Medicine and Public Utility Regulation: Part I

Now that the one-year anniversary of the exchanges is upon us, I’d like to make a prediction about health law in a post-ACA era. Maybe it’ll prove right, maybe it’ll prove wrong. But hopefully it’ll prompt a conversation.

For many years, the plight of those without insurance has dominated the policy debate. As the ranks of uninsured dwindle, however, the serious economic challenges confronting even those with insurance will become more salient. Outrage over the exploitation that Elizabeth Rosenthal has documented in her Paying Till It Hurts series is, to my mind, a leading indicator of a larger trend.

Mounting public frustration isn’t likely to lead to the dismantling of the ACA, which is becoming more entrenched by the day. Nor will it usher in an era of single-payer—eliminating private coverage, especially employer-sponsored coverage, would be much too disruptive. Instead, I suspect the frustration will generate support for laws that tightly regulate the economic practices of health-care providers. As these laws accumulate, providers may come to be treated more like public utilities and less like conventional market actors.

What would this public utility regulation of health-care providers look like? States might, for example, require providers to care for anyone with insurance, regardless of whether the patient is in-network. They might stiffen their certificate-of-need laws to push health-care systems operate enough facilities to meet public needs. They might even regulate what providers can charge. All of these state-level efforts would be variants of laws that already apply to public utilities. They could be adapted for the health-care industry.

Not a chance in hell, you might say. Even if other countries treat their providers like public utilities (and they do), there’s no way we’d ever do that in the U.S. of A. On this view, public utility regulation is anathema to stubborn American political traditions that valorize patient choice and reject heavy-handed state interference in economic affairs.

This suspicion of public utility regulation is a legacy of the modern law-and-economics movement, which, in the mid-twentieth century, subjected the public utility model to withering criticism. Deregulation of the airline and trucking industries in the 1970s reinforced the idea that public utility regulation should be confined to natural monopolies like railroads and electrical plants. Because health care isn’t a natural monopoly, this reasoning goes, there’s no good reason to treat it like a utility.

But bear with me. The principles of public utility regulation are more central to health law than most people understand. And there’s good reason to think that the public utility idea will become even more important to health care in the years ahead. In a series of posts here at TIE, I’ll sketch out why I think that’s so. For those disinclined to wait, I’ve got a new paper coming out at the Michigan Law Review, Medicine as a Public Calling, that makes the case in more detail.


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