively. While the Patient Protection and Affordable Care Act invests in CER at record levels and creates an entirely new regulatory framework for oversight of the research, the new law does very little to advance the difficult work of translating CER into actual medical practice. First, CER is costly to conduct and its data often raise more questions than answers. Second, the government’s CER agenda seems vague and ill-defined, not consistently focusing on generating research that will help clinicians resolve immediate treatment questions. Third, and most important, physicians likely will remain indifferent to and “tune out” CER. Health law and policy are not setting the right incentives for physicians to adapt their practice patterns to CER and, in some respects, exacerbate the physician-engagement difficulties. The reasons for physician indifference to CER include: lack of financial incentives, suspicions of industry bias in the public/private oversight of the research, threats to clinical autonomy, a commitment to individualized medicine (encouraged by health law, professional ethics, and medical norms) that remains in tension with CER, concerns that CER is a vehicle for crude cost-cutting, and malpractice liability fears. To be truly effective, the new national CER program requires targeted reforms designed to engage physicians more directly with the research. This Article’s principal suggestions include greater linkage of CER with reimbursement and liability incentives, enhanced use of academic detailing, and more support for comparative implementation studies that evaluate different strategies for fostering physician uptake of CER.

Issues - Print Edition - PennLawReview.com