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Published online by Cambridge University Press: 29 April 2021
In Volume 3, Number 3 of this journal, Professor Havighurst wrote a brief Comment in which he observed that the function of health care cost-containment regulation is the rationing of health care resources, and argued that the fostering of health care consumers' and providers' free choice in the competitive marketplace is preferable to conventional cost-containment regulation as a mechanism for such rationing. He briefly outlined various reforms, including changes in federal tax treatment of health insurance premiums, aimed at implementing his approach.
Subsequently, in a Comment in Volume 4, Number 1, Stephen M. Weiner, then Chairman of the Massachusetts Rate Setting Commission, criticized Professor Havighurst's analysis by asserting that it failed to acknowledge the validity of regulation in the health care field; that it overemphasized free market economics; and that it failed to appreciate the essentially political nature of regulatory processes. Mr. Weiner argued that health care regulation is here to stay, and called for renewed efforts to clarify and implement appropriate relationships between health care regulation and (1) health care rationing, (2) health care planning, and (3) health care competition.
In the Comment below, Professor Havighurst replies both to specific statements in, and the general direction of, Mr. Weiner's critique, asserting that it inaccurately represented the earlier Havighurst Comment in several important respects. Professor Havighurst states, for example, that, Mr. Weiner's opinion notwithstanding, Havighurst—both in his earlier Comment and in his other writings—has considered extensively the political nature of regulation, and, furthermore, has been constructive in his critiques of regulation. He charges Mr. Weiner with attempting to stifle debate on the question of the volume and direction of health care regulation, and suggests that Weiner's criticisms may reflect a bias against the individual's right to choose for himself and to have his preferences registered in the economic marketplace.
1 Weiner, Governmental Regulation of Health Care: A Response to Some Criticisms Voiced by Proponents of a “Free Market,” 4 Am. J. L. & Med. 15 (1978)CrossRefGoogle Scholar.
2 Havighurst, Health Care Cost-Containment Regulation: Prospects and an Alternative, 3 Am. J. L. & Med. 309 (1977)CrossRefGoogle Scholar.
3 At one point, Weiner tries to score a debating point by claiming that my proposal to use limited tax credits to subsidize health insurance purchases is inconsistent with my “biases.” Weiner, supra note 1, at 31. In order to lecture me on the implications of my own supposed philosophy, Weiner must be wedded very firmly to his stereotype, since one would expect my philosophy to be revealed in its application. In any event, my proposal was to remove an existing distortion of private incentives (see text accompanying notes 27-28 infra), not to manipulate them, as Weiner suggests. Further, there is an important distinction between the conservative laissez faire tradition, with which Mr. Weiner seems to think he is contending, and the approach of a pragmatic liberal such as Charles L. Schultze (formerly of Brookings) in his 1977 book The Public Use of Private Interest. Indeed, this title, suggesting that private interest is not sacrosanct but is there to be used by the public, probably would offend a true conservative. I am myself quite comfortable with a pragmatic approach that would provide for direct government intervention only where indirect approaches—ordering incentives and strengthening competitive forces—are demonstrably inadequate. Later discussion in the present Comment suggests the possibility that Weiner himself could be philosophically content with this approach.
4 Weiner, supra note 1, at 16.
5 Havighurst, supra note 2, at 312.
6 Weiner, supra note 1, at 26-30.
7 Havighurst, supra note 2, at 312 n.7.
8 Id. at 316.
9 Havighurst, Regulation of Health Facilities and Services by “Certificate of Need,” 59 Va. L. Rev. 1143, 1194-1204 (1973)CrossRefGoogle Scholar.
10 Havighurst, Blumstein, & Bovbjerg, Strategies in Underwriting the Costs of Catastrophic Disease, L. & Contemp. Prob., Autumn 1976, at 122, 138-65 (1976)Google Scholar; Havighurst, & Blumstein, Coping with Quality/Cost Trade-Offs in Medical Care: The Role of PSROs, 70 Nw. U. L. Rev. 6, 20-68 (1975)Google Scholar; Havighurst, Federal Regulation of the Health Care Delivery System: A Foreword in the Nature of a “Package Insert,” 6 U. Tol. L. Rev. 577 (1975)Google Scholar; Havighurst, & Bovbjerg, Professional Standards Review Organizations and Health Maintenance Organizations: Are They Compatible? 1975 Utah L. Rev. 381, 401–21 (1975)Google Scholar; Havighurst, Health Maintenance Organizations and the Health Planners, 1978 Utah L. Rev. 123, 140–54 (1978)Google Scholar; Havighurst, supra note 9, at 1178-1218.
11 Weiner, supra note 1, at 20.
12 Id. at 16.
13 Id. at 18.
14 Id. at 24.
15 Id. at 21.
16 Havighurst, supra note 2, at 313.
17 Weiner, supra note 1, at 22.
18 Havighurst, supra note 2, at 317 (emphasis added).
19 Havighurst, & Blumstein, Coping with Quality/Cost Trade-Offs in Medical Care: The Role of PSROs, 70 Nw. U. L. Rev. 6 (1975)Google Scholar.
20 Weiner, supra note 1, at 17-18.
21 Goldberg, Regulation and Administered Contracts, 7 The Bell Journal Of Economics 426 (1976)CrossRefGoogle Scholar.
22 The “administered contract” exhibits either or both of two elements. First, it involves a contractual relationship between principals that continues for an extended period of time, rather than occurring only at a fixed point in time, and that establishes a framework for redefining contractual terms and conditions as circumstances change over time. Second, this relationship involves a reliance upon agents for the fulfillment of such functions as gathering and analyzing essential information, making binding decisions, and adjusting the terms of the ongoing contractual relationships between the principals.
Weiner, supra note 1, at 17 (footnote omitted).
23 Id.
24 Presumably it would refer to doctor-patient transactions conducted on a fee-for-service basis without third-party financing.
25 Weiner, supra note 1, at 32 n.51.
26 It should be recognized that unions and employers have a “political” relationship with the workers and necessarily are concerned with symbolism in providing health benefits. The tax law exacerbates this problem by transferring some of the cost of eschewing stringency from the parties to the federal government. If the tax law were changed and if the union leadership still preferred lavish health care at the expense of increased take-home pay, the high cost would be borne solely by the rank and file, who would have an incentive to demand a different plan. If they failed to d o so, that presumably would reflect their choice, and, even if we did not agree with it, it would be hard to find any reason to intervene.
27 Weiner, supra note 1, at 30-31.
28 Insurance companies, in particular, would rather not have this ticklish responsibility. Competition should force them to accept it, however. See Havighurst, Professional Restraints on Innovation in Health Care Financing, 1978 Duke L.J. 321 (1978)CrossRefGoogle Scholar.
29 Weiner, supra note 1, at 32.
30 Havighurst, & Bovbjerg, Professional Standards Review Organizations and Health Maintenance Organizations: Are They Compatible? 1975 Utah L. Rev. 381 (1975)Google Scholar; Havighurst, Health Maintenance Organizations and the Health Planners, 1978 Utah L. Rev. 123 (1978)Google Scholar; Havighurst, supra note 9, at 1204-15.
31 Weiner, supra note 1, at 18-20.
32 Id. at 20 (emphasis added).
33 Id. (emphasis added).
34 Havighurst, supra note 2, at 315-16 (emphasis added).
35 Havighurst & Blumstein, supra note 19, at 15-20.
36 Weiner, supra note 1, at 25.
37 Havighurst, supra note 2, at 317-19.
38 See, e.g., Kristol, I., Two Cheers for Capitalism 27–31 (1978)Google Scholar.
39 Weaver, Regulation, Social Policy, and Class Conflict, Pub. Interest, Winter 1978, at 45, 59.
40 Id. at 60.
41 Id. at 61.
42 Id. at 60-61.
