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December 22, 2007
Epicycles & Arms Races in Marketized Health Care
The press does a terrible job covering the fate of the estimated 18,000 adults ages 25-64 who die each year because they are uninsured. But sensational cases of insurance denial, like this one, get a lot of attention--especially when accompanied with a novel legal theory for pressing criminal charges against insurance companies:
The family of a 17-year-old leukemia patient blamed Cigna Corp. on Friday for her death, saying the health insurance giant's initial refusal to pay for a liver transplant contributed to her death. . . . [The family's attorney] said he would ask the district attorney's office to press murder or manslaughter charges against Cigna, an allegation that one legal expert described as difficult to prove and "a little bit of grandstanding."
In a Dec. 11 letter to Cigna, four doctors had appealed to the insurer to reconsider. They said patients in similar situations who undergo transplants have a six-month survival rate of about 65 percent. . . . The case raised the question among at least one medical expert [sic] over whether a liver transplant is a viable option for a leukemia patient because of the immune-system-suppressing medication such patients must take to prevent organ rejection.
Beyond the personal tragedy involved in this case, I just think it stands for so much of what is wrong with American health care. Imagine all the time and money that was spent determining whether the patient should receive care. Might the money consumed in these secondary and tertiary disputes surpass the amount the transplant would have cost in the first place?
There have been a number of legal discussions of these issues; this book collects law review articles on p. 271. Robert Kuttner's diagnosis of the situation in 1999 remains all too true nearly 10 years later:
Ironically, by maintaining a largely private health insurance system aimed at limiting the reach of government regulation, we reap ever more complex regulation to compensate for the inadequacies of that very system. . . . In a universal system . . . there is no regulatory need to resolve issues of continuity and eligibility, let alone interminable certifications, appeals, and adjudications. . . .There are no questions of rate-banding, cross-subsidies, guranteed issues, or permissible exclusions for various categories of applicants and conditions. . . .
As "ever more baroque regulatory overlays" give us the satisfaction of feeling we have a market in health care, entrepreneurs take note. For example, President Bush's cousin, Jonathan Bush, has has co-founded athenahealth, "one of the biggest of hundreds of companies in a lucrative niche: helping doctors wring payments from health plans." Expect the insurers to found "zeushealth" to take this on. Market-generated arms races and epicycles may not be good for health outcomes, but they're great at generating profits.
*PS: Here is more from Daniel Goldberg on the relationship between insurance and health status.
PPS: I guess my post title is a little obscure; here's an entry on epicycles in Ptolemaic astronomy:
"Adding epicycles" has, in part due to sometimes fantastic attempts to make the failed earth-centered model work, come to be used as a derogatory comment in modern scientific discussion. If one continues to try to adjust a theory to make its predictions match the facts, when it has become clear that the basic premise itself should be questioned, one is said to be "adding epicycles".
Health law is no stranger to this metaphor.
Posted by Frank Pasquale at December 22, 2007 10:17 AM
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