Health Law Pulse

Posted by: John Culhane on Saturday, November 14th, 2009, at WordinEdgewise.org.

China’s political and environmental challenges are often chronicled, but less attention has been paid to the public health issues that the nation’s move to developed nation status has caused.

That’s starting to change. In a good summary article in Yale Public Health, (pdf. of Fall issue on right side of linked homepage), Christina Larson offers a succinct account of the many issues confronting public health researchers and policy-makers in a nation with more than 170 cities of at least one million people (that’s right). As in any rapidly developing nation, China finds itself with a spike in chronic disease problems, while infectious disease issues have to an extent been dealt with. Today, the country is dealing with a high incidence of lung cancers (caused by a just silly smoking rate and by environmental toxins); diabetes; and — yes — obesity. Those iconic Beijing bikes are quickly giving way to cars, with the host of predictable negative health consequences you might expect.

The article goes on to explain that China is really a host of sub-populations, flung over a vast expanse and with wildly different problems. Interventions need to be carefully targeted to stand any chance of improving public health outcomes, but that targeting is itself challenging because of the dynamic, quickly changing nature of the nation and its people. Trying to glean useful data that screens out the “noise” is always a challenge for epidemiologists, but even more daunting under these conditions.

Steps are being taken, including the bellwether move of banning smoking in certain bars, but it will be vital for local, state, and global public health officials to “get smart” about the challenges they face, and soon. Time’s not on their side.

With these issues in mind, a contingent of health law professors from our law school is traveling to Southwest University in Chongqing next month, there to discuss, among other topics, global public health. Our expert on these issues, Michele Forzley, is a global public health expert with ties to WHO and the U.S. Department of Commerce; she is to speak on training legal and public health experts on confronting emerging issues. Her work is vital.

Tags: China

Keep this in mind when you hear opponents of the House healthcare reform bill protest that it would constitute a government take-over of our healthcare system: the Congressional Budget Office and the Kaiser Foundation estimate that a public plan would enroll only 2% of Americans. To put this in perspective, about 15% of the US population is currently uninsured or underinsured.  By reason of its mandate for individuals to purchase coverage, the House bill would result in new enrollment in private insurance of a far larger portion of the population – roughly 10%. The House bill arguably does much more to grow the private insurance market than a public one.

The public plan population, moreover, would likely include the high-risk and the unhealthy in disproportionate numbers, making it if anything more difficult for the public plan to compete with private insurance on the basis of cost. Indeed, the public plan would tend to draw those persons that the insurance industry currently finds unattractive. It would not be depriving private insurance of the objects of its desire.

For further assurance that the public plan will not swallow up the private insurance market, note that the public plan is available only to those who are not enrolled in qualified or grandfathered employer or individual coverage, Medicare, Medicaid (with some exceptions), TRICARE or VA coverage (with some exceptions), plus some small businesses. The public plan, moreover, is required to sustain itself on its premiums, must meet the same requirements as private plans regarding issue and renewal guarantees, benefit levels, provider networks, consumer protections, cost-sharing – in short, must bear all the burdens to be imposed on private insurance.

Perhaps one more observation is due: these provisions of the proposed public plan relate to coverage, not to the practice of medicine. As of today, the AMA continues to endorse the House bill. We are, after all, talking about the way healthcare providers are paid, not the way they practice, except to the extent that the way they practice is informed by the way they are paid. But on that score, providers are of course already affected by the payment directives of Medicare and Medicaid, and those of private insurers, which operate with a profit motive.

By John Culhane Nov 7, 2009 (and also available on his blog: http://wordinedgewise.org/)

As I write this, the House of Representatives has just approved, 220-215, the vast health care reform bill that has bubbled on the hot stove for much of the year. But before doing so, the Democratic leadership caved to the pro-life members of their caucus, and allowed a vote on an amendment that will make obtaining abortions much more difficult for poor women. It passed easily.

Under the terms of this amendment, those obtaining insurance through any kind of government support — public option, insurance exchange, or even a subsidized private plan — won’t be able to get funded abortions except under limited circumstances (a threat to the mother’s life, rape, or incest). This is no surprise, really, since the pro-life forces have long since won legislation that bans federal funding for abortions. What’s new is that even private plans will be subject to the ban, even though the Democratic leadership is trying to spin this in a positive direction by noting that people will be able to buy “insurance riders” that would allow payments for abortion.

What planet are they living on? How likely is it that poor, or lower middle class women, who obtain subsidized coverage will know to bargain for such “riders”? Exposing the fiction that health insurance works like any other “market” has been at the center of the country’s education. Now the Democrats are saying: The insurance market works so transparently that companies and women will bargain about riders to fund abortions. Moreover, what would they cost? And who could afford them?

I know of a sixteen-year-old girl nearby (here in Philly) who is pregnant with her second child; her first was born when she was fourteen. The family is raising the first child while she has continued in school. Now what? Will she give up and drop out? In any case, does anyone care to predict what kind of life these children will have?

But let’s continue to argue for abstinence-only education and to deny funding for abortion. And above all, let’s not do anything to help these girls once their kids arrive. With the exception of gun policy, it’s hard to think of another area in which reality and the law are so clearly mismatched.

As you may recall, on the eve of the approval in concept of the America’s Healthy Future Act by the Senate Finance Committee on October 13, PricewaterhouseCoopers released a study funded by America’s Health Insurance Plans that suggested the net effect of the Senate bill would likely be a dramatic increase in insurance premiums.  In what may have been retaliation to what may have been taken as a not-so-veiled threat by the insurance industry, Senate and House committees pointedly drew attention to hearings on proposals to repeal the exemption for health and medical malpractice insurers from federal antitrust laws created in 1945 by the McCarran-Ferguson Act. In point of fact, proposals to withdraw McCarran-Ferguson exemption are not new. The principal sponsor of the Senate’s bill, Patrick Leahy of Vermont, had sponsored a similar bill in 2007 in the aftermath of Katrina, and more than a decade before that Senator Metzenbaum also made the attempt. In connection with the 2007 legislative proposal, the Congressional Research Service (CRS) prepared an analysis entitled, appropriately enough, “Impact of the Abolition of McCarran-Ferguson Antitrust Exemption for the ‘Business of Insurance’”. The CRS’s conclusion, which has clear implications for the current proposals, was generally that any impact of withdrawing antitrust exemption would be uncertain pending litigation of certain key issues (mentioned below).

For their part, insurers argue that certain forms of intercompany cooperation are critical for the efficient pricing and operation of insurance. Indeed, insurers argue such cooperation is actually pro-competitive, and (here comes that sour note again) that premiums would rise without the exemption. The 2007 CRS report gives these arguments their due. As the report acknowledges, the exemption from federal antitrust regulation facilitates efficiency in insurance product pricing by allowing companies to share loss information, jointly develop policy forms and rates, and participate in state guaranty funds. (As a factual matter, the industry has curtailed joint rate making activities anyway, perhaps in response to state laws.) Smaller and newer insurers, the argument goes, lack databases of sufficient scale to predict loss accurately and so depend on shared information to establish their premiums; and the survival of smaller and newer insurers, the argument continues, is critical to ensuring competition.

Opponents of the exemption hasten to observe that the present state of health insurer market concentration is ample evidence that sharing loss information has not had the competitive effect vaunted by insurer apologists. This argument seems to have found favor in the Antitrust Division of Department of Justice, whose spokesperson stated at the Senate Judiciary Committee hearing on October 14 that the DOJ opposed antitrust exemption where a compelling justification was not evident.

If exemption opponents prevail, they may still only be half way to their goal, given the number of threshold issues remaining to be litigated. For one thing, the McCarran-Ferguson Act by its terms applies only to “the business of insurance”, and thus the Act (and its exemption) may not apply to questions of market consolidation in the first place, unless they are deemed by the courts to involve the “business of insurance”. Another question is whether an exemption might survive despite McCarran-Ferguson Act repeal under the “state action” carve-out for antitrust laws.

The 2007 CRS report suggests two ways such litigation could be curtailed, namely, (i) remove economic incentives for private causes of action for antitrust violations by health and malpractice insurers, and (ii) construct “safe harbors” for pro-competitive forms of inter-insurer cooperation (e.g., allow small insurers access to shared loss data).  Perhaps current events suggest another way to ensure competition, while avoiding what is otherwise likely to be protracted, expensive, case-by-case and state-by-state litigation over legislative intent and authority: Public option anyone?

Tags: Antitrust, McCarran-Ferguson

NPR reports yesterday and today that the Obama administration will not prosecute medical marijuana uses that are compliant with state laws. It is one of a number of instances where the healthcare policy debate has created strange bedfellows. Conservatives accustomed to arguing for states’ rights were forced to align themselves with federal policy against medical marijuana during the Bush years, as several states liberalized their medical marijuana rules. The devotion of conservatives to states’ rights would be even more severely tested were medical malpractice reform to emerge at the federal level. Elsewhere we witness labor unions joining with insurers to oppose the public option, the latter for obvious reasons and the former presumably to maintain their hold on the last vestige of compensation/ benefits for which they can negotiate on behalf of their members. Last year we saw Wal-Mart’s Lee Scott and Andy Stern of the Service Employees International Union sharing platforms to call for single-payor insurance so that US companies might compete more effectively with those in countries in which employers do not bear the cost of health insurance. This year Wal-Mart and the SEIU appear to have agreed to support the employer mandate. Is this the lion lying down with the lamb, or merely a short-term alliance of the terminally self-interested?

By John Culhane (also available on his blog, WordInEdgeWise):

Nan Hunter has just run a good summary of recent legislation in Oklahoma that, taken as a whole, is designed to prevent women from having abortions altogether. The state’s determination shows that, Roe v. Wade not to the contrary, there’s plenty that states can do to restrict what the Court has declared to be part of a fundamental right to self-governance, privacy, and autonomy.

The state’s zeal, though, shows that ideologues on a mission can wreak havoc with settled public health principles, thereby jeopardizing the public’s trust in health care — just in case there’s any such trust left. There are at least two recent examples of this misguided approach.

First, a recent piece of legislation — later declared unconstitutional — required women to undergo an ultrasound (vaginally in the case of early pregnancies) before an abortion could be performed. Such coerced invasion of the body has typically been required only in cases of epidemic; even there, often the resisting party can usually forego vaccination and pay a fine, or suffer the less objectionable deprivation of liberty. This would have been the first case I’m aware of where an unwanted, invasive procedure would have been made a prerequisite for a procedure that someone has a legal right to have, and where that first procedure isn’t needed for some other medical reason. In other words, this is quite different from requiring a biopsy before surgery to remove a tumor.

Laws educating women about fetal development (although also typically a smoke-screen for restricting access to abortions) are OK with me, at least in principle. This weird law, on the other hand, is creepy and offensive, and it’s lucky that the legislators blew it through a technicality (shoving too many subjects into a single piece of legislation).

The second, and more recent example, is a law currently under challenge. This one  would set up publicly available, web-based reports on anyone who obtains an abortion. The information would have to be reported to doctors, who would then be required to pass it on to public health officials. This is a very, very bad idea. I don’t even need to talk about abortion (thankfully!) to explain why.

This law will drive a wedge between physicians and their patients. Many people have distrust of the medical and public health professions, and won’t be warmly encouraged to make that next visit to their provider — or to any other — when they’re met with a battery of identifying questions that can then be used to pick them out of a probably hostile community. As a flimsy subterfuge for the laws’ true intent, names aren’t required — but, as a lawyer from the Center for Reproductive Rights has pointed out, names won’t be needed to identify someone from sufficiently small communities, especially when so much other identifying information is exposed. According to this article, quoted extensively by Hunter, there will be “answers to 34 questions including…age, marital status and education levels, as well as the number of previous pregnancies and abortions. Women are required to reveal their relationship with the father, the reason for the abortion and the area where the abortion was performed.”

It’s clear that the legislators are trying to slap a different kind of scarlet “A” on these women, hoping that the shame and ostracism of expected discovery will keep them from carrying out their intended abortions. It might have this effect, but the more sweeping result will be a lack of trust that will penetrate relationships between patients, doctors, and public health practitioners. Patients will learn how to lie their way around the obviously unenforceable law (some of the facts sought depend on patients’ willingness to disclose, such as “reason for seeking the abortion” and, often, the number of previous pregnancies), and doctors may be less than forthcoming with public health officials if they see them as interfering with the MD/patient relationship. And any public health official with good training will despise and, one thinks, try to circumvent the law.

Even in states that require doctors to report HIV infection to public health, the goal is partner notification and contact tracing to eliminate an established risk. These laws are controversial, but they at least have arguments to recommend them — and the results aren’t published on public websites.

With this level of identifying information, the Oklahoma statute looks more like the sex-offender laws (which have their own problems, btw) than anything else. What more do you need to know? 

Tags: abortion

By Nicholas A. Mirkay, III

          In our September 2008 Forum newsletter , we discussed the “The Return of ‘Charity Care,’” and the evolving debate over the amount of uncompensated services and other measurable community benefit (collectively referred to as “charity care”) that nonprofit hospitals should provide to maintain their charitable tax exemption.  As recent as July 2007, Senator Charles Grassley’s Minority Staff of the Senate Finance Committee released a Discussion Draft  in advance of a roundtable discussion on tax-exempt hospitals proposing that nonprofit hospitals, in order to maintain their tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, satisfy a quantitative charity care standard.  The proposed standard would have required hospitals to dedicate a minimum of 5% of its annual patient revenues or operating expenses, whichever is greater, to charity care in accordance with a written and widely-disseminated charity care policy.

           The charity care debate permeated the early discussions of health care reform, specifically in the context of financing the health care reform.  The proposals released in May 2009 by Senate Finance Committee Chairman Max Baucus and ranking member Senator Grassley and discussed throughout the summer focused on codifying certain organizational and operational requirements for determining if a nonprofit hospital qualified as a tax-exempt, charitable organization under Section 501(c)(3).  The proposals required tax-exempt hospitals to: (i) frequently conduct a community health needs assessment; (ii) provide a minimum annual amount of charity care; (iii) not refuse provision of health care services based on a patient’s inability to pay; and (iv) conform to certain procedures before commencing collection actions against patients.

          In addition to these proposals, Senator Grassley proposed the removal of the safe harbor under the intermediate sanctions rules (Section 4958 of the Code) that provides all tax-exempt organizations, including nonprofit hospitals, a “rebuttable presumption of reasonableness” as to the determination of executive compensation.  To the relief of nonprofit hospitals and other tax-exempt organizations, the Senator ultimately decided to not seek a vote on the amendment as part of the October 1 markup.

           Hospitals and health care associations were further relieved to hear that the controversial minimum charity care requirement was omitted from both the initial and amended versions of the Senate Finance Committee’s proposal, America’s Healthy Future Act of 2009 (the amended version was approved by the Committee 14 to 9 on October 13, 2009).  Under the Chairman’s Mark, four new provisions affect tax-exempt hospitals, the goal of which is to ensure that these hospitals fulfill their charitable mission and maintain their tax exemption.  The Mark specifically provides that these new requirements are in addition to, and not in lieu of, the requirements otherwise applicable to nonprofit hospitals under Section 501(c)(3).  The Mark requires each nonprofit hospital to:

•  Conduct a community health needs assessment at least once every three years and adopt an implementation strategy to meet the community needs identified by the assessment;
• Adopt and implement a written and widely-disseminated financial assistance policy;
• Bill patients who qualify for financial assistance no more than the amount generally billed to insured patients based on either the best, or an average of the three best, negotiated commercial rates, or Medicare rates; and
• Forgo undertaking certain extraordinary collection actions against a patient, such as lawsuits and liens, without first reasonably attempting to ensure that the patient does not qualify under the hospital‘s financial assistance policy.

           The Chairman‘s Mark includes new reporting and disclosure requirements, requiring the Internal Revenue Service to review a hospital’s community benefit activities, currently reported on Schedule H of the Form 990, at least once every three years.  This review is described as intentionally similar to the review of companies registered with the Securities and Exchange Commission.  The Mark also requires each tax-exempt hospital to make its audited financial statements widely available.

           In the end, should these provisions survive in the final health care legislation, nonprofit hospitals must contend with increased disclosure and more benevolent collection practices as a substitute for a quantitative charity care requirement.  Some commentators have hailed this approach as recognizing that a rigid percentage standard does not take into account the particularities of each hospital and, therefore, may not result in greater community benefit.  Others see this approach as placating Senator Grassley who has long pursued a more definable standard for hospitals to be tax exempt.  Either way, the debate over the role of nonprofit hospitals in our society and the standards to which they must adhere for tax exemption continues to morph and evolve.

Tags: 501(c)(3), charity care

Further to my comment last week about the deference to states contained in Senate proposals, note that Senators Schumer (NY) and Carper (DE) have proposed a state-by-state opt-out option that has serious potential for reviving the public plan option.

The Huffington Post reports:  “In private, aides on Capitol Hill say that the opt-out option remains one of several proposals being debating (sic) as a compromise to a straightforward national public plan. But, they add, it is quickly winning plaudits within the caucus. A senior aide said that Schumer was taking the lead on negotiating the compromise approach — along with Carper….”

Senator Tom Carper’s original compromise proposal had been an “opt-in” option for states, but the suggestion of reversing the option by progressives in the Senate seems to be gathering momentum. Stay tuned.

            The healthcare reform proposals in Congress currently receiving the most press all contain provisions that would require all individuals to obtain health insurance (known as an “individual mandate”). In recent weeks conservatives and libertarians have attempted to spark a debate over the constitutionality of this provision, as the New York Times has reported. Such attempts, and sporadic state efforts to fend off the federal mandate by amending state constitutions to block an individual mandate, are easy enough to dismiss as mere political theatrics. That such endeavors will finally succumb under Commerce Clause, Spending Clause and Supremacy Clause scrutiny is perhaps a foregone conclusion, as Professors Mark Hall and Timothy Jost have ably argued. Arguments against reform based on states’ rights, moreover, are inherently perilous for their proponents, since they are likely to have to change course when it comes to tort reform. But behind the theatrics and mental gymnastics there may be a more serious question:  How will health reform change the federal footprint in our healthcare system?

            Historically, after all, much of the law of healthcare has been state-based. States have regulated insurance, provider licensure and entity formation issues, and states have controlled the development of the aspects of common law that most affect healthcare (notably tort law). With the exception of ERISA, federal legislation impacting healthcare has tended to proceed from Spending Clause programs such as Medicare, Medicaid and SCHIPS, applicable to providers or states, as the case may be, on an “opt-in” basis and designed to avoid giving rise to a federal common law for healthcare.

            Certainly the federal healthcare footprint would expand somewhat under each of the healthcare reform packages currently receiving notice – those of the Senate Finance Committee, the Senate Committee on Health, Education, Labor and Pensions (“HELP”), and the House Tri-Committee (Ways and Means, Energy and Commerce, and Education and Labor). All three bills have quality reform provisions; all would expand Medicaid eligibility; all would mandate (incentivize?) individual coverage; all have employer pay or play provisions; and all would create insurance exchanges, although each would allocate operational responsibility to the states (the Tri-Committee doing so at the states’ option, provided federal rules are followed).  All would have significant impact on the design of health insurance contracts, with provisions requiring guaranteed issue and modified forms of community rating, and prohibiting non-renewal and exclusions for pre-existing conditions.

            Lest the foregoing observation be hijacked by those who fear that health reform is the federal government’s attempt to insert itself into the doctor-patient relationship, I hasten to add that in most respects any federal intrusion resulting from the proposed reform measures would be into relationships in which states have already inserted themselves (e.g., insurance regulation), or areas in which there currently is no doctor-patient relationship (e.g., expansion of Medicaid eligibility to cover those currently uninsured). In these respects there is little basis for anxiety about government encroachment, or, for that matter, about government restraint of personal choice.  Moreover, the proposed federal legislation is extremely deferential to states. Where health exchanges are proposed, for example, two of the bills would have exchanges operate at the state level and the third (that of the Tri-Committee) would allow states to opt to operate the exchange in lieu of a national exchange provided federal rules are followed.

          The case against federal government intrusion is arguably stronger where quality assurance measures are concerned. All of the foregoing bills would establish national priorities for quality reporting and improvement and would in varying respects expand value-based purchasing programs; all would emphasize and/or fund outcomes or comparative effectiveness research, the effect of which will be to develop national-level best practices and guidelines. But those on the right seem to recognize that to argue against such measures could jeopardize the case for tort reform. Indeed, if tort reform takes the direction it has in some recent reform proposals, it could be joined at the hip with federal-level quality measures: providers could be granted a measure of immunity from liability to the extent they can demonstrate they adhere to best practice guidelines, which in turn would derive from the comparative effectiveness research methods advocated by some reform proposals.

         There is another compelling argument against reflexively resisting the expansion of federal influence in healthcare. Under our federalist system, at least as envisioned by Justice Brandeis, a “single courageous State may, if its citizens choose, serve as a laboratory, and try novel social and economic experiments without risk to the rest of the country.” Federalism as such is not static, but a series of experiments undertaken for the purpose of discovering the best way of dealing with given issues. Perhaps it is time to recognize that our states have sufficiently experimented, and otherwise declared their collective conclusion to the effect that we should now undertake healthcare reform measures at the federal level.

Tags: Federalism, individual mandate, Senate Finance Committee, Tri-committee

Adjunct Prof. Dr. Andrew Newman writes:

My carpenter’s helper is about 30, married and living in a 3rd story apartment – an ardent nature lover; takes walks in nature preserves and loves to spot and feed birds… All in all, a sweet, sensitive guy WITH NO HEALTH INSURANCE.

On this particular day, he was building shelves for my garage and pierced the base of his thumb with a drill.

I washed and dressed it, and since I am a former hand surgeon, advised him to go to the closest ER to have it lavaged, get antibiotics and a tetanus shot. He said he would.

Two hours later, he was still working. When I asked about the ER, he told me he thought he may have had a tetanus shot about 2 years ago. In any case, he added, he had NO medical coverage and was still paying other medical bills off. Workman’s comp may have been a thought for him, but he would still have to pay up front and collect later, he said, and he just doesn’t have the money.

As those who have had a chance to peruse September’s Forum will know, Dr. Newman has an active scholarly interest in the issues raised by blood transfusions for Jehovah’s Witnesses. In that connection, Dr. Newman observes:

I was fascinated to read, in our local newspaper and on the First Amendment  Center web site, about a recent (Oct. 7, 2009) decision by Pa. Commonwealth Senior Judge Keith Quigley to refuse an injunction requested by the State of Pennsylvania.

Tags: blood transfusion, Jehovah's Witness