HMGT 372 DISC 1

CHAPTER

39

ACCESS TO HEALTHCARE: RIGHTS AND RESPONSIBILITIES

The US Healthcare System: Fragmented and Unequal

We often hear the claim that the United States has “the best healthcare system in the world.” However, there are at least two objections to that assertion.

First, it is somewhat anomalous to call our fragmented approach a healthcare “system.” Consider that the federal govern- ment alone runs six major healthcare pro- vider or insurance programs—Medicare, Medicaid, the Children’s Health Insur- ance Program (CHIP), the Department of Defense TRICARE and TRICARE for Life programs (TRICARE), the health pro- gram of the Veterans Administration, the Indian Health Service (IHS), and the US Pub- lic Health Service (PHS) (see The US Public Health Service). Through these programs

2 After reading this chapter, you will

• understand the history of government’s role in providing access to care,

• be familiar with the “right” to healthcare,

• recognize basic provisions of the Affordable Care Act (ACA) and related court decisions,

• understand the hospital’s duty to admit and care for patients under routine and emergency circumstances, and

• understand the issues that apply to the admission and discharge of psychiatric patients.

The US Public Health Service

The PHS is a division of the US Department of Health and Human Services (HHS). It is concerned with “the science of protecting and improving the health of people and their communities. This work is achieved by promoting healthy lifestyles, researching disease and injury prevention, and detecting, preventing and responding to infectious diseases” (CDC Foundation, What Is Public Health? [accessed July 18, 2019], at www.cdcfoundation. org/what-public-health).

The PHS includes the National Institutes of Health (NIF), Centers for Disease Control and Prevention, Indian Health Service, Food and Drug Administration (FDA), Agency for Toxic Substances and Disease Registry, Health Resources and Services Administration, Agency for Healthcare Research and Quality, and Substance Abuse and Mental Health Services Administration.

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C o p y r i g h t 2 0 2 0 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/13/2022 1:58 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS AN: 2361947 ; Stuart Showalter.; The Law of Healthcare Administration, Ninth Edition Account: s4264928.main.eds

T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n40

the federal government provides healthcare to about one-third of Americans and research and prevention activities to benefit everyone (see appendix 2.1).

Outside the federal sector there are myriad public, private, and vol- untary entities that contribute to the delivery of essential health services to the public, including private hospitals, physician practices, long-term care facilities, hospices, and employer-owned clinics. Many regions also have state- owned hospitals; state and local health and public safety or environmental departments; and many human service groups, education and youth devel- opment programs, recreation and arts organizations, and other economic and charitable organizations unconnected to government.1 In sum, to call this a “system” is a misnomer. As the late Princeton University economist Uwe Reihardt writes, “At international conferences on health policy, the US system of financing health care is routinely viewed as the bogeyman—as an example of how not to structure a nation’s health system.”2

A second objection to the claim of being the “best healthcare system in the world” is that the US does not guarantee its citizens access to care and, as a result of this and other factors, our overall health status “ranks poorly relative to that of residents of other industrialized nations.”3 This conclu- sion is confirmed by the Commonwealth Fund’s annual comparison of US health system performance with that of ten other high-income countries. The Mirror, Mirror 2017 report states:

The United States spends far more on health care than other high-income

countries, with spending levels that rose continuously over the past three

decades. Yet the U.S. population has poorer health than other countries. Life

expectancy, after improving for several decades, worsened in recent years for

some populations, aggravated by the opioid crisis. In addition, as the baby boom

population ages, more people in the U.S.—and all over the world—are living with

age-related disabilities and chronic disease, placing pressure on health care

systems to respond.

Timely and accessible health care could mitigate many of these challenges,

but the U.S. health care system falls short, failing to deliver indicated services

reliably to all who could benefit. In particular, poor access to primary care has con-

tributed to inadequate prevention and management of chronic diseases, delayed

diagnoses, incomplete adherence to treatments, wasteful overuse of drugs and

technologies, and coordination and safety problems.4 [Citations omitted.]

For those who are covered by some form of insurance or who can afford to pay out of pocket, the highest-quality healthcare on the planet is available in the United States. However, not everyone can access the care they need, so the claim that we have the best healthcare system in the world is somewhat dubious.

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Moral and Legal Issues These thoughts raise a fundamental question: Should we have a right to healthcare? There are both moral and legal aspects to the answer. The moral aspect concerns distributive justice: how goods, benefits, and burdens should be fairly allocated in a society. Reinhardt phrased the question this way after President Bill Clinton’s health reform initiative failed in 1997:

As a matter of national policy, and to the extent that a nation’s health system can

make it possible, should the child of a poor American family have the same chance

of avoiding preventable illness or of being cured from a given illness as does the

child of a rich American family?5

To many observers the answer is a clear, resounding “yes.” However, moral questions are so complex and fraught with emotion that politicians and poli- cymakers are chary of confronting them explicitly. To again quote Reinhardt:

And so, permanently reluctant ever to debate openly the distributive social ethic

that should guide our health system, with many Americans thoroughly confused

on the issue, we shall muddle through health reform, as we always have in the

past, and as we always shall for decades to come. Our doctors, nurses, and

research scientists will work hard to bring about many wondrous cures on the

clinical facet of our health system, while the financial facet will forever remain a

fount of rancor, confusion, litigation, and political posturing.6

On the legal side of the issue, the answers are less emotional but still somewhat complicated. Clearly, there is no constitutional right to healthcare. Given the level of medical knowledge in the eighteenth century (see chapter  1, part 2), it is no wonder that the founders did not consider it one of our “unalienable rights.” Although the Constitution provides that Congress has the power to “lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and gen- eral Welfare of the United States,”7 the “general welfare” does not perforce include the provision of healthcare.

Constitutional principles aside, various statutes and common-law principles provide for certain legal rights in healthcare, but these fall short of universal coverage and their application depends on the circumstances. Consider the following examples:

• In emergencies, individuals who come or are brought to a hospital have a statutory right to be seen and have their conditions stabilized.

• Persons with health insurance have a contractual right to their covered benefits.

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n42

• Persons with limited English proficiency have a statutory right to effective communication with their care providers.

• The doctor–patient relationship implies a contractual right to treatment without abandonment.

• There are common-law and statutory rights to informed consent and patient self-determination.

• Certain poor, disabled, and elderly persons have a statutory right to governmental financial assistance for healthcare services.

As one sees from this discussion, the United States does not guarantee universal access to healthcare either constitutionally or by statute and does not confront honestly the underlying social justice issues. The reforms contained in the Patient Protection and Affordable Care Act of 2010 (ACA) are the closest we have come to doing so, but given the contentious history of this issue and the toxicity of today’s political climate, we are unlikely to see universal health insurance anytime soon. More about the ACA later in this chapter, but first let us review the history of government involvement in healthcare over the past cen- tury or more (appendix 2.2 summarizes much of this history in a table format).

Early Twentieth Century: The Birth of Health Policy Until the dawn of the twentieth century, law had little effect on the evolution of healthcare in this country. Even while European countries were adopting broad plans of social insurance—for sickness, old age, industrial accidents, and the like—the US government did little to ensure the “general welfare” of the citizenry. Instead, responsibility for all social programs resided almost entirely with the states (see The Vaccine Act).

Physician licensure was the first seri- ous healthcare-related public policy issue, and it arose at the state level after the Civil War. Licensure laws had long been disfa- vored as elitist and monopolistic, but the need to protect the public from unquali- fied practitioners was strong. West Vir- ginia passed one of the earliest physician licensing law in the early 1880s, and it was immediately challenged by Frank Dent, a practitioner of “eclectic medicine,” a disci- pline that made use of botanical and other folk remedies.

Dent argued that the law uncon- stitutionally deprived him of the right to practice his trade, and his case—Dent

The Vaccine Act

The first federal legislation concerning healthcare was the Vaccine Act of 1813. It provided for the appointment of a federal agent who would be charged with preserving “genuine vaccine matter” for the prevention of smallpox and furnishing it, postage-free, to any US citizen who applied for it. Although that venture into health policy was suc- cessful for nearly a decade, the law was repealed in 1822 after contaminated vaccines caused an outbreak of smallpox and a health panic in North Carolina. Burned by the Vaccine Act experience, Congress refrained from enacting any significant health policy statute for nearly a century.

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v.  West Virginia (1889)—was the first significant healthcare issue to be decided by the US Supreme Court. In a unanimous decision, Justice Stephen J. Field displayed little sympathy for “Doctor” Dent’s argument and upheld the West Virginia statute “for the protection of society”:

No one has a right to practice medicine without having the necessary qualifica-

tions of learning and skill; and the statute only requires that whoever assumes,

by offering to the community his services as a physician, that he possesses such

learning and skill, shall present evidence of it by a certificate or license from a body

designated by the state as competent to judge of his qualifications.8

By the turn of the twentieth century, as the quality of care had improved and the public’s expectations had grown, health and healthcare became a matter of greater national concern. For example, when Upton Sinclair’s (1878–1968) book The Jungle appeared in 1906 and exposed hor- rendous working conditions in the slaughterhouses of Chicago, Congress stepped in to pass the Meat Inspection Act of 1906 and the Pure Food and Drug Act of the same year. These statutes led eventually to the creation of the FDA. Despite Congress’s action in 1906, other arguably health-related topics such as workers’ compensation were left to the states’ discretion, and the idea of insurance coverage for medical care was a chimera.

President Theodore Roosevelt (1858–1919) and other Progressives supported the concept of health insurance for all Americans during Roos- evelt’s 1912 campaign for president, but the idea died with his defeat. The onset of World War I, the red scare that followed the 1917 Russian Revolu- tion, and opposition from employers and physicians prevented further con- sideration of the idea for decades.

There was some temporary activity in 1922 with passage of the Sheppard-Towner Act, which led to creation of 3,000 child and mater- nal health centers around the country, many in rural areas. Reluctant to impinge on local prerogatives, however, Congress made state participa- tion in the law voluntary, and implementation varied from place to place. The law was allowed to lapse in 1929 after opposition from the American Medical Association (AMA), which saw it as a “socialist threat” to physi- cian autonomy.

The New Deal Years When Franklin D. Roosevelt (FDR) (1882–1945) was elected president in 1932, the nation was in economic shambles as a result of the Great Depres- sion, and social reform was in the air. A few states had passed old-age pension laws by then, and 34 foreign countries were operating some form of social insurance program for their citizens.9 FDR made Social Security a hallmark of his New Deal, proposing it to Congress in June 1934. His bill included

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unemployment insurance, old-age assistance, aid to dependent children, and grants to the states to provide various forms of medical care. However, a pro- posal for the federal government even to study the concept of national health insurance was considered too politically controversial and was ultimately left out of the bill. Reform of our fragmented health system has remained a vola- tile issue ever since.10

In addition to the Social Security Act, the Depression Era spawned new concepts in hospital and physician insurance coverage. In Blue Begin- nings, the history of the Blue Cross Blue Shield Association, the genesis of the Blue Cross and Blue Shield plans is summarized:

Born out of necessity in the Great Depression, the Blue Cross concept was created

in 1929 by a pioneering businessman, Justin Ford Kimball. He offered a way for

1,300 school teachers in Dallas to finance 21 days of hospital care by making small

monthly payments [$6 per person] to the Baylor University Hospital.

Around the same time, the Blue Shield concept was growing out of the

lumber and mining camps of the Pacific Northwest. Serious injuries and chronic

illness were common among workers in these hazardous jobs. Employers who

wanted to provide medical care for their workers made arrangements with physi-

cians who were paid a monthly fee for their services.

These pioneer programs provided the basis for what would become the

“modern” Blue Shield Plans.11

Although a “contract doctor” system had served workers on the Los Ange- les Aqueduct project from 1908 to 1912, the Blue Cross and Blue Shield plans were more prominent, and they were destined to play a major role in Medicare and Medicaid years later. “The Blues” were followed by what is now known as Kaiser Permanente, a consortium established to provide

health coverage to workers on the Colo- rado River Aqueduct Project and later for employees in the shipyard, steel mill, and other industries.12 These and similar private initiatives evolved into the concept we now generally refer to as managed care plans (see Managed Care).

World War II to the Eisenhower Years During World War II, when wage and price controls were in effect, employers added health coverage as a benefit in lieu of salary increases, and in 1954 their con- tributions to health plans were determined untaxable income for their employees. For

Managed Care

Managed care plans are insurance programs that attempt to reduce the cost of care. They do so through economic incentives, review of the medi- cal necessity of specific services, increased ben- eficiary cost sharing, controls on inpatient admis- sions and lengths of stay, selective contracting with healthcare providers, and intensive man- agement of high-cost treatments. Managed care plans are of three basic types: health maintenance organizations (HMOs), preferred provider organi- zations (PPOs), and point of service (POS) plans, the last being essentially a hybrid of the first two.

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C h a p t e r 2 : A c c e s s t o H e a l t h c a r e : R i g h t s a n d R e s p o n s i b i l i t i e s 45

this basic reason, even today—three generations later—most Americans’ health insurance is tied to their place of employment. This has led to what Professor Paul Starr has called “a policy trap—a costly, extraordinarily com- plicated system which nonetheless protected enough of the public to make the system resistant to change.”13 This “trap” has bedeviled every attempt to reform the system from the 1940s to the present day.

In 1948, President Harry S Truman (1884–1972) campaigned for reelection on a platform that included a plan for national health insurance. Truman defeated Governor Thomas E. Dewey (1902–1971) and Democrats regained control of Congress, but he never actually submitted a legislative proposal and was not successful in any attempts to pass a healthcare bill. Even some members of Truman’s own party were not in favor. “Southern Demo- crats in key leadership positions blocked [Truman’s] initiatives, partly in fear that federal involvement in health care might lead to federal action against segregation at a time when hospitals were still separating patients by race.”14

This fear was based on prior experience. In 1946, at Truman’s urging, Congress had passed the Hospital Survey and Construction Act (the “Hill- Burton Act”), a program of federal grants and loans designed to modernize existing hospitals and construct new ones in underserved areas. To the conster- nation of some southern senators known as the Dixiecrats, Truman’s original proposal prohibited racial discrimination in federally subsidized facilities, but to ensure the law’s passage, Senator J. Lister Hill of Alabama (1894–1984) added a provision that allowed segregation of hospital facilities and services according to the concept of “separate but equal” (see Segregation and the Hill-Burton Act). The Hill-Burton Act thus has the dubious distinction of being the only federal law of the twentieth century to codify racial segregation.

The Hill-Burton Act is distinctive in another way as well, this one laudable. Hospitals that received federal money were required to provide a reasonable amount of free or reduced-cost services to persons who were unable to pay. The act was arguably the first federal law to address the problem of the healthcare uninsured, and it would be the last until Lyndon B. Johnson (1908–1973) took office.

Public policy issues aside, as healthcare made significant advances in the 1930s, 1940s, and 1950s, the federal government became more directly involved in supporting medicine. The medical programs of the military services were strengthened. Agencies such as the NIH and the National Science Foundation were created or expanded. Furthermore, the PHS became more involved in medi- cal research and provided care to certain populations, such as inmates, lepers, and narcotics addicts.

Segregation and the Hill-Burton Act

“Separate but equal” was struck down in the con- text of education in the famous 1954 US Supreme Court case Brown v. Board of Education, but the Hill-Burton Act’s segregation provision was not declared unconstitutional until 1963.

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Outside of government, private groups such as the American Cancer Society and the March of Dimes spurred public support for scientific research on particular diseases. Polio, the most frightening disease of the time, was targeted for a cure by the National Foundation for Infantile Paralysis and its March of Dimes. When the Salk vaccine, named after its principal developer, Dr. Jonas Salk (1914–1995), was declared effective and made available in 1955, parents were so excited that “pandemonium swept the country.”15

With various private insurance options in place, the nation recover- ing from the effects of World War II, and medical research proving effective against polio and other diseases, a generation passed before we reached the next milestone in health policy: the landmark legislation of President Lyndon Baines Johnson (LBJ).

The Great Society: Medicare and Medicaid After assuming office on the death of President John F. Kennedy in 1963, Johnson was elected to a full term in 1964, giving Democrats an overwhelm- ing majority in Congress. They dove right in to consider his “Great Society” agenda, which included civil rights, consumer protection, the environment, and healthcare, the last being one of Johnson’s first and highest priorities. It would require scores of pages to describe the proposals and the political maneuverings that allowed the Medicare and Medicaid laws to pass, so a brief summary here will have to do. (A detailed history can be found on the Social Security Administration website.)

We begin with the fundamental proposition that, ideally, the legislative process requires compromise and deal making. In the case of Johnson’s pro- posals for Medicare and Medicaid, the interests of hospitals, physicians, and insurance companies had to be addressed—all of which had a vested interest in maintaining the status quo and had traditionally opposed any effort to effect change.16

Johnson, a former Senate majority leader and wily political profes- sional, was aware of the stiff opposition he would face as his proposals went forward. Cooperation from doctors, hospitals, and the insurance industry was therefore essential. Rather than advocate a comprehensive system of national health insurance for all Americans (an idea that never would have passed), Democrats came up with an ingenious proposal that one observer described as a “three-layered cake.” It had something all sides could like:

1. The Democrats’ plan for hospital insurance for the elderly and individuals with disabilities under Social Security (now called “Medicare Part A”)

2. A Republican-backed plan for government-subsidized insurance to cover physicians’ services (“Medicare Part B”)

3. Assistance to the states for care of the poor (see Medicaid)

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In addition, the proposal allowed healthcare providers (e.g., hospitals, physi- cians, and long-term care facilities) to nom- inate private companies as go-betweens in dealing with the SSA. These Medicare Administrative Contractors (MACs)— originally known as Part A Fiscal Interme- diaries and Part B Carriers—would receive the federal money and pay the providers’ claims. They would also render consulting, auditing, and similar services. The arrange- ment seemed to assuage providers’ and insurance companies’ concerns enough to ensure passage of the bill, and it would ultimately prove financially rewarding for the MACs, who of course provide their services for a fee.

Blue Cross and Blue Shield (BCBS), in particular, stood to benefit from this compromise because, not surprisingly, the overwhelming majority of providers chose BCBS organizations to be their Medicare contractors. Thus it can be said that pro- vider and insurance company support for Medicare was obtained by giving them more control over the funds that paid for the new system. “As a result, the administration of Medicare was lodged in the private insurance systems [that were] originally established to suit provider interests. And the federal government surrendered direct control of the program and its costs.”17

As noted earlier, legislation usually involves deals and compromises. Medicare and Medicaid were no exceptions. For a generation or more, orga- nized medicine and conservative naysayers had predicted that trouble would lie ahead if something like this proposal were to pass. However, in the end, the medical establishment accepted the inevitable and made the best of it. For providers, in the first few years, Medicare was a bonanza because it paid hospitals based on their costs rather than, for example, a negotiated schedule of rates. It also included a generous formula to cover depreciation of assets. As the costs of care rose and the number of beneficiaries increased a decade or more later, however, these political accommodations—albeit necessary to ensure Medicare’s passage—began to have serious adverse consequences.

Nixon to Reagan President Richard M. Nixon (1913–1994) began his first term in office in 1969, a time of great social unrest. John F. Kennedy (1917–1963), Robert

Medicaid

Medicaid is subsidized by federal funds, and the amount of federal funds paid (at least 50 percent of a state’s Medicaid budget) varies depending on a complex formula that includes average per capita income for each state relative to the national aver- age. This is called the Federal Medical Assistance Percentage (see, e.g., Kaiser Family Foundation, Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier [accessed July 12, 2019], at https://www.kff.org/medicaid/state-indicator/ federal-matching-rate-and-multiplier/).

Although it is federally subsidized, Medic- aid is more than 50 separate programs run by individual states and US territories—thus the administrative structures, reimbursement rates, and coverage levels vary by jurisdiction. Physician participation is far from universal, and because the program is stigmatized as being public assistance (welfare), Medicaid has never attained Medicare’s level of societal acceptance.

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F.  Kennedy (1925–1968), and Martin Luther King Jr. (1929–1968) had been assassinated, huge riots took place in the Watts neighborhood of Los Angeles and later throughout the country after King’s death, the Viet- nam War was at its height, student protests against the military draft were common, and National Guard troops shot and killed four students at Kent State University in Ohio.

The situation in healthcare was similarly tumultuous. Nixon declared that a crisis was at hand because of increased costs and an unequal distribu- tion of healthcare professionals. Prices were rising sharply, and inflation was making healthcare unaffordable for millions of Americans, especially the poor. The rhetoric of the time eerily foreshadowed language used during the reform efforts of Presidents Bill Clinton (1946–) and Barack Obama (1961–).

The healthcare system was seriously out of balance. There was too much emphasis on hospital treatment, not enough on primary care, and vir- tually none on wellness and prevention. The incentives, too, were all wrong. Cost-based reimbursement meant Medicare paid hospitals and doctors what- ever “usual, customary, and reasonable” fees prevailed in their service area. This arrangement practically gave providers a free hand to charge whatever they wanted, and not surprisingly, they did.

Starr describes the situation clearly:

Patients want the best medical services available. Providers know that the more

services they give and the more complex the services are, the more they earn and

the more they are likely to please their clients. Besides, physicians are trained to

practice medicine at the highest level of technical quality without regard to cost.

Hospitals want to retain their patients, physicians, and community support by

offering the maximum range of services and the most modern technology, often

regardless of whether they are duplicating services offered by other institutions

nearby. Though insurance companies would prefer to avoid the uncertainty that

rising prices create, they have generally been able to pass along the costs to their

subscribers, and their profits increase with the total volume of expenditures. No

one in the system stands to lose from its expansion. Only the population over

whom the insurance costs and taxes are spread has to pay, and it is too poorly

organized to offer resistance.

The obvious defect is the absence of any effective restraint. Yet this is not

accidental oversight. It is . . . the outcome of a long history of accommodation to

private physicians, as well as to hospitals and insurance companies.18

Other unintended consequences included the disincentive to provide preventive and health promotion services (because they were not reimburs- able costs) and Medicaid’s burden on state and local governments, which left them with limited resources to care for people who were uninsured but not

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poor enough to qualify for the Medicaid program. The only option for the uninsured “near poor” was to seek treatment at hospital emergency depart- ments, the most expensive setting imaginable.

To address the financial challenges, the Nixon administration proposed developing prepaid health plans along the lines of the Kaiser Per- manente model (discussed earlier). These HMOs, as they are now called, would be paid a capitated amount (per member/per month) and would be responsible, through a network of participating physicians, to care for their enrollees with the total funds provided. In theory, this model would rearrange the incentives, contain costs, and make wellness and prevention services profitable.

The HMO Act was passed in 1973, and the results were mixed. The theory behind HMOs is sound, but keeping people well is only one way for insurance companies to prosper; another way is to collect premiums while providing less care, thereby reducing the insurers’ medical loss ratio (the percentage of premium dollars paid for medical claims) and increas- ing their profit margin. When mild economic recessions hit the country in the mid-1970s and early 1980s, HMOs began to see less income from the reserve funds they had invested, so they tightened their treatment criteria. Authorizations for hospital admission were harder to come by, and patients approved for treatment often found themselves discharged “sicker and quicker.” (For more on medical loss ratios, see the Legal Brief under Utilization Review: Controls on Admission and Discharge later in this chapter.)

Other cost control measures implemented during this period were certificate of need (CON) programs (to control hospitals’ capital expen- ditures), health-planning agencies (to review proposed projects and make recommendations on CONs and federal funding), and peer review organiza- tions (to give advice on whether a physician’s services were necessary in a given case). None of these measures worked extremely well. The avalanche of laws and regulations not only did not control costs but also seemed to deepen the public’s skepticism. Treatment was becoming more expensive with no noticeable improvement in the health of the population.

Apparently fed up with the lack of progress in controlling costs— and perhaps wanting to distract attention from the growing Watergate scandal—President Nixon proposed a national health insurance plan that would have provided comprehensive benefits for all Americans. In doing so, he became the first president to actually submit healthcare reform leg- islation to Congress. The timing was unfortunate, however. If Nixon had not been the proponent, and had the Watergate scandal not intervened to cause his resignation, the United States might have had national health insurance in 1974.

medical loss ratio The percentage of premium dollars spent on medical care and quality improvement efforts.

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Reagan to Obama The following decade saw an emphasis on corporatization. For-profit com- panies—notably, Hospital Corporation of America, Columbia, AMI, and Humana—began to acquire or manage healthcare facilities. Hospitals of all kinds (both for-profit and not-for-profit) merged, diversified, consolidated, restructured, acquired one another, and divested one another. Simple hos- pital corporations became multi-institutional systems and tried to provide a spectrum of services. Although hospital leaders wanted the public to believe otherwise, it seemed to some observers that the goal was more to maximize reimbursement and increase market share than to serve communities’ needs.

Healthcare even began to sound like corporate America. “Trustees” became “directors.” “Hospital administrators” became “presidents” and “chief executive officers.” “Medical records departments” became “health information management.” “Nursing homes” turned into “skilled nursing facilities.” Expressions such as vertical and horizontal integration, industry concentration, return on investment, and earnings per share seemed to displace the concepts of mission, values, charitable purpose, and community service.

Starr was prescient when he wrote a quarter century ago:

This turn of events [corporatization] is the fruit of a history of accommodating

professional and institutional interests, failing to exercise public control over

public programs, then adopting piecemeal regulation to control the inflationary

consequences, and, as a final resort, cutting back programs and turning them

back to the private sector. The failure to rationalize medical services under public

control meant that sooner or later they would be rationalized under private control.

Instead of public regulation, there will be private regulation, and instead of public

planning, there will be corporate planning. Instead of public financing for prepaid

plans that might be managed by the subscribers’ chosen representatives, there

will be corporate financing for private plans controlled by conglomerates whose

interests will be determined by the rate of return on investments. That is the future

in which American medicine seems to be headed.

But a trend is not necessarily fate. Images of the future are usually only

caricatures of the present. Perhaps this picture of the future of medical care will

also prove to be a caricature. Whether it does depends on choices that Americans

have still to make.19

The 1980s also saw some significant legislative developments:

• The Tax Equity and Fiscal Responsibility Act of 1982 signaled the end of cost-based reimbursement and the beginning of Medicare’s prospective payment system (PPS).

• The Social Security Amendments of 1983 phased in the use of diagnosis-related groups for hospital inpatient services under PPS.

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• The Consolidated Omnibus Budget Reconciliation Act of 1985 enabled many employees to keep their health coverage after job loss, albeit for a short time and at their own expense.

• The Emergency Medical Treatment and Labor Act was passed in 1986 to prevent patient dumping, in which providers passed off low-income patients to others or simply turned away poor people in favor of more profitable patients.

There is irony in the fact that these developments—especially the first two— occurred during Ronald Reagan’s (1911–2004) presidency (1981 to 1989). Reagan was an outspoken opponent of “socialized medicine,” and in the early 1960s he had warned that Medicare would mean government control of healthcare. Yet Medicare’s pre-1983 “cost-based reimbursement” system contained virtually no control over the prices hospitals could charge. Only through the PPS system that Reagan signed into law did the government begin to control prices for healthcare services.

There was a serious effort to reform our healthcare system soon after President Bill Clinton took office in 1993. The Clinton plan would have provided universal coverage by mandating insurance for everyone and set- ting up insurance cooperatives to help the poor obtain coverage. The effort barely got off the ground, however, because of the complexity of its provi- sions; the press of other important business; and heavy opposition from conservatives, libertarians, and the health insurance industry (see Politics in Action).

While Clinton’s plan was being considered, Republicans were looking ahead to the midterm elections and had little incentive to deal with health- care reform. In the November 1994 election, the GOP regained control of Congress. One year after Clinton’s health reform ship set sail, it was dead in the water. Writing in the winter of 1995, Starr provided this epitaph:

The collapse of health care reform in the first two years of the Clinton adminis-

tration will go down as one of the great lost political opportunities in American

history. It is a story of compromises that never happened, of deals that were never

closed, of Republicans, moderate Democrats, and key interest groups that back-

pedaled from proposals they themselves had earlier co-sponsored or endorsed.

It is also a story of strategic miscalculation on the part of the president and

those . . . who advised him.20

Politics in Action

Insurance interests produced a famous (or infa- mous, depending on one’s point of view) television ad campaign to oppose President Bill Clinton’s proposal. The ads showed a fictional couple, Harry and Louise, complaining about the plan and urging viewers to contact their members of Congress. Ironically, the Harry and Louise characters returned during the 2008 presidential campaign and the first year of President Obama’s term to support the concept of healthcare reform. This time the ads were sponsored by different organizations, not the health insurance industry.

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President George W. Bush (1946–; in office from 2001 to 2009) devoted little attention to health policy. One sig- nificant health law did pass during Bush’s tenure, however.

The Mental Health Parity and Addiction Equity Act (“Parity Act”)21 provides, among other things, that the coverage of mental health and substance abuse disorders must be on a par with coverage of other medical/surgical care. The law applies to group health plans, so that their financial requirements (e.g., copays, lifetime limits) and treatment decisions (e.g., preauthorization require- ments, visit limits) will be applied in the same fashion for diseases such as schizo- phrenia as they would be for diabetes, for

example. The ACA builds on the Parity Act by making mental health and substance abuse coverage one of the 10 “essential health benefit” categories required of individual and small group health insurance plans.

The Affordable Care Act

After the 2008 election of Obama, another opportunity for reform presented itself, and the result was the passage in March 2010 of the ACA.22 Upheld by the US Supreme Court in June 2012 and again in June 2015,23 this landmark legislation did not create a system of universal insurance, but it was the most significant attempt to improve health insurance coverage since the enactment of Medicare and Medicaid in the mid-1960s. It has significantly reduced the number of Americans who are uninsured (see Legal Brief), although those gains have been reversed, to a degree, by the Trump administration.

Although generally referred to as “the law,” “the ACA,” or (often deri- sively) as “Obamacare,” this legislation was not a single statute but was a com- bination of the Patient Protection and Affordable Care Act of 2010 and three other statutes. As is usually the case with major legislation, the jumble of stat- utes resulted from political realities and compromise among various affected interests. When all the provisions are counted, the bill ran to more than 900 pages, 10 “titles” (major divisions), and about 400 individual sections. It was meant to achieve near-universal coverage and to engage in spreading risk, thus lowering premiums through the creation of effective health insurance markets for individuals and new statutory requirements (such as mandated

spreading risk The goal of any insurer is to spread risk over a large enough population that losses can be predicted with reasonable accuracy. The larger the insured population, the more accurately losses and premiums can be calculated.

Legal Brief

The number of uninsured has declined steadily since the ACA went into effect. Between 2010 and 2018, the uninsured rate dropped from 16 percent (48.6 million people) to 8.8 percent (28.3 million people) (see Katie Keith, Two New Federal Sur- veys Show Stable Uninsured Rate, Health Affairs (September 13, 2018), at https://www.health affairs.org/do/10.1377/hblog20180913.896261/ full/. See also Edward Berchick, Emily Hood, and Jessica C. Barnett, Health Insurance Coverage in the United States, US Census Bureau (published September 2018), at https://www.census.gov/ content/dam/Census/library/ publications/2018/ demo/p60-264.pdf ).

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minimum coverage) for insurance companies. It pursued these goals through a carefully balanced restructuring of the nation’s health insurance ecosystem.

Through what is commonly known as the individual mandate, the ACA requires individuals to maintain a certain level of minimum insurance coverage. To compel compliance with this provision, Congress imposed a tax penalty on persons who were subject to the requirement but chose to disobey it. The ACA labeled this penalty the “shared responsibility payment,” and it was originally set to be assessed $695.00 or 2.5 percent of a family’s house- hold income—whichever was greater.

Some individuals—for example, noncitizens, illegal immigrants, mem- bers of religious orders, and incarcerated individuals—were exempt from the individual mandate. In addition, some people were exempt from the shared responsibility payment but not the individual mandate. These included indi- viduals who cannot afford the coverage, taxpayers with income less than 100 percent of the poverty line for the size of the family involved, members of Native American tribes, people who experience short-term gaps in coverage, and individuals who have received a hardship exemption from the secretary of the HHS. Thus, several classes of individuals were obligated to obtain cover- age but were not subject to the penalty for failure to do so.

Congress also wanted to ensure affordable health insurance for those with preexisting conditions. For example, Congress specifically determined that

if there were no [individual mandate] requirement, many individuals would wait

to purchase health insurance until they needed care. By significantly increasing

health insurance coverage, the requirement . . . will minimize this adverse selec-

tion and broaden the health insurance risk pool to include healthy individuals,

which will lower health insurance premiums. The requirement is essential to

creating effective health insurance markets in which improved health insurance

products that are guaranteed issue and do not exclude coverage of preexisting

conditions can be sold.24 (Emphasis added.)

Because avoiding adverse selection and its consequences is essen- tial to maintaining a viable insurance market, the ACA required insur- ers to accept every employer and individual who applied for coverage; prohibited exclusion of individuals based on preexisting conditions; and prohibited charging higher premiums based on age, sex, health status, or certain other factors.

The ACA comprises many other integral provisions. These include an excise tax on high-cost insurance plans (the so-called Cadillac tax), the elimi- nation of lifetime and annual coverage limits, and a provision allowing depen- dent children to remain on their parents’ insurance until the age of 26. The ACA also implemented an employer mandate and an employer-responsibility

adverse selection This occurs when high-risk individuals choose more generous and expensive insurance plans, while healthier people go uninsured or choose plans with lower premiums. If allowed to continue, adverse selection would make insurance companies unprofitable and eventually put them out of business. Commentators sometimes refer to this outcome as a death spiral.

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n54

assessment. These provisions require employers with at least 50 full-time employees to pay the federal government a penalty if they fail to provide their employees with ACA-compliant health plan options.

Several ACA provisions are tied to another signature reform—the creation and subsidization of “health insurance exchanges.” Through these and other provisions, the ACA allocated federal money to subsidize the pur- chase of health insurance and expanded the scope of Medicaid, thus adding millions of people to the eligibility roster.

Appendix 2.3 lists select ACA reforms arranged by the segments of the sector they affect, and as shown in appendix 2.4, those reforms were scheduled for implementation in phases throughout the 2010s. The result was, for a time, greater affordability and a significant decrease in the number of uninsured persons. Some well-publicized glitches that plagued the federal health insurance exchange at its outset were resolved, and notwithstanding some anticipated premium increases, insurance became more affordable for many Americans.

Legal Challenges and the Supreme Court’s Affordable Care Act Rulings In addition to problems during start-up, litigation immediately threatened the ACA’s very survival. Literally minutes after President Obama signed the Act into law, Florida and 12 other states filed suit to challenge it. They were later joined by 13 additional states, numerous individual plaintiffs, and the National Federation of Independent Business (NFIB) in a case that made its way to the US Supreme Court as NFIB v. Sebelius, 567 U.S. 1, 132 S. Ct. 2566 (2012).

NFIB focused on two main questions. The first was whether the indi- vidual mandate—the requirement to buy health insurance or make a “shared responsibility payment”—exceeds Congress’s constitutional authority. In a rather remarkable bit of judicial diplomacy and legal craftsmanship, Chief Justice John Roberts cobbled together a 5–4 majority which held that the individual mandate is not a valid exercise of Congress’s power to regulate commerce, but it is a valid exercise of Congress’s taxing power. This issue turned on whether the individual mandate is a “tax.” This question is impor- tant because under the Anti-Injunction Act (AIA), taxes can be challenged only after they have been paid. If the payment were considered a tax, the case would have to be dismissed.

The chief justice and his colleagues found it significant that Congress used the word “penalty” to describe this payment but called other payments in the ACA “taxes.” They held that the shared responsibility payment is not a tax in the context of the AIA, and thus the case would not be dismissed on that basis. However, the AIA’s language does not determine whether the penalty is a tax within the meaning of Congress’s authority to Congress to “lay and

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collect taxes.”25 Thus the payment is consti- tutionally permissible (see Law in Action).

The second major question in NFIB was whether the federal government can force states to expand their Medicaid programs, which it attempted to do by threatening to cut their existing Medicaid funding. On this point the Court ruled that Medicaid expansion cannot be coerced, but it is optional at each state’s discretion.

Relying on this decision, govern- ments in as many as two dozen states, most of them led by Republicans, initially refused to expand Medicaid on the belief (or pretext) that the cost would be a sig- nificant burden. Proponents countered that the federal share of the increased cost would be at least 90 percent, and eventu- ally a few recalcitrant states reversed their positions after electing new governors. As of early 2019, 37 states (including DC) had expanded their Medicaid programs, while 14 had not.26

The practical effect of NFIB v.  Sebelius was that the most salient provisions of the ACA survived: the individual mandate, elimination of annual and lifetime benefits limitations, prevention of policy rescission because of illness, coverage of children up to 26 on their parents’ plans, guaranteed coverage for preexisting conditions, and reforms of underwriting practices. In addi- tion, although states could not be forced to expand their Medicaid programs, federal funds were still available to cover much of the incremental cost for those states that chose to avail themselves of the opportunity.

The second important Supreme Court ACA decision was King v.  Burwell, 576 U.S. ___, 135 S. Ct. 2480 (2015). The ACA requires the creation of a health insurance exchange in each state, and the federal government establishes the exchange for a state that does not create one of its own. The law then provides for tax credits

Law in Action

That a concept can be classified as one thing for a certain purpose and as something else for another boggled the minds of some people and provided talking points for disingenuous politicians and doctrinaire commentators who opposed the ACA. However, Chief Justice Roberts’s distinction is not logically inconsistent. A concept can be judged by different standards depending on context and function.

A simple example may help to clarify. In bot- any, a tomato is classified as a fruit—the fleshy, seed-bearing part of a flowering plant. To a cook, however, a tomato is a vegetable because it has less sugar than most fruits and is served as part of a salad or entrée rather than at dessert. As British journalist Miles Kington once wrote, “Knowledge is knowing that a tomato is a fruit; wisdom is not putting it in a fruit salad.” To hold that it is a fruit in one context (botany) and not in another (cooking) is eminently defensible.

This distinction was precisely the finding the US Supreme Court made more than a century ago. In the late 1800s, US tariff laws imposed a tax on imported vegetables but not on fruits, so classification of the tomato was a matter of some legal and financial importance. In Nix v. Hedden, 149 U.S. 304 (1893), the Supreme Court decided that, regardless of what botanists say, the tomato is a vegetable for purposes of customs regula- tions because of how the tomato is used and the popular perception that it is more vegetable-like than fruit-like.

Like a tomato, the shared responsibility pay- ment is one thing by one set of standards but something else by another. It is a tax for purposes of constitutional analysis, but it does not qualify as a tax under the narrower definition of the AIA.

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(subsidies) for certain low-income taxpay- ers who are enrolled in an insurance plan through “an Exchange established by the State.” An Internal Revenue Service (IRS) regulation interpreted that language to mean any exchange, whether created by the state or the federal government.

The plaintiffs in King v. Burwell were four residents of Virginia (which had opted to use the federal exchange). Without a

federal subsidy, these plaintiffs would be exempt from the individual mandate requirement because of their low incomes. Given that Virginia had opted to use the federal exchange, the plaintiffs argued that no exchange established by the state was available to them, so they could not receive the tax subsidies and thus would not need to be insured. Under the IRS interpretation, however, they would receive the subsidies and would be required to purchase insurance.

In a 6–3 decision, Chief Justice Roberts noted that without subsidies, the statute would not work as Congress intended. Instead, low-income people in states relying on the federal exchange would not be able to afford coverage, and those states’ insurance markets would be pushed into a “death spiral” (see Death Spiral). The court’s majority was not about to let the ACA fail because of a few examples of what Roberts called “inartful drafting.” Roberts felt that in the context of the whole statute, the federal exchanges are not meaning- fully different from those created by the state. This reading of “established by the state” is in line with the congressional intent to cover as many people as possible (see The Court Decides: King v. Burwell at the end of this chapter).

The late Justice Antonin Scalia, joined by Justices Clarence Thomas and Samuel Alito, dissented vociferously. He argued that the plain language of the statute clearly limits the tax subsidies to state-created exchanges. To hold otherwise is “quite absurd,” the often-irascible Scalia wrote, adding:

Words no longer have meaning if an Exchange that is not established by a State is

“established by the State.” . . . Under all the usual rules of interpretation, in short,

the Government should lose this case. But normal rules of interpretation seem

always to yield to the overriding principle of the present Court: The Affordable Care

Act must be saved. . . .

I wholeheartedly agree with the Court that sound interpretation requires

paying attention to the whole law, not homing in on isolated words or even isolated

sections. Context always matters. Let us not forget, however, why context matters:

It is a tool for understanding the terms of the law, not an excuse for rewriting them.

. . . Ordinary connotation does not always prevail, but the more unnatural

the proposed interpretation of a law, the more compelling the contextual evidence

Death Spiral

A death spiral is a situation in a health insurance market in which premiums grow, healthy enrollees drop coverage (“adverse selection”), the risk pool becomes riskier, and premiums grow even faster for the remaining insured population. Left unchecked, such a market will eventually collapse.

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must be to show that it is correct. Today’s interpretation is not merely unnatural;

it is unheard of. Who would ever have dreamt that “Exchange established by the

State” means “Exchange established by the State or the Federal Government”?

An Uncertain Future Although it survived these two major court challenges, the ACA’s future is uncertain as a result of the unpredictability of the political process. Despite its clear benefits, and even though it was modeled in large part on reforms adopted in 2006 by Massachusetts under then Republican governor (and now US Senator) Mitt Romney, Republicans introduced more than 60 bills in the 115th Congress (2017–2018) to repeal the law entirely. After those “repeal and replace” attempts failed, they used the mechanism of the 2017 tax reform bill to reduce the penalty (the “shared responsibility payment” or “individual mandate”) to $0 beginning in 2019. This effectively eliminated the requirement that most American be insured.

Whether reducing the penalty to zero is in fact the death knell for the individual mandate and the ACA itself was the issue in a cased filed in Febru- ary 2018 by Texas and 19 other Republican-led states. In late 2018 a district court judge held that because the mandate no longer “triggers a tax,” it is unconstitutional. He further held that without the mandate the entire ACA is invalid.27 This decision will, of course, be appealed and is likely to reach the Supreme Court in due course.

In addition to trying to repeal the individual mandate, the Trump administration attempted to undermine the law by, among other things, scaling back ACA outreach and education programs, making it easier to get hardship exemptions from the individual mandate, transferring certain responsibilities to the states, and encouraging creation of alter- native insurance markets with benefits that do not meet the ACA’s minimum require- ments (see States’ Mandates).28

To defend the law, California and 16 Democrat-led states plus numerous “friends of the court” (amicus curiae) have intervened in the Texas litigation. In August 2018, Maryland filed suit in federal court for a declaratory judgment that the president has violated his duty under Article 2, Section 3 of the Constitu- tion to “take Care that the Laws be faith- fully executed.” Although the lawsuit was

States’ Mandates

As noted earlier, Massachusetts has had an individual mandate since 2006, and other states may consider enacting their own as a way to avert the negative consequences of repeal of the federal requirement (See Jason a. Levitis, state individuaL Mandates [pub- lished October 2018], at https://www.brookings. edu/wp-content/uploads/2018/10/Levitis_State- Individual-Mandates_10.29.18.pdf ). It should also be noted that since 1974 Hawaii has had an employer mandate that requires coverage for all employees who work at least 20 hours per week. This was the first law in the nation to set minimum standards of healthcare coverage for workers (see, e.g., State of Hawaii Disability Compensation Division, About Pre- paid Health Care (accessed July 18, 2019), at https:// labor.hawaii.gov/dcd/about-phc/).

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dismissed by the trial court judge as being speculative and premature,29 it will likely be filed again to reassert this interesting theory if concrete actions amounting to failure to carry out the law actually do occur. Both the Mary- land and Texas cases bear close watching.

Given the current tumultuous legal and political climate, the ACA faces an uncertain future, to be sure. Readers will wish to track how many of the implementation steps listed in appendix 2.4 were completed, delayed, or rescinded and what effect any changes have on the number of persons not eligible for Medicare who do not have insurance.

Some Final Thoughts First, after years of emotional, rancorous, and often disingenuous political dis- course (see Law in Action), the ACA was a giant step toward improving Americans’ access to healthcare and controlling the costs of health services. Tumid political rhetoric to the contrary notwithstanding, the ACA was not socialized medicine or a “massive power grab” by the federal government, as opponents often claimed. Many commentators seem to feel that it was a reasonable compromise.

Second, much of the reason for the years-long ACA implementa- tion timeline had to do with Congress’s desire to defer to the states and to “start small” with various demonstration projects and pilot programs. At

least 40 sections of the law refer in some significant way to state initiatives that constitute a kind of public policy labora- tory for experimenting with new ideas. Some of these provisions for state-based innovations include flexibility relating to insurance exchanges, flexibility to estab- lish alternative programs, an eligibility option for family planning services, new options for states to provide long-term care services, and demonstration pro- grams to evaluate alternatives to current systems of medical tort litigation. These options and projects are, of course, sub- ject to change by Congress and to vari- ous approaches in the several states.

Third, the ACA strengthened the government’s primary fraud laws—the false claims, antikickback, and Stark self- referral statutes—and enforcement agen- cies will use them more aggressively. As dis- cussed in chapter 15, regulatory agencies’

Law in Action

An example of disingenuous political discourse is the false rumor that the ACA would include “death panels” that could “pull the plug on Granny” if her care cost too much. This phony issue and the resulting outcry led legislators to eliminate a pro- vision for Medicare to pay for voluntary physician consultations about living wills, healthcare pow- ers of attorney, and similar matters.

Confusion about government’s rule in end- of-life care persisted long after the ACA passed. A Kaiser Family Foundation survey found that “in 2013, more than one-third (35 percent) of people ages 65 and over incorrectly believed that a panel was created by the ACA to make end-of-life deci- sions for Medicare beneficiaries.” (Henry J. Kaiser Family Foundation, 10 FAQs: Medicare’s Role in End-of-Life Care [published September 26, 2016], at https://www.kff.org/medicare/fact-sheet/10- faqs-medicares-role-in-end-of-life-care.)

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increased zeal for recovering money spent unnecessarily as a result of fraud, waste, and abuse should help recoup some of the costs of new programs.

Fourth, of all the implementation challenges, the biggest hurdles were perhaps those the states had to face. They needed to set up insurance exchanges (or allow the federal government to operate one for them), amend their insur- ance codes, expand their Medicaid programs (if they chose to do so), and test alternatives to medical malpractice litigation, all while facing significant budget deficits and keeping an eye on the constantly changing political landscape. For this reason, implementation may seem to be taking a very long time. In the words of one health policy analyst written in 2010 but still valid today,

Implementation [often seems to be] adaptive and somewhat unpredictable; a

function of real world developments, politics, the number of players and decision

points and the time period involved in implementing a law. In the case of health

reform, implementation [will] depend not only on what is written in the law, but

also on how the political and economic landscape shifts, how governors and states

respond to health reform, how the private sector responds, how health care institu-

tions and health professionals filter the intent of the legislation on the front lines,

what the media [do], and most of all, what the public’s reaction to health reform is

over the next several years.30

Fifth, anticipating the 2020 election, politicians and policymakers have floated various ideas for further changes to the health system. Among these are such concepts as “single payer” (aka “Medicare for all”), which would essentially be a federal takeover of the health insurance market. Such a drastic overhaul would be complicated, challenging, and enormously disruptive, and it would meet with massive resistance from entrenched interests (see The Issues Posed by a Single-Payer System).

Finally, the history of the US health- care “system”—a patchwork of private and public providers financed in various dis- jointed ways—reflects an ongoing tension between the need to fill gaps in health cov- erage and the peculiar American ethos that purports to abhor “big government” on one hand while generally approving mas- sive programs such as Medicare and Social Security on the other. The US hospital, an “idiosyncratically ‘American’ institution,”31 is thus caught in the dilemma of how to provide and finance care without creating a giant welfare state.

The Issues Posed by a Single-Payer System

In May 2019 the Congressional Budget Office issued a 34-page report evaluating the key design compo- nents and considerations for a single-payer system. It raises many questions that those who wish to consider such a system will have to wrestle with. (See CongressionaL Budget offiCe, Key design CoMpo- nents and Considerations for estaBLishing a singLe-payer heaLth Care systeM [published May 2019], at www. cbo.gov/system/files/2019-05/55150-singlepayer. pdf?wpisrc=nl_health202&wpmm=1.)

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The ACA is the latest attempt to deal with that dilemma. Only history will be able to judge accurately to what degree it was successful, how much of it will have survived further repeal efforts, and what the unintended con- sequences were of disingenuous (or even well-meaning) attempts to amend it. One thing is certain: no matter the outcome, the repercussions will be debated for years to come.

Traditional Principles Regarding Access to Care

As described in earlier sections, health policy debates have raged and various tweaks to the payment system have occurred throughout the past century, but one constant has remained: Healthcare providers carried out their mission of treating people in need. As they did so, they dealt with such quo- tidian legal issues as the right to care, the details of the admissions process, nondiscrimination requirements, treatment of mentally ill individuals, and reviewing the quality of care. These are some of the issues addressed in the latter portion of the chapter.

In the rest of chapter 2, the emphasis is on hospitals, and though the criteria for service eligibility at other types of providers may differ some- what, two basic principles pertain: Only physicians can admit and discharge patients, and only physicians (or certain other licensed personnel) can make clinical decisions and issue orders for patient care.

The Right to Care Under common law, it was a general rule (black-letter law) that hospitals had no duty to treat any specific individual (see The Court Decides: Hill v. Ohio County at the end of this chapter). Furthermore, they accepted persons for admission and treatment only on a physician’s order. Thus, even today most institutions can accept or refuse nonemergency cases with impunity if admis- sion policies are not illegally discriminatory and the relevant government regulations are followed.

Clear written policies on the admission of patients are essential and must address the following kinds of factors:

• Whether the patient’s condition is an emergency (see chapter 10) • The conditions the hospital is equipped to treat (specialty hospitals,

such as those established to treat only women or children, are not set up for all diagnoses)

• Whether the individual’s physician has medical staff privileges (see chapter 8)

• The hospital’s ownership (a government hospital is often subject to different admission standards from those imposed on private hospitals)

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• Whether the facility has received federal funding under the Hill-Burton Act

• Whether civil rights or nondiscrimination laws apply • Whether contractual arrangements (such as managed care contracts)

obligate the hospital to treat members of a certain group • Procedures and processes that differ depending on the payer type (e.g.,

private insurance vs. government program)

Although an individual usually has no basis for claiming a legal right to be treated at a particular hospital, many factors affect whether the patient will be admitted. Rather than focus on whether a patient has such a right, the hospital should be attentive to its mission and purpose in the community. If it adheres to its mission, the narrow legal question of a patient’s right to admission usually becomes a nonissue.

Patient Registration and Admission Hospitals must be prepared to register any patient who meets the facility’s admission criteria and for whom a physician has written an order for treat- ment. Patients may be registered as either inpatient or outpatient. Outpatient status comprises various subcategories, such as observation, ambulatory surgery, emergency, clinic, rehabilitation, laboratory, and nonpatient (i.e., the patient is not present but the patient’s specimens are in the laboratory for analysis). The registration process varies by category, and detailed policies and procedures must be in place to handle every eventuality. For example, once an order has been written to admit an individual as an inpatient, the hospital typically collects the following information:

• Demographics, such as patient name, address, telephone number, marital status, personal representative (if other than a spouse), gender, race, and Social Security number

• Religious affiliation, if the patient cares to disclose it • Emergency contacts • Identity and demographics of the financially responsible party (e.g.,

patient, parent, guardian) • Insurance coverage • Patient’s language preferences and English proficiency • Special needs (e.g., assistance for deaf or blind persons) • Special requests regarding release of patient information • Generalized consent for routine care and diagnostic procedures

(which must be signed and placed in the medical record and does not substitute for a detailed informed consent for significant medical procedures)

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Registration personnel must review the collected information for any “red flags” of medical identity theft, the phe- nomenon of registering with another individual’s insurance information, name, Social Security number, or other identi- fier (see Legal Brief). The Federal Trade Commission (which enforces the so-called red flag rules) has identified warning signs such as suspicious documents, inconsis- tent identifying information, discrepan- cies between mailing addresses, a reluc- tance to provide needed information, an inability to provide one’s phone num- ber or address, and other questionable activities.32

During registration, the hospital gives the patient and family a wide range of information out of both general courtesy and legal need. This infor- mation includes the following:

• General hospital information (maps, telephone numbers, parking restrictions, visiting hours, cafeteria location, gift shop hours)

• Instructions for storing personal belongings and valuables • Smoking regulations • Notice of privacy practices • Written notice of rights under the Patient Self-Determination Act

(e.g., decision-making rights, advance directives, healthcare power of attorney)

The preceding lists are not inclusive, and the requirements vary from state to state; thus, each hospital’s legal counsel and other experts should advise on the full range of issues to be addressed at registration. The main point is that these matters must be covered by detailed hospital policies and procedures, and registration staff must be trained appropriately.

It should also be noted that a patient’s occupation of a hospital bed overnight does not always mean he is an “inpatient” for Medicare’s purposes. One becomes a Medicare inpatient only when formally admitted as such. Inpatient status must meet certain regulatory guidelines to be eligible for Medicare inpatient coverage and the attendant reimbursement. Some outpa- tients—such as those occupying a bed for observation purposes or ambula- tory surgery—may appear indistinguishable from those who are technically “inpatients.”

Legal Brief

Medical identity theft is insidious in several ways. Beyond the potential financial loss suffered by the healthcare provider and the possible damage done to the victim’s credit, the victim must amend his medical records lest the files contain the history, diagnosis, and treatment of the identity thief. If the victim does not strike this erroneous informa- tion from his files, it may surface years later and may be difficult to extract from the mare’s nest of electronic medical and billing records. For general information on medical identity theft, see www. worldprivacyforum.org.

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Government Hospitals’ Duty to Provide Services Medicare—the federal program that pays for healthcare services provided to seniors and certain other beneficiaries—is but one of many government- supported healthcare programs at the state and federal levels. For example, some states and localities actually own and manage hospitals, and those organizations carry some special obligations not present at private hospitals.

Government hospitals are creatures of statute and are established for specific purposes. Many of the statutes regulating government hospitals sort the intended beneficiaries according to their particular disease, financial status, or place of residence. Under these statutes, a patient included in the intended class of beneficiaries has a right to be treated, with certain excep- tions. For example, the right to treatment is subject to the hospital’s abil- ity (e.g., staffing levels, available space and equipment) to provide the care needed. The right to treatment also depends on the rules and regulations of the hospital’s governing board. For example, the board might require proof of inability to pay when the hospital’s statutory purpose is to serve the indi- gent. (However, even if the hospital’s mandate is to care for the indigent, the law typically does not prevent the hospital from admitting patients who are able to pay if facilities are available and indigent patients are not disen- franchised as a result.)

Government hospitals owe the same duty of care to emergency patients that other hospitals do: to stabilize the patient’s condition. Refusal to provide emergency care is not justified just because an individual is outside the class of persons the government hospital serves (see the discussion on emergency care in chapter 10).

Local Government’s Duty to Pay for Care Most states have statutes providing for payment from public funds for certain medical services furnished to indigent persons. Legislation differs significantly from state to state on the services covered, which patients are entitled to care, the process for payment, and the facilities that can render services. Typically, the statutes require municipal or county governments to pay for emergency medical care given to indigent persons wherever the care is rendered. These laws have withstood constitutional challenges.33 Healthcare administrators must be aware of local statutes and judicial decisions that determine an insti- tution’s right to reimbursement. In addition, the health reform laws of 2010 will expand coverage under the states’ Medicaid programs, and the increased number of “Medicaid eligibles” will need to be factored into the admission and registration processes.

In many states, counties are required to reimburse for emergency medical care given to indigent residents. In Arizona, for example, if an indi- gent patient who needed emergency care was admitted to a private hospital,

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the county’s obligation to pay for the services would continue throughout the period of hospitalization, even after the emergency ended. In St. Joseph’s Hospital and Medical Center v. Maricopa County, an indigent patient was admitted to a private hospital for emergency treatment. At some point thereafter, the agency responsible for paying the medical expenses could have ended its obligation to reimburse the private hospital by arranging the patient’s transfer to a county-owned facility. It did not do so, and the govern- ment had to pay for the entire hospitalization.34 Similarly, Nevada counties have a duty to pay for emergency care whether rendered at a county hospital or elsewhere, and prior governmental consent is not required if the patient’s condition threatens her life or might cause permanent impairment.35

The duty to pay for the care of indigent people is a major policy issue given the number of undocumented workers and other uninsured persons in many states. Also of concern is reimbursement for healthcare furnished to persons who (a) have been found guilty of a crime, (b) are in custody or under arrest awaiting trial, or (c) have been injured during apprehension. The duty to pay may differ depending on the status of the patient, and there is a distinction between the duty to provide or summon care and the govern- ment’s duty to pay for that care.

A Prisoner’s Right to Care Failure to obtain medical assistance for a prisoner or person in custody can lead to tort liability. For example, in a 1965 Indiana case, a police officer was summoned to a man’s home “for the purpose of taking [him] to the hospital for medical care.” According to the court, the man was “very ill and running a high temperature,” but after departing with him, the officer arrested and jailed him for being drunk and disorderly. The man died in his cell, and an autopsy showed no alcohol in his body. The cause of death was lobar pneu- monia and severe congestion of both lungs. The city of Indianapolis was held liable on the grounds that the police knew or ought to have known that the person needed medical treatment.36

The Eighth Amendment to the US Constitution prohibits cruel and unusual punishment. It has been interpreted as requiring governments to provide convicted prisoners with adequate medical treatment.37 The due process clauses of the Fifth and Fourteenth Amendments require that persons who have not been convicted but who have been detained or are under arrest be given essential food, shelter, clothing, and medical care.38 On the other hand, a person not dependent on the government has no constitutional right to medical care,39 and the right to receive care is not necessarily accompanied by the right to have the government pay for that care.

Some laws clearly state that the government must pay for care given to prisoners40 or persons in police custody.41 The duty to pay might be limited

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to cases in which the government’s institutional facilities are inadequate42 or in which the prisoner or the prisoner’s family is unable to pay.43 However, most states’ laws simply uphold a prisoner’s right to receive treatment and are silent on the question of the government’s financial obligations.44 Although the police generally have a duty to seek medical care for injured persons, especially those whose injuries are the result of police actions during appre- hension, the government may not be obligated to pay the care provider if the patient has not been arrested. This precedent may be the reason some law enforcement agencies do not officially arrest injured suspects until after emergency treatment has been completed.

For example, in City of Revere v. Massachusetts General Hospital,45 Patrick M. Kivlin attempted to flee from the scene of a crime and was shot by a police officer. The police summoned an ambulance, and the ambulance took Kivlin to Massachusetts General Hospital, where he remained for nine days. Although he was in police custody and a warrant had been issued, he was not officially arrested until the date of his discharge from the hospital. A month later, he was again hospitalized, but the city of Revere refused to pay for either hospitalization.

The Supreme Judicial Court held that Massachusetts contract law provided no basis for ordering the city to pay, but it found that the Eighth Amendment’s prohibition against cruel and unusual punishment required it to do so. After granting certiorari, the US Supreme Court overruled the state court’s finding on the Eighth Amendment issue, stating that the amendment did not apply because there had not yet been a formal finding of guilty at the time Kivlin needed medical care.46 Although the Supreme Court noted that due process requires persons in Kivlin’s situation be given care, local govern- ment had no duty to pay for that care in the absence of state legislation. Thus, just as the state may deny payment for an elective abortion and the federal government may restrict Medicaid payments for abortions, the city of Revere was not required to pay Massachusetts General Hospital.

Hill-Burton Act and Mandated Free Care The Hospital Survey and Construction Act (the Hill-Burton Act) was passed in 1946 to provide federal financing for the construction and modernization of publicly owned and not-for-profit hospital facilities.47 For political reasons, and despite President Harry S Truman’s attempts to create a national health system, the legislation did not contain provisions requiring the government to pay for services rendered in facilities that received Hill-Burton money. Two decades passed before Congress enacted Medicare.

The Hill-Burton Act enabled the nation’s hospitals to upgrade their physical plants, and in an accommodation to President Truman, it required recipients of construction grants and loans to furnish a “reasonable volume”

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of services to persons unable to pay. Recipient hospitals had to comply with this requirement, known as the uncom- pensated care obligation, for 20 years after completion of construction. The statute also required that facilities financed with federal funds be available to all persons in the community, a duty commonly referred to as the community service obligation (see Law in Action).48 Thus, the Hill-Burton

Act was an early attempt at providing healthcare to the poor and stands as a harbinger of Medicaid and similar programs.

The Hill-Burton Act was implemented through the states, which were responsible for determining the need for facilities and for ensuring that grant recipients were complying with the uncompensated care and community ser- vice obligations. For many years, these requirements were not implemented effectively. The regulations failed to define a “reasonable volume” of services, and they did not specify patient eligibility criteria. Proper regulations were issued only after several lawsuits resulted in court orders.49 The eventual regulations provided that an institution that received Hill-Burton financ- ing could meet its uncompensated care obligation by budgeting a certain minimum amount for free care or simply by certifying that it did not refuse admission solely because of inability to pay. (The latter option was sometimes referred to as the “open-door policy.”50) The community service obligation was interpreted as requiring all Hill-Burton hospitals to serve Medicaid patients and to extend emergency care to any person residing or employed in the hospital’s service area regardless of ability to pay, and all services had to be nondiscriminatory with regard to race, color, creed, and national origin.51

In 1974, the National Health Planning and Resource Development Act (Public Law 93-641) essentially terminated the original Hill-Burton program and substituted a more restrictive scheme of providing federal funds to modernize healthcare institutions. This legislation recognized the continuing obligation of hospitals to provide uncompensated care and com- munity service and mandated new regulations. Congress acknowledged that the Hill-Burton Act had never been effectively implemented, and thus the new law placed greater responsibility on the Department of Health, Educa- tion, and Welfare (now the Department of Health and Human Services) to enforce the provisions for care of the indigent. The statute also provided that project funding would obligate the recipients to furnish uncompensated care and community service indefinitely. However, because P. L. 93-641 was not retroactive, institutions that received funds before 1975 could still claim the 20-year limit on their uncompensated care obligation.

Law in Action

Because the ACA has reduced the number of unin- sured, either the federal government will need to revise its community service and uncompensated care obligations or hospitals will have to find inno- vative ways to meet them.

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Over the years, restraints on the federal budget have restricted appro- priations of new funds for hospital construction, so remnants of the Hill- Burton Act are hard to find. The issues of uncompensated care and service to the community have not gone away, however; for tax-exempt hospitals they live on in various ways. (These issues are discussed in chapter 12.)

Admission and Treatment of Mentally Ill Patients

The legal rights of mentally ill and incompetent patients are determined by constitutional law and state statutes. Because both of these sources of law are continuously evolving, hospital management needs competent, current advice concerning emergency treatment, temporary detention, and formal admission of these persons. Hospitals must give emergency care to a mentally ill individual just as they would to any other person, but denial of admis- sion may be justified if the hospital is not staffed or equipped for psychiatric patients. Nevertheless, hospitals must be prepared to deal with such patients for their own safety or for the protection of others. Unless statutory require- ments are followed carefully, the hospital risks liability for false imprison- ment, assault and battery, and other tort claims. On the other hand, when healthcare professionals act in good faith, in the patient’s best interests, and according to constitutional and statutory requirements, the risks of liability are minimized.52

Involuntary Detention or Commitment Because institutionalization is a significant deprivation of personal liberty, state statutes governing the civil commitment of mentally ill persons must ensure that the patient is granted both substantive and procedural due process of law.53 A person may not be committed involuntarily unless mental illness presents a danger to the patient or to third parties.54 Danger to self can be found if patients cannot provide the basic necessities of life or if they exhibit indications that they may harm themselves. Unless persons are adjudged dangerous to themselves or others, indefinite con- finement without treatment violates their right to due process, and the officials responsible for such confinement can be personally liable under civil rights laws.

When mentally ill patients present a danger to themselves, the state has a legitimate interest—under its parens patriae powers (Latin for father of his country)—to provide needed care.55 If mentally ill patients present a danger to the community or to third parties, a psychiatric evaluation and possible civil commitment are justified by the state’s inherent power to regu- late matters of health, safety, and welfare. For patients to meet these criteria,

parens patriae The doctrine that the government is the ultimate guardian of all people who have a legal disability, such as minors and the mentally ill.

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psychiatrists and other professionals have to predict their behavior, a task that may be nearly impossible from a medical standpoint (see Legal Brief). Many states require evidence of a timely overt act or threat of violence to show that the patient presents a danger.

The balance between the legiti- mate rights of patients and the rec- ognized interests of society depends on the answers to difficult questions of social policy and medicolegal judg- ment. Setting this balance involves three main risks: (1) Some patients might be detained unnecessarily, (2) some who

are not dangerous might be released but not receive needed outpatient care, and (3) patients who are thought to pose no risk might be released and proceed to harm others.56 Poor definition of dangerousness in both medicine and law increases the potential for error in setting the balance, and in many commitment hearings the matter is left for the jury to decide on the basis of testimony from expert witnesses. Misdiagnosis alone does not constitute negligence or malpractice; causation must also be proven. Proof may be difficult to furnish because dangerousness is difficult to predict.

State statutes typically allow for involuntary detention of psychiatric patients for a limited period, ranging from 48 to 72 hours. The Florida Men- tal Health Act (also called the Baker Act) is typical of the process.57 Under the Florida law, involuntary psychiatric examination can be accomplished if there is reason to believe that a person has a mental illness, does not agree to a voluntary examination, and may suffer harm or be a danger to himself or others if not cared for. The process can be initiated by court order, by a law enforcement officer, or by a physician or mental health professional.

The person is taken into custody and delivered to a “receiving facility” (a facility designated by the state for such purposes) and must be examined within 72 hours. If he or she is first seen in a hospital emergency department, as is often the case, the 72-hour period begins at that time. The patient may not be held involuntarily for longer than 72 hours, at which time the facility must (a) release the patient entirely or to law enforcement if charged with a crime, (b) admit the patient for voluntary treatment, or (c) petition a court for involuntary civil commitment.

Because civil commitment takes away a person’s freedom, the patient in a civil commitment proceeding receives full due process rights:

Legal Brief

The American Psychiatric Association (APA) . . . informs us that “[the] unreliability of psychiatric predictions of long-term future dangerousness is by now an established fact within the profession.” The APA’s best estimate is that two out of three [such] predictions are wrong. The Court does not dispute this proposition, and indeed it could not do so; the evidence is overwhelming.

—Barefoot v. Estelle, 463 U.S. 800, 920 (1983)

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a court hearing, representation by legal counsel, and full consideration of the evidence regarding the patient’s competence and mental illness. These kinds of protections reflect a nationwide emphasis on the rights of mental health patients that began in the last few decades of the twentieth century. A Florida case, O’Connor v. Donaldson,58 illustrates the plight of some who were confined against their will before legal protections were enacted.

Kenneth Donaldson had been confined against his will in a state mental hospital for 15 years. He was not thought to be dangerous to him- self or others and was receiving no treatment. According to Justice Potter Stewart, his confinement amounted to nothing more than “a simple regime of enforced custodial care, not a program designed to alleviate or cure his supposed illness.” On the basis of these findings and without dissent, the Supreme Court held:

A finding of “mental illness” alone cannot justify a State’s locking a person up

against his will and keeping him indefinitely in simple custodial confinement.

Assuming that that term can be given a reasonably precise content and that the

“mentally ill” can be identified with reasonable accuracy, there is still no consti-

tutional basis for confining such persons involuntarily if they are dangerous to no

one and can live safely in freedom. . . .

In short, a State cannot constitutionally confine . . . a nondangerous indi-

vidual who is capable of surviving safely in freedom by himself or with the help

of willing and responsible family members or friends. Since the jury found, upon

ample evidence, that O’Connor [the hospital superintendent], as an agent of the

State, knowingly did so confine Donaldson, it properly concluded that O’Connor

violated Donaldson’s constitutional right to freedom.

This landmark decision and others like it gave impetus to the patients’ rights movement and led to the due process protections in most states’ laws.

Standard of Care and Administration of Medication Once committed, psychiatric patients retain substantive constitutional rights to adequate food, shelter, clothing, medical care, safe physical conditions, reasonable freedom from physical restraints, and rehabilitation or training appropriate to their diagnoses. Hospital officials who fail to observe these rights can be held personally liable.59 One federal court defined minimally adequate medical care as follows:

In order to render effective care and treatment, a hospital for the mentally ill must

not only hire qualified individuals but must ensure the continuation of their train-

ing and education during their employment. . . . The court finds there are four

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standards generally advanced by mental health professionals as essential for

minimally adequate treatment: a humane and therapeutic environment; qualified

staff in sufficient numbers; an individualized treatment plan for each patient; and

planned therapeutic programs and activities. It is against these standards that the

conditions at a psychiatric facility must be measured in order to determine whether

those operating the facility have failed to provide treatment for those mentally ill

individuals involuntarily confined for such purpose in violation of the Fourteenth

Amendment of the United States Constitution.60

With respect to conditions of confinement and the patient’s right to rehabilitation and training, the Supreme Court has held that the Constitution

only requires that the courts make certain that professional judgment in fact

was exercised. . . . The appropriate standard [is] whether the defendants’

conduct [is] . . . such a substantial departure from accepted professional judg-

ment, practice, or standards in the care and treatment of this plaintiff, as to

demonstrate that the defendants did not base their conduct on a professional

judgment.61

In the Supreme Court’s view, this standard “affords the necessary guidance and reflects the proper balance between the legitimate interests of the State and the rights of the involuntarily committed to reasonable conditions of safety and freedom from unreasonable restraints.”

In several contexts, courts have developed the principle that mentally ill persons should not be presumed incompetent to make treatment decisions. The decision to commit someone involuntarily is not the same as a finding of incompetence. Thus, a competent patient has the right to consent (or refuse to consent) to care unless her or others’ safety requires it. For example, com- petent psychiatric patients who are not a danger to themselves or others may not be given antipsychotic medications (which may have serious side effects) against their will and may not be forced to become subjects of medical research. The foundation for this rule has been described as part of a “right of privacy” or, more simply, as a principle of common law.62

The right to give informed consent (see chapter 11) can be over- come, and medications, restraints, and other measures can be forcibly administered, only when there are compelling reasons for doing so. In all jurisdictions, unless an immediate danger or threat of harm exists, the patient is entitled to (1) professional determination that medication or restraint is necessary, (2) evaluation of alternatives, and (3) regular review of the recommended course of treatment. A formal hearing is not required, but a judicial determination of incompetence and the appointment of a guardian might be required.

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Discharge from the Hospital

Issues relating to the mentally ill aside, hospital discharge presents few signifi- cant legal issues in most cases. As soon as they are able, most patients want to go home or to an institution that better suits their needs, and the only significant risk is liability for abandonment (i.e., discharging a patient who needs further care).

Discharge requires a physician’s order (unless the patient elopes or leaves against medical advice), so the test of an abandonment claim is whether the physician’s discharge order was reasonable under the circum- stances.63 For example, if the patient’s condition was likely to be aggravated by the discharge and the decision was therefore deemed unreasonable, the reason the physician and hospital discharged the patient is irrelevant. (For instance, the patient’s failure or inability to pay the bill is no justification.) When contemplating a patient’s transfer to a less costly institution (e.g., when required by a managed care plan), attending physicians and hospital staff must be assured that the receiving institution is adequately equipped and staffed to care for the patient’s condition. Most states have standards for proper patient transfers, and federal standards apply in the emergency setting.

Several cases illustrate the prospect of liability for abandonment. In Meiselman v. Crown Heights Hospital, the defendant was liable for discharg- ing a minor while his legs were in casts and open wounds were draining. Further professional care at home was necessary and was to be arranged and supervised by the chief of the hospital’s surgical staff. The home care proved to be inadequate, however, and the patient had to be sent to another hospi- tal. Because the need for further care was foreseeable and there was evidence that the motive for discharging the patient was financial, the discharge was considered unreasonable.64

Patients can be discharged or given temporary leaves of absence only on the written order of a physician, but the hospital itself owes the patient a duty to have proper discharge policies. In one case, a physician mistakenly diagnosed a diabetic patient who was near death; he thought the patient was suffering from delirium tremens and called for the sheriff to remove him from the facility. When the patient’s estate claimed that premature release was the proximate cause of death, the court held that the plaintiff was entitled to a trial on questions relating to the hospital’s possible negli- gence. “We cannot agree that the hospital operates as a slavish handmaiden to the physicians on its staff. . . . Under Alabama law a hospital [has] a duty of care to its patients.”65 Had there been hospital policies requiring trained staff to be involved in discharge planning, the death might have been pre- vented. (See chapter 8 for a discussion of staff physicians as independent contractors.)

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If a patient is a known threat to third persons, the hospital and attend- ing physician can be liable to persons injured by the patient after discharge. In Semler v. Psychiatric Institute of Washington, D.C.,66 a man who pleaded guilty to abducting a young girl received a suspended prison sentence contingent on continued inpatient treatment at a psychiatric institution. On later recommen- dations of his physician and probation officer, the court approved his transfer to day care, permitting him to live at home and commute daily to the hospital with his parents. Soon, however, he began living alone and working as a bricklayer’s helper, all to the knowledge of his attending physician and the court probation officer but without court approval. He then murdered a girl. The psychiatric facility, the physician, and the probation officer were all held liable for allow- ing the patient full outpatient status without obtaining the court’s approval. Because the court had not given the probation officer authority to approve the transfer, the probation officer’s approval did not shield the institution from liability, and the officer’s unauthorized act made him personally liable.

When a readily identifiable potential victim suffers foreseeable harm, a per- son who knew of the potential for harm but failed to warn the victim may also be held liable. Depending on the circumstances, some courts have drawn a distinc- tion between breach of duty to the community at large (negligent discharge) and breach of duty to warn a third party who is at particular risk (see Law in Action).67

Home care programs for any patient must be carefully planned and monitored to ensure that they meet the individual’s needs. On discharge of a patient to home care, attending physicians and hospital personnel must carefully instruct the patient and family and relay medical information to pro- fessional persons responsible for the home care program.68 Failure to do so constitutes a breach of the hospital’s duty. The hospital also remains vicariously liable for the negligence of those responsible for continuing care of the patient if they are hospital employees or apparent employees. If the patient’s care and treatment are rendered under the jurisdiction of the court, the orders of the court must be strictly followed.

A problem arises when patients of sound mind insist on leaving the hospital though they still need care. Such patients may allege false imprison-

ment if the hospital holds them against their will, but they should not be allowed simply to walk away.69 Attending physi- cians should advise these patients that remaining in the hospital is recommended, explain why they are making this recom- mendation, and inform the patients of the consequences of leaving early.

The hospital must have a detailed policy to cover these situations. It should

Law in Action

The Tarasoff case in California is perhaps the most notorious and tragic of cases involving a duty to warn third parties of a patient’s dangerous pro- pensities. The decision is discussed in chapter 9 under the heading Duty to Warn Third Parties.

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include documentation of the advice given and the patient’s signature on a form releasing the hospital from liability. This form should state that the patient was fully aware of the medical reasons for recommending continued stay and had been advised not to leave the hospital, that the discharge was solely on the patient’s own initiative, and that the refusal to stay was a mat- ter of the patient’s free will and volition. Some patients who insist on leaving against medical advice refuse to sign the release. Patients cannot be forced to sign, but hospital policy should require that the substance of the form be explained and that the patient’s refusal to sign be documented.

Hospitals are permitted to restrain patients of unsound mind from leaving the hospital if their departure would endanger their health or life or the lives or property of others.70 On the same grounds, patients of sound mind who are suffering from a contagious disease may be detained to protect themselves and others. (The hospital may have an affirmative duty to the community to refuse to discharge such patients.) Restraint must be reason- able according to the circumstances of each case. Gathering and document- ing in the medical record competent evidence of the contagious disease or the mental instability of patients detained on either of these grounds is essen- tial.71 Hospital policies should address this possibility.

A patient should never be held in the hospital for failure to pay a bill or until arrangements for settlement are complete. Such detainment is false imprisonment, especially if force is used or threats are made.72 Proper policies should ensure that the payment question is addressed at the time of admis- sion, not discharge.

Unemancipated minors under the age of discretion should be dis- charged only to their parents or to persons legally entitled to custody. If the whereabouts of the parents are unknown and the minor does not have a court-appointed guardian, the hospital must appoint a guardian. Social welfare agencies help hospitals in these situations. If the parents can be located but for some reason cannot come to the hospital, the patient should be discharged only to someone who has written permission from the parents.

Emancipated minors—those old enough to consent for themselves under state law—can be discharged from the hospital in the same manner as adults. Emancipation is usually a matter of agreement between the par- ent and child; it is a question of fact in each case and does not depend on whether the youth is living at home. In some states, minors are emancipated when they marry. Emancipation can also be decreed by a court in some cases.

Generally, discharge of an infant child to the custody of the infant’s minor mother is legally sound. The hospital cannot prevent the mother from claiming her child, especially when she intends to retain custody and

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n74

responsibility for raising the infant. Even if she intends to place the child for private adoption, most states recognize her legal right to claim her child, subject to local limitations and restrictions. If the mother does not claim the child but requests dis- charge to a third party, the child should not be discharged except on the rec- ommendation of an approved social ser- vice agency that handles adoptions. Legal counsel should be consulted for advice consistent with law.

Most states now have safe haven (“Baby Moses”) laws that allow mothers to leave unwanted children in the hands of care providers anonymously and free of interrogation. These laws were adopted to prevent infanticides and baby aban- donment. They were not passed with in- hospital births in mind, but their premise is consistent with the idea that at the time of the mother’s discharge from the hospital, the party to whom the baby is discharged depends on the mother’s wishes (see Legal Decision Point).

In at least one state (Nebraska), the safe haven law was so broadly written that

parents misused it to abandon older children. After as many as 35 children, some as old as 17, were left at various Nebraska hospitals in 2008, the law was amended to apply only to children 30 days old or younger.73

Utilization Review: Controls on Admission and Discharge

Thus far this chapter has discussed the health reform laws and the tradi- tional principles concerning hospital admission and discharge. Both topics pose questions about the use—actually, the potential for overuse—of health services: questions relating to cost, quality, and value; questions relating to what is medically necessary; questions about who should pay and how much. This section—indeed an entire chapter—cannot do justice to the myriad issues involved; issues of public policy and ethics are beyond the scope of this book. The ensuing paragraphs briefly discuss a few of the legal implications of utilization review (UR) not covered in chapter 7.

Legal Decision Point

A new mother is about to be discharged but does not want custody of the baby. She has not made arrangements for private adoption, does not want to take the baby home with her, and has not named another person to take custody. If she were to leave the hospital with the baby, she could walk across the street to a fire or police station and abandon the child anonymously. She could also return to the hospital and leave the baby outside the emergency department anonymously. However, if she simply leaves the baby behind when she is discharged, the abandonment is not anonymous; hospital personnel have a record of the baby’s birth, the mother’s name, and other information.

How should the hospital deal with privacy issues in such cases? What happens if the sup- posed father learns of the situation and arrives to claim the child? What happens if he or someone else alerts the media or state child protection agencies? Can hospital authorities confirm any- thing about the case? Why or why not? What can be said to whom, and (especially) what can be said in public?

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Most hospitals have a type of internal UR process known as case (or care) management. Case management departments provide ongoing con- current reviews of patient care to determine whether treatments are medi- cally necessary and, if not, to assist in placing patients in more appropriate (usually less costly) care settings. The departments are closely aligned with or part of the quality improvement function, and they typically track average length of stay and similar indicators. Internal case management serves an advisory purpose and does not have the authority to order a patient’s dis- charge or transfer; for this reason, it does not present a significant legal risk.

As discussed in chapter 7, legal risks can arise when the financial pres- sures of third-party payers conflict with the perceived best interests of the patient. The UR decisions of third-party payers are made in a number of ways:

• Prospectively (whether to authorize payment for treatment before the treatment has begun)

• Concurrently (whether to permit treatment to continue beyond a certain point)

• Retrospectively (whether to deny payment for treatment that has been completed)

UR decisions are almost always based on physicians’ recommendations and sound professional judgment related to the patient’s medical needs. However, to keep their costs (medical loss ratio) as low as possible, third-party payers (man- aged care plans) sometimes approve pay- ment for only a certain number of days in the hospital (see Legal Brief). In such cases, hospitals have an incentive to see patients discharged as soon as possible, perhaps even before optimum outcomes have been achieved.

A physician who believes the patient is not ready for discharge should carefully document the reasons for not signing a discharge order. If the physician bows to pressure and orders a discharge that is contrary to professional standards and her better judgment, she may invoke significant liability consequences (see discussion of the Wickline case in chapter 7). The physician

third-party payers Managed care organizations, government programs, employee benefit plans, private insurance plans, and similar entities responsible for paying for health services.

Legal Brief

In insurance vernacular, loss ratio (LR) essentially means the cost of claims per premium dollar:

In health insurance, the medical loss ratio (MLR) represents the percentage of premium dol- lars paid for medical care and related quality improvement efforts. Fewer claims paid results in a lower MLR, which in turn means higher retained earnings (profits) for the insurer. The average MLR for private insurance plans is typically 80–85 percent, and the ACA sets that range as a minimum depending on market size. If an insurer’s MLR falls below the applicable level, it must provide a premium rebate to its insureds. A government program’s MLR is much higher (in the 95+ percent range) because government programs are not motivated to earn a profit.

LR = Losses + loss-related expense

Earned premiums

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n76

and hospital usually can appeal the coverage decision, but a physician who believes treatment is necessary must ensure that the treatment is provided at whatever expense.

Conversely, if the physician sees no need for continued hospitalization and recommends discharge or transfer to a less expensive facility, patients often bear the cost of care if they choose to stay in the hospital. Attending physicians and case management staff must carefully explain coverage limita- tions and transfer options to patients and their family members, and together they must decide on the future course and site of care.

Hospitals and physicians should be patients’ advocates if insurance coverage is threatened. The Joint Commission alludes to this responsibility in its hospital accreditation standards. In the leadership chapter, a section on ethical issues in operations states the following:

The hospital is professionally and ethically responsible for providing care, treat-

ment, and services within its capability and law and regulation. At times, such

care, treatment, and services are denied because of payment limitations. In

these situations, the decision to continue providing care, treatment, and services

or to discharge the patient is based solely on the patient’s identified needs.74

[Emphasis added.]

Patients whose medical conditions justify discharge or transfer have no common-law or constitutional right to remain in the hospital. A patient who remains is a trespasser, and the hospital may ask a court to issue an injunc- tion to remove the person from the premises.75 The courts have reasoned that hospitals have a duty to reserve their beds and facilities for patients who genuinely need them and should not permit a patient to remain when adequate care can be provided elsewhere.

On the other hand, the hospital and physician may not abandon or discharge a patient who needs further care without making appropriate arrangements for that care. Thus, someone who needs continuing care—in a nursing home, for example—presents a dilemma for all the parties involved if no appropriate facility is available, especially if the patient is unable to pay the ongoing hospital charges.

Monmouth Medical Center v. State illustrates the conflict between eco- nomic and human values in these circumstances.76 At issue were New Jersey’s administrative regulations prohibiting Medicaid reimbursement for indigent patients who no longer need hospitalization and are awaiting transfer to a nursing home. Because there was a shortage of nursing home beds, the state regulations required the hospital to absorb the cost; the hospital was unwill- ing to do so, and it filed suit.

The New Jersey Supreme Court pointed out that the purpose of the Medicaid program is to provide financial assistance for “medically necessary”

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services, and the regulations require states to furnish services “sufficient in amount, duration, and scope to reasonably achieve [their purpose].” The court held that the state regulations conflicted with the federal rules; as long as the hospital exercised good faith and reasonable diligence in attempting to place patients in nursing homes, it was legally entitled to reimbursement from Medicaid. In essence, the court said that fairness required society—not the hospital—to absorb the costs even if the patient no longer needed the services of an acute care facility.

Putting the issue in sharper focus, a later case—Monmouth Medical Center v. Harris77—upheld the government’s right to deny Medicare reim- bursement to a hospital for a patient who no longer required hospital or skilled nursing care. The patient needed custodial care, but beds in a nurs- ing home that provided such care were not available. The court said the unavailability of beds was irrelevant because Medicare does not reimburse for custodial care.

Federal law requires organizations that contract with Medicare to conduct utilization and quality control reviews to evaluate the services they provide to Medicare beneficiaries.78 Through retrospective reviews of data, peer-review organizations (PROs)—also known as quality improvement orga- nizations—are responsible for determining whether

• hospital services are reasonable and medically necessary, • the quality of those services meets professional standards, and • the services could be provided more economically elsewhere.

Each PRO is expected to conduct reviews of admission patterns and identify groups of patients whose diagnoses or contemplated treatments indicate that they could be safely cared for elsewhere than in an acute care hospital. Each PRO is empowered to set objectives for reducing inappropriate admissions in its geographic region and to identify unac- ceptable admission patterns in use by particular institutions and medical practitioners.

To measure the quality of care furnished to Medicare patients, the review organization has the following responsibilities:

• To ensure that patients with certain diagnoses receive adequate medical services, especially when appropriate facilities are available but are underused

• To review hospital readmissions caused by previous substandard care • To identify instances of unnecessary surgery • To reduce the number of preventable deaths

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n78

To achieve these objectives, PROs develop treatment protocols for par- ticular diagnoses and set specific statistical goals. In addition to performing these functions on behalf of the federal government, PROs have the power to deny reimbursement to a Medicare provider for unnecessary or inap- propriate care.79 In certain circumstances, the review organization may also recommend penalties—ranging from monetary fines to exclusion from the Medicare program—for providers that render unnecessary or inappropriate care.

The ACA contains many provisions related to quality improvement, such as technical assistance and research, support for patient-centered medi- cal homes, better treatment of chronic disease, and regionalized emergency care systems and trauma centers. Further examples include provisions for demonstration programs on quality and patient safety training, improve- ments to women’s health, a “patient navigator” program, and studies and reports on new tort claims or causes of action generated by quality initiatives.

It remains to be seen what effects the reforms will have on quality programs generally and PROs specifically. In any event, these provisions will affect Americans’ access to healthcare. (Peer review and quality issues are discussed more fully in chapter 8.)

Summary

This chapter reviews various rights and responsibilities regarding health- care, the history of US governmental health policy, and the major changes wrought by the Affordable Care Act. Briefly stated, the ACA has had an enormous effect on the US healthcare system and will continue to do so for many years if it is properly implemented. It will extend coverage to mil- lions of previously uninsured persons, change payment systems significantly, strengthen fraud and abuse laws, improve prevention and wellness programs, and improve quality and cost-effectiveness. The first part of the chapter also discusses the outcomes of various lawsuits that challenged the ACA, the status of some pending cases, and numerous political factors involved in the broad topic of health reform.

The second part of the chapter turns to traditional rules about hospital admission and discharge—the black-letter law that there is no common-law right for a person to be admitted to a hospital—and discusses a number of exceptions to that principle. The discussion of the law relat- ing to emergency services foreshadows a more thorough treatment of the topic in chapter 10. In addition, this chapter presents special circumstances

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attending the admission and discharge of psychiatric patients and the uncompensated care and community service obligations of many not-for- profit organizations.

Discussion Questions

1. Do you feel all persons should have equal access to medical care regardless of their ability to pay?

2. What are the most significant aspects of the ACA? Which of these have been implemented? Which have not been, and why not?

3. Which of the arguments made in the legal challenges to the ACA strike you as most persuasive?

4. Referring to Article I, Section 8 of the US Constitution, how would you define “commerce among the several states”? For example, does it include local telephone service? Your family physician? The corner drugstore? Why or why not?

5. It is reported that the late senator, vice president, and presidential candidate Hubert Humphrey once said, “Compassion is not weakness, and concern for the unfortunate is not socialism.” How might this quote be applicable to the concerns of the AMA and others who opposed adoption of the Medicare and Medicaid statutes?

6. Explain the compromises that led to the Medicare and Medicaid systems being such a jumble.

7. Who has the authority to admit patients to hospitals, and in most cases why do patients not have a right to be admitted?

8. What is a hospital’s responsibility to provide care to the indigent, and how does it differ depending on the type of care (emergency vs. nonemergency) and the type of hospital (e.g., public, private, for- profit, not-for-profit, tax exempt)?

9. What are the standards and processes for involuntary admission of persons who are mentally ill?

10. What are the tensions between managed care’s objectives and medical judgment?

11. What effect has the ACA had on the number of persons without health insurance since the individual and employer mandates began to take effect in 2014?

12. What is the current status of Medicaid expansion in your state and nationwide?

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n80

The Cour t Decides

King v. Burwell 576 U.S. ___, 135 S. Ct. 2480 (2015)

Roberts, Chief Justice

The Patient Protection and Affordable Care Act adopts a series of interlocking reforms designed to expand coverage in the indi- vidual health insurance market. First, the Act bars insurers from taking a person’s health into account when deciding whether to sell health insurance or how much to charge. Second, the Act generally requires each per- son to maintain insurance coverage or make a payment to the Internal Revenue Service. And third, the Act gives tax credits to certain people to make insurance more affordable.

In addition to those reforms, the Act requires the creation of an “Exchange” in each State—basically, a marketplace that allows people to compare and purchase insurance plans. The Act gives each State the opportunity to establish its own Exchange, but provides that the Federal Government will establish the Exchange if the State does not.

This case is about whether the Act’s interlocking reforms apply equally in each State no matter who establishes the State’s Exchange. Specifically, the question pre- sented is whether the Act’s tax credits are available in States that have a Federal Exchange.

I A [Here the Chief Justice summarizes what he calls a “long history of failed health insur- ance reform” including two related concepts that several states adopted in the 1990s: a “guaranteed issue” requirement and a “com- munity rating” requirement. Together these reforms meant that anyone who wanted

health insurance in those states could buy it, and insurers could not deny coverage or charge a higher premium because of preexist- ing conditions. Then the opinion continues.]

The guaranteed issue and community rat- ing requirements achieved [the goal of mak- ing insurance available to all], but they had an unintended consequence: They encour- aged people to wait until they got sick to buy insurance. Why buy insurance coverage when you are healthy, if you can buy the same cov- erage for the same price when you become ill? This consequence—known as “adverse selection”—led to a second: Insurers were forced to increase premiums to account for the fact that, more and more, it was the sick rather than the healthy who were buying insurance. And that consequence fed back into the first: As the cost of insurance rose, even more people waited until they became ill to buy it.

This led to an economic “death spiral.” As premiums rose higher and higher, and the number of people buying insurance sank lower and lower, insurers began to leave the market entirely. As a result, the num- ber of people without insurance increased dramatically.

In 1996, Massachusetts adopted the guaranteed issue and community rating requirements and experienced similar results. But in 2006, Massachusetts added two more reforms: The Commonwealth required indi- viduals to buy insurance or pay a penalty, and it gave tax credits to certain individuals to ensure that they could afford the insurance they were required to buy. The combination

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of these three reforms—insurance market regulations, a coverage mandate, and tax credits—reduced the uninsured rate in Massachusetts to 2.6 percent, by far the low- est in the Nation. [Massachusetts’s reforms— sometimes referred to as “Romneycare,” a reference to then-Governor Mitt Romney— were a model for drafters of the ACA.]

B [The opinion next describes the ACA’s reform provisions: (1) adoption of the guaranteed issue and community rating requirements; (2) a requirement for individuals to have insurance or make a tax payment to the IRS—the “individual mandate” upheld in NFIB v. Sebelius, and (3) the giving of tax credits to low-income persons to help make insurance more affordable.]

These three reforms are closely intertwined. . . . Congress found that the guaranteed issue and community rating requirements would not work without the coverage requirement. And the coverage requirement would not work without the tax credits. The reason is that, without the tax credits, the cost of buying insurance would exceed eight percent of income for a large number of individuals, which would exempt them from the coverage requirement. [The ACA exempts from the individual mandate individuals who would have to spend more than 8 percent of their income on health insurance.]

C In addition to those three reforms, the Act requires the creation of an “Exchange” in each State where people can shop for insur- ance, usually online. An Exchange may be created in one of two ways. First, the Act provides that “[e]ach State shall . . . establish an American Health Benefit Exchange . . . for the State.” Second, if a State nonetheless

chooses not to establish its own Exchange, the Act provides that the Secretary of Health and Human Services “shall . . . establish and operate such Exchange within the State.”

The issue in this case is whether the Act’s tax credits are available in States that have a Federal Exchange rather than a State Exchange. The Act initially provides that tax credits “shall be allowed” for any “applicable taxpayer.” 26 U. S. C. §36B. The Act then provides that the amount of the tax credit depends in part on whether the taxpayer has enrolled in an insurance plan through “an Exchange established by the State [under § 18031 of the ACA].”

[To implement these provisions, the IRS promulgated a rule that made tax credits available to applicable taxpayers who enrolled in an insurance plan through an Exchange regardless of whether the Exchange was established by the state or by HHS. The petitioners in this case were four residents of Virginia who do not want to buy health insurance. They argue that Virginia’s exchange does not qualify as “an Exchange established by the State” because it was established by HHS, that they there- fore should not receive tax credits, and that they are exempt from the individual mandate because without the credits the cost would be more than 8 percent of their income.]

II * * * Petitioners argue that a Federal Exchange is not “an Exchange established by the State under [42 U.S.C. §18031],” and that the IRS [regulation making tax credits available to federal exchange enrollees] therefore contra- dicts Section 36B. The Government responds that the IRS Rule [referred to earlier] is lawful because the phrase “an Exchange estab- lished by the State under [42 U.S.C. §18031]” should be read to include Federal Exchanges.

(continued)

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. . . It is . . . our task to determine the cor- rect reading of Section 36B . . . [and in doing so] we must read the words “in their context and with a view to their place in the overall statutory scheme.” Our duty, after all, is “to construe statutes, not isolated provisions.” [Quoting an earlier Supreme Court case.]

A We begin with the text of Section 36B. . . . Section 36B allows an individual to receive tax credits only if the individual enrolls in an insurance plan through “an Exchange estab- lished by the State under [42 U.S.C. §18031].” . . .

[A]ll parties agree that a Federal Exchange qualifies as “an Exchange” for purposes of Section 36B. Section 18031 provides that “[e]ach State shall . . . establish an American Health Benefit Exchange . . . for the State.” . . . [But] if the State chooses not to do so, Section 18041 provides that the Secretary “shall . . . establish and operate such Exchange within the State.”

By using the phrase “such Exchange,” Section 18041 instructs the Secretary to establish and operate the same Exchange that the State was directed to establish under Section 18031. . . . In other words, State Exchanges and Federal Exchanges are equiv- alent—they must meet the same require- ments, perform the same functions, and serve the same purposes. Although State and Federal Exchanges are established by differ- ent sovereigns, Sections 18031 and 18041 do not suggest that they differ in any meaningful way. A Federal Exchange therefore counts as “an Exchange” under Section 36B.

* * * The Act defines the term “Exchange” to mean “an American Health Benefit Exchange

established under section 18031.” If we import that definition into Section 18041, the Act tells the Secretary to “establish and oper- ate such ‘American Health Benefit Exchange established under section 18031.’” That sug- gests that Section 18041 authorizes the Sec- retary to establish an Exchange under Sec- tion 18031, not (or not only) under Section 18041. Otherwise, the Federal Exchange, by definition, would not be an “Exchange” at all.

This interpretation of “under [42 U. S. C. §18031]” fits best with the statutory context. All of the requirements that an Exchange must meet are in Section 18031, so it is sen- sible to regard all Exchanges as established under that provision. In addition, . . . the Act repeatedly uses the phrase “established under [42 U.S.C. §18031]” in situations where it would make no sense to distinguish between State and Federal Exchanges. A Fed- eral Exchange may therefore be considered one established “under [42 U. S. C. §18031].”

. . . The Affordable Care Act contains more than a few examples of inartful drafting. . . . [W]e “must do our best, bearing in mind the fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” [Citing a 2014 case.] After reading Section 36B along with other related provisions in the Act, we can- not conclude that the phrase “an Exchange established by the State under [Section 18031]” is unambiguous.

B Given that the text is ambiguous, we must turn to the broader structure of the Act to determine the meaning of Section 36B. “A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme . . . because only

(continued from previous page)

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one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.” [Citation omitted.] Here, the statutory scheme compels us to reject petitioners’ interpretation because it would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very “death spirals” that Congress designed the Act to avoid. . . .

The guaranteed issue and community rat- ing requirements ensure that anyone can buy insurance; the coverage requirement creates an incentive for people to do so before they get sick; and the tax credits—it is hoped— make insurance more affordable. Together, those reforms “minimize . . . adverse selec- tion and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums.” 42 U.S.C. §18091(2)(I).

Under petitioners’ [interpretation], how- ever, the Act would operate quite differently in a State with a Federal Exchange. As they see it, one of the Act’s three major reforms— the tax credits—would not apply. And a second major reform—the coverage require- ment—would not apply in a meaningful way.

. . . The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral. . . .

It is implausible that Congress meant the Act to operate in this manner. . . . Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation. But those requirements only work when combined with the coverage requirement and the tax credits. So it stands to reason that Congress meant for those pro- visions to apply in every State as well. . . .

* * * Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. Sec- tion 36B can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.

The judgment of the United States Court of Appeals for the Fourth Circuit is

Affirmed.

Discussion Questions

1. When interpreting a statute, judges typically analyze not only the text of the law itself but also its history and purpose, other judicial decisions, and the consequences of one outcome versus another. Compare the majority opinion on King v. Burwell to Justice Scalia’s dissent as summarized in the text. In your opinion, which rationale addresses those factors more satisfactorily?

2. Can you explain the logic behind the chief justice’s holding, and is it persuasive to you? 3. Can you summarize the “death spirals” he refers to?

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The Cour t Decides

Hill v. Ohio County 468 S.W.2d 306 (Ky. 1971)

Smith, Special Commissioner

[This wrongful death case was filed against Ohio County, Kentucky, the owner of Ohio County Hospital. The trial court granted a motion for summary judgment in favor of the defendant without giving reasons for its decision. The “uncontradicted material facts” follow.]

Decedent approached Nurse Hartley [who was “in charge of the floor,” according to the court] at her desk in the hospital before 9 am on May 12, 1967, said that her name was Juanita Monroe, her doctor was in Illinois, she had come to Ohio County to attend a funeral and she was afraid she would not be able to get back to Illinois before she had her baby. Nurse Hartley assumed she wanted to be admitted for obstetrical (herein OB) care.

There were only four doctors admitted to practice in the hospital. Nurse Hartley consulted her list and found that Dr. Beard (according to the doctors’ informal agree- ment among themselves) was on call that week. He was at the time in the operating room. Upon Nurse Hartley’s inquiry whether to admit decedent, Dr. Beard [replied] that he did not handle OB cases. Upon advice from the hospital administrator that another of the four doctors, Dr. Johnson, was making rounds, Nurse Hartley asked him the same question and Dr. Johnson replied that he did not handle “walk-in OBs.”

Decedent did not advise that she had been delivered of a child at the Ohio County Hospital in June 1964, admitted by Dr. Charles Price of Hartford (one of the four doctors practicing in the Hospital) and had again con- sulted Dr. Price within the past year.

Decedent was advised that she could get OB service in Owensboro and Louisville, with doctors on call, and replied she did not want to go to Owensboro or Louisville, but would call a taxi to go home. Nurse Hartley assisted her in making the call. Being advised that decedent was still there more than an hour later, Nurse Hartley consulted with the hospital administrator and was told to call Bill Danks, ambulance driver, who promptly appeared and offered to take decedent wher- ever she wanted to go. She declined, and a taxi finally took her away.

Her baby was born at home (apparently unattended) during the night. Decedent called Bill Danks who came immediately, and about 6 am called Dr. Johnson, who asked some questions concerning the state of mother and child and advised Danks to take them to Owensboro. Decedent was dead on arrival at the Owensboro Hospital, some 25 miles from Hartford.

Ohio County Hospital is a public hospital, constructed (at least in part) with Hill-Burton funds which are for construction only. It is a one-floor building and the county pays the cost of operation, including an administra- tor (not a doctor) and at least two registered nurses. There are no salaried doctors, no residents or interns, and only four local doc- tors are admitted to practice. The hospital rules properly provide that no patient may be admitted without an order from a doctor to do so [and Kentucky law] provides that no one may practice medicine without being licensed to do so. . . .

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Notes

1. See generally, Institute of Medicine, Committee for the Study of the Future of Public Health, Appendix A: Summary of the Public Health System in the United States (National Academies Press 1988). Downloadable at https://www.ncbi.nlm.nih.gov/books/ NBK218212/.

2. Uwe e. ReinhaRdt, PRiced OUt: the ecOnOmic and ethical cOsts Of ameRican health caRe xxviii (Princeton University Press 2019) (emphasis in original).

3. institUte Of medicine, insURing ameRica’s health: PRinciPles and RecOmmendatiOns (National Academies Press 2004) at 24–25. Downloadable at https://doi.org/10.17226/10874.

[The court quotes favorably from American Jurisprudence, second edition, which states:]

With respect to a public hospital, it has been said that since all persons cannot participate in its benefits, no one has, individually, a right to demand admission. The trustees or governing board of a public hospital alone determine the right of admis- sion to the benefits of the institution, and their discretion in this regard will not be reviewed by the courts at the suit of an individual applicant.

. . . In the instant case, the decedent was not

admitted to the hospital nor was the element of critical emergency apparent. The hospital nurse acted in accordance with valid rules for admission to the facility. The uncontradicted facts demonstrate that no breach of duty by the hospital occurred. The nurse could not force the private physicians to accept dece- dent as a patient. The nurse did all she could do for the decedent on the occasion in ques- tion. Therefore, the hospital and the nurse were entitled to a dismissal as a matter of law.

The judgment is affirmed.

Discussion Questions

1. What other facts would you like to know about this situation as you consider whether the case was decided correctly?

2. This decision is now more than 45 years old; would the case be decided differently today? If so, why?

3. In a separate portion of the opinion, the court uses the expression “plaintiff ’s intestate” in referring to the plaintiff, Mr. Hill. What does that expression mean? Why is Mr. Hill the plaintiff in a case involving an OB patient?

4. What is the significance, if any, of the fact that the hospital is a public hospital that received Hill-Burton funds?

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4. E. Schneider, et al., Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care (Published July 14, 2017), the Commonwealth Fund, at https:// interactives.commonwealthfund.org/2017/july/mirror-mirror/. (The Commonwealth Fund updates this comparison annually.)

5. Quoted in ReinhaRdt, supra note 2 at xxiv. 6. Id. at xxvi–xxvii. 7. U.S. Const. art. I, § 8, cl. 1. 8. Dent v. West Virginia, 129 U.S. 114 (1889). 9. See, e.g., Social Security Administration, Historical Background and

Development of Social Security (accessed December 9, 2018), at https://www.ssa.gov/history/briefhistory3.html.

10. See generally Kaiser Family Foundation, National Health Insurance—A Brief History of Reform Efforts in the U.S. (published February 28, 2009), at https://www.kff.org/health-reform/issue-brief/ national-health-insurance-a-brief-history-of/.

11. See, e.g., Consumers Union, Blue Cross and Blue Shield: A Historical Compilation (accessed Dec. 14, 2018), at https://consumersunion. org/wp-content/uploads/2013/03/yourhealthdollar.org_blue- crosshistory-compilation.pdf.

12. See, e.g., Kaiser Permanente, About Us—History (accessed July 12, 2019), at https://share.kaiserpermanente.org/about-us/history/.

13. PaUl staRR, Remedy and ReactiOn 41 (Yale University Press rev. ed. 2013).

14. See Kaiser Family Foundation report, supra note 10 at 3. 15. PaUl staRR, the sOcial tRansfORmatiOn Of ameRican medicine 347

(Basic Books 1982) [hereinafter STAM]. Today, except for a few cases in a handful of underdeveloped countries, polio has been virtually eradicated from the earth.

16. The AMA described a Medicare proposal in the Kennedy administration as “the most deadly challenge ever faced by the medical profession” and launched an all-out effort to defeat it. See Social Security Administration, Social Security History (accessed July 14, 2016), at https://www.ssa.gov/history/corningchap4.html.

17. STAM at 375. 18. Id. at 386–87. 19. STAM at 448–49. 20. Paul Starr, What Happened to Health Care Reform?, 20 am. PROsPect

20–31 (1995). 21. 29 U.S.C. § 1185a.

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22. Pub. L. No. 111-148, as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152. These laws are codified in various portions of the US Code, but mostly in Title 42 (The Public Health and Welfare), Chapter 7, Subchapters XVIII and XVIX (The Medicare and Medicaid Programs).

23. Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S.Ct. 2566 (2012) and King v. Burwell, 135 S.Ct. 2480 (2015).

24. 42 U.S.C. § 18091(2)(I). 25. Us cOnst. art. I, § 8. 26. The 14 states that have refused to expand their Medicaid programs

are AL, FL, GA, KS, MO, MS, NC, OK, SC, SD, TN, TX, WI, and WY. In addition, Medicaid expansion has been adopted but not yet implemented in ID, NE, and UT.

27. Texas v. United States, No. 4:18-cv-00167-O (N.D. Tex. Dec. 14, 2018).

28. See JasOn a. levitis, state individUal mandates (published October 2018), at https://www.brookings.edu/wp-content/ uploads/2018/10/Levitis_State-Individual-Mandates_10.29.18.pdf.

29. Maryland v. United States, 360 F. Supp. 3d 299 (2019). 30. Henry J. Kaiser Family Foundation, Pulling It Together: Implementation

Is Forever (published April 5, 2010), at https://www.kff.org/ health-costs/perspective/pulling-it-together-implementation-is-forever/.

31. ROsemaRy stevens, in sickness and in wealth: ameRican hOsPitals in the twentieth centURy (Johns Hopkins University Press 1989).

32. 16 C.F.R. § 681. 33. Idaho Falls Consol. Hosps., Inc. v. Bingham County Bd. of County

Comm’rs, 102 Idaho 838, 642 P.2d 553 (1982). 34. Virginia ex rel. Cuccinelli v. Sebelius, 656 F.3d 253 (4th Cir., 2011). 35. Washoe Country, Nev. v. Wittenberg & St. Mary’s Hosp., 676 P.2d

808 (1984). 36. Brinkman v. City of Indianapolis, 141 Ind. App. 662, 231 N.E.2d

169 (1967). See also Hart v. County of Orange, 254 Cal. App. 2d 302 (1967); Porter v. County of Cook, 42 Ill. App. 3d 287, 355 N.E.2d 561 (1976).

37. Estelle v. Gamble, 429 U.S. 97, reh’g denied, 429 U.S. 1066 (1977) (Eighth Amendment is violated by “deliberate indifference to serious medical needs”). See also Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971) (persons subjected to constitutional violations by federal officials have a right to recover damages against the official).

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38. Youngberg v. Romero, 457 U.S. 307 (1982) (an involuntarily committed mental patient was entitled to medical care).

39. Maher v. Roe, 432 U.S. 464 (1977). See also Harris v. McRae, 448 U.S. 297 (1980).

40. See, e.g., Conn. Gen. Stat. § 18-7 (Supp. 1985); see also Hillcrest Medical Center v. State of Okla., ex rel. Dep’t of Corrections, 675 P.2d 432 (Okla. 1983) (the county was liable for the medical expenses of a convicted murderer injured in an automobile accident while in the county’s custody).

41. Idaho Code § 20-209 (1979); but see Sisters of Third Order of St. Francis v. County of Tazewell, 122 Ill. App. 3d 605, 461 N.E.2d 1064 (1984) (the county was not liable for care furnished to an arrestee in the custody of municipal police).

42. Alaska Stat. § 33.30.050 (1982). 43. Md. Ann. Code art. 27, § 698 (Supp. 1985). See also Fla. Stat.

§ 901.35, which establishes a hierarchy of responsibility for medical expenses provided to “any person ill, wounded, or otherwise injured during or at the time of arrest.” The first tier of responsibility includes (1) insurance, (2) the patient, and (3) a financial settlement relating to the cause of the injury or illness; only when those sources are not available may the provider seek reimbursement from governmental authority. On the basis of the “during or at the time of arrest” language, some law enforcement officials attempt to avoid governmental responsibility by not formally arresting the suspect until after treatment is rendered.

44. See William Contente, Note and Comment, City of Revere v. Massachusetts General Hospital: Government Responsibility for an Arrestee’s Medical Care, 9 am. J.l. & med., 361, 369–70 (1983–84).

45. Massachusetts Gen. Hosp. v. City of Revere, 385 Mass. 772, 484 N.E.2d 185 (1982). Rev’d on other grounds, City of Revere v. Massachusetts Gen. Hosp., 463 U.S. 239 (1983).

46. 463 U.S. 239 (1983). 47. Pub. L. No. 79-725; 42 U.S.C. §§ 291 to 291o-1. 48. Regulations regarding the uncompensated care and community service

obligations may be found at 42 C.F.R. § 124. The former begin at § 124.501 and the latter at § 124.601.

49. See, e.g., Cook v. Ochsner Found. Hosp., 61 F.R.D. 354 (E.D. La. 1972). 50. 42 C.F.R. § 53.111(d)(2). 51. See Cook, supra note 52. See also 42 C.F.R. § 124.603(b)(1). 52. See, e.g., Jackson v. Indiana, 406 U.S. 715 (1972); Humphrey v. Cady,

405 U.S. 504 (1972).

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53. Lewis v. Donahue, 437 F. Supp. 112 (W.D. Okla. 1977) (a patient released from state hospital and transferred to outpatient status may not be recommitted without due process protections). See also In re Anderson, 73 Cal. App. 3d 38, 140 Cal. Rptr. 546 (1977).

54. People in Interest of Paiz, 43 Colo. App. 352, 603 P.2d 976 (1979). 55. Addington v. Texas, 441 U.S. 418 (1979). 56. See Tobias v. Manhattan Eye and Ear Hosp., 283 N.Y.S.2d 398, 28

A.D.2d 972 (1967), aff’d, 23 N.Y.2d 724, 296 N.Y.S.2d 368 (1968). 57. Fla. Stat. §§ 394.451 to 394.4789. 58. O’Connor v. Donaldson, 422 U.S. 563 (1975). 59. See, e.g., Wyatt v. Stickney, 344 F. Supp. 387 (M.D. Ala. 1972), 344

F. Supp. 373 (M.D. Ala. 1972), aff’d in part, remanded in part, 503 F.2d 1305 (5th Cir. 1974) (people involuntarily committed have a constitutional right to treatment that will afford them a realistic opportunity to return to society), and Youngberg v. Romero, 457 U.S. 307 (an intellectually disabled person was not provided treatment appropriate for his diagnosis).

60. Rone v. Fireman, 473 F. Supp. 92, 104, 119 (N.D. Ohio 1979); see also Ohlinger v. Watson, 652 F.2d 775 (9th Cir. 1980).

61. Youngberg, supra note 63 at 314, quoting and adopting the view of concurring Chief Judge Seitz, Court of Appeals, Third Circuit, 644 F.2d 147, 178 (1980).

62. Rennie v. Klein, 653 F.2d 836 (3d Cir. 1981), vacated, 458 U.S. 1119, on remand, 720 F.2d 266 (1983); Davis v. Hubbard, 506 F. Supp. 915 (N.D. Ohio 1980); Rogers v. Okin, 634 F.2d 650 (1st Cir. 1980), vacated, 457 U.S. 291; Goedecke v. State, 198 Colo. 407, 603 P.2d 123 (1979) (common law recognizes a mental patient’s right to refuse medication).

63. See, e.g., Parvi v. City of Kingston, 394 N.Y.S.2d 161, 41 N.Y.2d 553, 362 N.E.2d 960 (1977) (the city was potentially liable in negligence when intoxicated persons attempting to cross New York Thruway were struck by a car after being abandoned by the police in a rural area). But see Modla v. Parker, 17 Ariz. App. 54, 495 P.2d 494, cert. denied, 409 U.S. 1038 (1972) (the hospital was entitled to summary judgment in a suit alleging wrongful discharge when there was no evidence that the release impeded treatment or worsened the patient’s condition).

64. 285 N.Y. 389, 34 N.E.2d 367 (1941); see also Anderson v. Moore, 202 Neb. 452, 275 N.W.2d 842 (1979).

65. Morrison v. Washington County, Ala., 700 F.2d 678 (11th Cir. 1983), cert. denied, 464 U.S. 864 (1983).

66. 538 F.2d 121 (4th Cir. 1976), cert. denied, 429 U.S. 827 (1976).

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67. Chrite v. United States, 564 F. Supp. 341 (E.D. Mich. 1983) (Veterans Health Administration could be liable for failure to warn a patient’s mother-in-law of threats of violence). Cf. Leedy v. Hartnett, 510 F. Supp. 1125 (M.D. Penn. 1981), aff’d mem., 676 F.2d 686 (3d Cir. 1982) (Veterans Health Administration owed no duty to warn the plaintiff ’s family when a discharged mental patient posed no greater danger to the plaintiff than to the community at large).

68. Kyslinger v. United States, 406 F. Supp. 800 (W.D. Pa. 1975), aff’d, 547 F.2d 1161 (3d Cir. 1977) (there was no evidence to support allegations that a patient with polycystic kidney disease and his spouse were given inadequate information and training in use of home hemodialysis unit at time of discharge from hospital).

69. See, e.g., Cook v. Highland Hosp., 168 N.C. 250, 84 S.E. 352 (1915); see generally False Imprisonment in Nursing Home, 4 A.L.R.2d 449.

70. See, e.g., Marcus v. Liebman, 59 Ill. App. 3d 337, 375 N.E.2d 486 (1978) (a psychologically disturbed patient was entitled to a jury trial on the issue of whether her suspicion that force was threatened was “reasonable,” thereby constituting tort of false imprisonment). See also Rice v. Mercy Hosp. Corp., 275 So. 2d 566 (Fla. App. 1973) and Paradies v. Benedictine Hosp., 431 N.Y.S.2d 175 (1980), appeal dismissed, 435 N.Y.S.2d 982 (1980).

71. For standards of The Joint Commission regarding use of restraint and seclusion of patients for behavioral health purposes, see generally “Introduction to the Standards PC.03.03.01 through PC.03.03.31,” 2011 hOsPital accReditatiOn standaRds at PC-37 to PC-39; see also Standards PC.03.03.01 through PC.03.05.19 at PC-39 to PC-62. The medical record documentation standard is PC.03.05.15 at PC-60 to PC-61.

72. Gadsden v. Hamilton, 212 Ala. 531, 103 So. 553 (1925); Bedard v. Notre Dame, 89 R.I. 195, 151 A.2d 690 (1959). Cf. Bailie v. Miami Valley Hosp., 8 Ohio Misc. 193, 221 N.E.2d 217 (1966) (there was no false imprisonment when no threat of force against a mother of an infant patient existed and the patient was unaware of detention).

73. Neb. Rev. Stat. § 29-121(2008). 74. This is the “rationale” statement for Standard LD.04.02.05. The

standard itself reads “When internal or external review results in the denial of care, treatment, and services, or payment, the hospital makes decisions regarding the ongoing provision of care, treatment, and services, and discharge or transfer, based on the assessed needs of the patient.”

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The “Elements of Performance” statement following the rationale contains the following language:

1. Decisions regarding the provision of ongoing care, treatment, and services,

discharge, or transfer are based on the assessed needs of the patient, regard-

less of the recommendations of any internal or external review.

2. The safety and quality of care, treatment, and services do not depend on the

patient’s ability to pay.

75. Jersey City Medical Center v. Halstead, 169 N.J. Super. 22, 404 A.2d 44 (1979); Lucy Webb Hayes Nat’l School v. Geoghegan, 281 F. Supp. 116 (D.C.D.C. 1967).

76. 80 N.J. 299, 403 A.2d 487 (1979), cert. denied, 444 U.S. 942 (1979).

77. 646 F.2d 74 (3d Cir. 1981). 78. 42 U.S.C. §§ 1320c to 1320c-13. (1983 and Supp. 1987). 79. 42 U.S.C. § 1320c-3.

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Appendix 2.1: Federal Health Insurance Coverage

Program Expenditures* Eligibility Benefits Beneficiaries*

Medicare $583 billion Eligible for Social Security (e.g., aged 65 or older, end- stage-renal dis- ease, disabled)

Basic acute care coverage, some preventive; high cost sharing; some prescription drugs

44 million

Medicaid† $350 billion Income at or below set percentage of federal poverty level, eligibility cat- egory (e.g., children, pregnant women, disabled people)

Comprehensive for both acute and chronic care plus institutional long- term care; nominal cost sharing

CHIP $50 billion Generally up to 200% of federal poverty level and under age 19

Medicaid or actuarial equivalent of largest managed care plan in state; some cost sharing

Veterans Health Administration

$75 billion Veterans with prior- ity based on service discharge status and income

Comprehensive chronic and acute care, including long-term institutional care; minimal cost sharing

More than 9 million

TRICARE $53 billion Active-duty military, their dependents, retirees

Acute care coverage; no cost sharing for active- duty personnel in military treatment facilities; some cost sharing for purchased care in civilian sector

9.4 million

IHS $6.1 billion American Indians and Alaska Natives who belong to fed- erally recognized tribes

Acute care; public health services; dental services; nutrition; community health; and other services

2.2 million

Federal Employ- ees Health Benefits

More than $20 billion

Federal employees, dependents, and retirees

“Managed competition” with more than 100 private health plans to choose from; no standard mini- mum benefit package, so benefits vary from plan to plan

More than 9 million

* 2018 estimates; numbers are approximations. † State-run; eligibility and benefits may vary by state, subject to federal minimum requirements.

70 million (Medicaid and CHIP total)

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Appendix 2.2: History of Health Reform Efforts

The tortuous history of healthcare reform in the United States runs for more than a century and a half and involves at least a dozen presidents.

Year Event

1854 A bill that would have established asylums for the “indigent insane” as well as for the blind and deaf passes both houses of Congress but is vetoed by President Franklin Pierce. Pierce argues that the federal government should not commit itself to social welfare, which he argued was the responsibility of the states.

1865 After the Civil War, the federal government establishes the first system of national medical care in the South. Through an agency known as the Freedmen’s Bureau, the government constructs 40 hospitals, employs more than 120 physicians, and treats more than a million sick and dying former slaves. The hospitals last only from 1865 to 1870 because continuation of the bureau is opposed by President Andrew Johnson, a southerner.

1912 Former President Theodore Roosevelt champions national health insurance in his unsuccessful third-party bid for election as the “Bull Moose” candidate.

1935 President Franklin D. Roosevelt (FDR) favors creating national health insurance amid the Great Depression but decides to push for Social Security first.

1942 FDR establishes wage and price controls during World War II. Businesses cannot attract workers with higher pay, so they compete by adding benefits, including health insurance. Employer-paid health insurance grows into a workplace perk and becomes the usual source of coverage for most Americans.

1945 President Harry S. Truman calls on Congress to create a national insurance pro- gram. The American Medical Association denounces the idea as “socialized medi- cine,” and it goes nowhere.

1960 Candidate John F. Kennedy makes healthcare a major campaign issue. Later, as president, he cannot get a plan for the elderly through Congress.

1965 President Lyndon B. Johnson’s legendary arm-twisting and a Congress dominated by his fellow Democrats leads to creation of two landmark government health pro- grams: Medicare for the elderly and Medicaid for the poor.

1974 President Richard Nixon proposes an employer mandate to offer private health insurance and reforms to Medicaid. The Watergate scandal intervenes, causing Nixon’s resignation.

1976 President Jimmy Carter promotes a mandatory national health plan, but an economic recession helps push it aside.

1986 President Ronald Reagan signs the Consolidated Omnibus Budget Reconciliation Act (COBRA), a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with the workers bearing the cost.

1988 Congress expands Medicare by adding a prescription drug benefit and “cata- strophic care” coverage. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the catastrophic care law the next year.

(continued)

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n94

Year Event

1993 President Bill Clinton puts First Lady Hillary Rodham Clinton in charge of develop- ing what becomes a 1,300-page plan for universal coverage. “Hillarycare” would require businesses to cover their workers and require everyone to have health insurance. The plan meets Republican opposition, divides Democrats, and comes under a firestorm of lobbying from businesses and the healthcare field. It dies in the Senate.

1997 Clinton signs bipartisan legislation—the Children’s Health Insurance Program (CHIP)—creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid.

2003 In a major expansion of the program for older people, President George W. Bush persuades Congress to add prescription drug coverage to Medicare.

2009 President Barack Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers, man- date that everyone have coverage or pay a penalty to the IRS, require insurance companies to accept all comers regardless of preexisting conditions, assist people who cannot afford insurance, create state and federal health benefit exchanges, and encourage states to expand Medicaid coverage. This effort becomes the ACA, which passes in 2010 with no Republicans voting in favor.

2012 In NFIB v. Sebelius, the US Supreme Court upholds the “individual mandate” por- tion of the ACA (the penalty for individuals who do not have insurance) but strikes down the provision requiring states to expand Medicaid.

2015 In King v. Burwell, the court holds that the ACA’s tax credits are available to applicable taxpayers in states that have a federal exchange rather than a state exchange.

2017 President Donald J. Trump takes office and vows to “repeal and replace” the ACA. Despite scores of attempts to do so legislatively, Congress fails to repeal the law.

2018 In Texas v. United States, a federal trial court judge rules the entire ACA unconstitutional.

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C h a p t e r 2 : A c c e s s t o H e a l t h c a r e : R i g h t s a n d R e s p o n s i b i l i t i e s 95

Appendix 2.3: ACA Provisions by Healthcare Field Segment

Segment of the Healthcare Field Provisions

Insurers • Report medical loss ratios and provide rebates to enrollees if the ratios are less than the prescribed percentages

• Institute rate review process and consumer coverage reforms • Limit the deductibility of insurer executive or employee compensation to

$500,000 per individual (“Cadillac plans”)

Non-Medicare individuals

• Free basic preventive care • No lifetime limits • Dependent coverage for adult children up to age 26 in all individual and

group policies • Children’s preexisting conditions will no longer exclude them from coverage • A requirement to purchase minimum coverage or pay a penalty (the “indi-

vidual mandate”) • Tax subsidies for low-income persons

Employers • Tax credits to small employers that offer coverage; temporary reinsur- ance program for employers that offer coverage to retirees not eligible for Medicare

• Requirement that certain large employers offer health insurance to employees

Hospitals and other providers

• Reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice, and other providers; adjust for productivity

• Ban new physician-owned hospitals in Medicare, and require hospitals to have a provider agreement in effect by December 31, 2010; limit the growth of certain grandfathered physician-owned hospitals; establish new rules for nonprofit hospitals

• Establish a committee to develop a national workforce strategy, scholarships and loans for health professionals, and teaching health centers to provide Medicare payments to primary care residency programs in federally qualified health centers

Pharmaceutical industry

• Authorize the Food and Drug Administration to approve generic versions of biologic drugs and to grant to biologics manufacturers 12 years of exclusive use before generics of their products can be marketed

Medicare and Medicaid

• Free annual wellness visits for Medicare beneficiaries • Expanded options at end of life (demonstration program for hospice and

curative care concurrently) • $250 rebate to beneficiaries who reach the Medicare Part D coverage gap in

2010 • Improved care coordination for dual-eligibles (persons entitled to both Medi-

care and Medicaid) through the Centers for Medicare & Medicaid’s (CMS’s) new Federal Coordinated Health Care Office

• Increase Medicaid drug rebates (brand-name drugs to 23.1 percent) • Funding for Medicaid and Children’s Health Insurance Program Payment and

Access Commission to include assessments of adult services

(continued)

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n96

Segment of the Healthcare Field Provisions

Notable new entities

• State-operated health insurance exchanges (and a federal exchange for states that choose not to develop their own) to serve as marketplaces where individuals and small businesses can enroll in plans after comparing price and coverage

• Patient-Centered Outcomes Research Institute, a private, nonprofit corpora- tion that develops and funds comparative effectiveness research

• Independent Payment Advisory Board for proposals to slow the growth of Medicare and private healthcare spending and improve quality

• Center for Medicare & Medicaid Innovation, a CMS entity that tests and evaluates payment structures and methods to foster patient-centered care, improve quality, and reduce the cost of care under Medicare and Medicaid

Source: See Henry J. Kaiser Family Foundation, Focus on Health Reform: Summary of the Affordable Care Act (last modified April 23, 2014), at http://files.kff.org/attachment/fact-sheet-summary-of-the-affordable-care-act. The Kaiser Family Foundation provides excellent information on national health issues generally: www.kff.org.

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C h a p t e r 2 : A c c e s s t o H e a l t h c a r e : R i g h t s a n d R e s p o n s i b i l i t i e s 97

Appendix 2.4: Original ACA Implementation Timeline

2010 • Various fraud and abuse provisions • Dependent coverage to age 26 • No limiting coverage for preexisting conditions in dependents under age 19 • National high-risk pool for others with preexisting conditions • Minimum coverage required for preventive services • Prohibition of rescission and lifetime limits • $250 rebate for those in the “donut hole” • Tax credits to small employers (fewer than 25 employees) • Requirement that health plans report medical-loss ratio • Reductions in Medicare market basket • Additional residency and medical education provisions • Process for reviewing insurance premiums and justifying increases • Expansion of CHIP • Various programs to study quality of care and effectiveness

2011 • Voluntary long-term care program for elderly • Medical malpractice demonstration project • Ban on physician ownership of hospitals • Medicare Advantage payment cuts • Adjustments to payments for hospital-acquired conditions • Medicaid alternative care delivery for certain chronic conditions • Expanded Medicare coverage for environmental hazards • Care coordination for dual-eligibles • Changes regarding FDA approval of generic drugs • Various prevention, wellness, and quality studies and grants • Tax changes

2012 • Accountable care organizations begin to share in cost savings • Hospital value-based purchasing • Increase in physician-quality reporting requirements • Various Medicaid demonstration projects • Increased requirements for not-for-profit status • Additional data collection on quality issues • Excess readmissions provisions go into effect • Pharmaceutical manufacturers to report information on drug samples

2013 • Disclosure of financial relationships among providers, suppliers, and manufacturers (transparency reporting)

• Consumer-owned cooperatives begin • Expanded coverage of preventive services (Medicaid) • Physician comparison database made available to public • Claims simplification improvements • Reductions in payments for hospital readmission • Increased reimbursement for primary care (Medicare) • Various tax provisions take effect

(continued)

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T h e L a w o f H e a l t h c a r e A d m i n i s t r a t i o n98

2014 • Individual and employer mandates take effect • Penalties for employers who do not offer benefits • Coverage expansions • Expanded Medicaid eligibility (optional, per Supreme Court ruling) • State health insurance exchanges begin • 100% federal match for new Medicaid enrollees • Employers may offer rewards for employees participating in wellness programs • Medicare and Medicaid disproportionate share payments reduced • Medicare commission to report to Congress

Through 2018

• Multistate insurance (“health choice”) compacts • Further reductions of payments for hospital-acquired conditions • Independent Payment Advisory Board to propose changes to Medicare payments • Excise tax on “Cadillac” health plans

Sources: See, generally, Henry J. Kaiser Family Foundation, Health Reform Implementation Timeline (published July 8, 2013), at http://www.kff.org/interactive/implementation-timeline; and Venson Wallin Jr. et al., Blunting the Negative Impact of Healthcare Reform, 64 heaLthCare fin. MgMt., 62–66 (2010).

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