[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.” This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]
Christopher Robertson is moderating this session.
This session was kicked off by Matthew Lawrence, a Fellow at the Petrie-Flom Center, on “Rationing Justice by Default”. His paper departs from the fact of a huge backlog in Medicare appeals. The question is, if procedural justice is scarce, how do you ration it? Trim procedural protections for everyone? Limit access by a filing fee? Quadruple funding? Lawrence proposes a better alternative: Give full procedural protection to some and none to the rest based on the value that claimants get by from procedure claim, which is heterogeneous. You can then sort the cases via choice architecture. Many Medicare appeals are by large repeat players like the Scooter Store. Beneficiaries appealing is very small. The reasons why we give process lines up quite well to identity of appellant. Fairness, dignity/autonomy, normative legitimacy. The first two of the three probably apply less to the Scooter Store, whose interest is primarily financial. How do you sort? The classical solutions would include: (1) Treating providers differently – but that would discourage assignment, results in inequality, and would be over and under inclusive. (2) Fee for hearing – but leads to externalities since there are public values of process, there are behavioral biases that lead to undervalue process, and perhaps it normatively should be free. His preferred approach: sort with default rule. Maximize the stickiness. Give incentives for sophisticated party to opt into efficiency track. He explained this approach and then considered a set of objections.
The second speaker was Abigail Moncrieff. Her co-authored (with Manisha Paul) paper was entitled “Libertarians, Cognitive Failures, and Transaction Costs: The Behavioral Case for the Individual Mandate.” Her paper has two motivations: (1) a story to justify the individual mandate, since it will be in contention for as long as on the books. (2) To show that libertarian paternalism IS an oxymoron (Cass Sunstein and Richard Thaler to the contrary!) Three suggestions as to why the individual mandate is justified: (i) adverse selection/death spiral story, (ii) pure behavioral story that those who are uninsured are making a boundedly rational decision that can be corrected by equalizing cost of uninsurance and insurance, (iii) their preferred reason — people who are uninsured are deviating from the optimal, that government can help them with that, and reduce transaction costs. This relates to Cass Sunstein’s keynote Choosing Not to Choose. Her presentation showed why she found the first two justifications insufficient. In defending the third she argues that in light of cognitive costs, transaction costs, etc, individuals may be making the right choice but government can reduce those costs via the individual mandate.
Third was Sarah Conly, a professor at Bowdoin College and a Fellow at the University of Chicago Law School. He paper was entitled “Death squads, Paternalism, and End of Life.” Her argument is we should not support continued permanent unconscious life for the heavily brain damaged. Why (1) The permanently unconscious life has no value. This is true on any philosophical theory as to why we value life. (2) People who by advanced directive choose this continued life are making “false beliefs.” Optimism bias – I will return to an active life while under a coma. She makes a great reference to Hard to Kill as reflecting this kind of bias — most of us are not going to be Steven Seagal! For most of us it is inconsistent with our own preferences if reflected on. If I have to choose between a small benefit to myself or cost to my family or one where I can benefit my family greatly at small or no cost I would choose latter. But choosing continuing care will hurt your family. You have insurance but it will run out. Forces your family to pay (money) or not pay (guilt and other psychological harm). (3) It is expensive for society. This is a good place for rationing, because there really is NO benefit. Why don’t we do this if it makes so much sense? Result of patient autonomy movement. That movement is mostly good but has some negative consequences and this is one of them. What to do: You can set default to not receiving continuing care. You can require a counseling session where we discuss the costs for your family and society, or go over the data to try to cure optimism bias. That may work. But maybe strong Paternalism would be better, just rule out the care altogether.
The fourth presenter was Nina Kohn, is a Professor at Syracuse University College of Law. Her paper “Improving Health Care Decisions Through a Shared Preferences and Values Approach and Surrogate Selection” co-authored with Jeremy Blumenthal. Surrogates are remarkably bad in making decisions that reflect what the patient wants. There are “congruent” decisions – what patient would have made if able — versus “incongruent” ones. The social psych literature shows that surrogates make incongruent ones. Kohn then reviews that literature. Why does this happen? Deliberate deviation, lack of information/overconfidence, and “projection bias” — surrogates making the decision for the patient based on what the decisionmaker wants not the patient. How to solve it? Getting family members to be surrogates? Many statutes do that. But family members are bad too and relationship between closeness of family tie and accuracy is poor. Get people to talk about their preferences? Turns out those discussions, whether specific or value discussions, don’t do very well either. Better instructions to surrogates? Also does not work so well. Kohn/Blumenthal’s modest proposal: the projection bias of surrogates is a potential solution: select surrogates who share the patient’s treatment preference. Where we can’t do that, do the second best of selecting surrogates based on shared values with patient. This is a simple solution that surprisingly is not championed in literature. She then goes on to discuss how this strategy might be implemented. She then discussed why should we care that surrogates be congruent. One element is human dignity and respecting rights. But as Conley’s presentation suggested, some choices lead to significant social costs. Still Kohn thinks that this approach ensures more flexible decision-making for health care and that flexibility may be in the public interest. Surrogates with more flexibility may be better able to make decisions that are cost-saving. Context-specific decision-making.
Barbara Evans, a Professor at University of Houston and Baylor College of Medicine presented a paper “Preventing Harms to Patients who Know Too Much about Their Own Genomes,” as the last presentation of the panel. The problem: whole genome and Exome sequencing is generating huge amounts of data. AGMG recommended that there were 57 variants that were actionable and known that you should look for. CLIA and HIPAA privacy rule have no been amended so patients get direct access to the data at the clinic. Evans’ paper is in part about how much the patient has a legal right to access. The answer is almost all of it. That is worrisome if patients don’t understand it. CLIA requires only analytical validity. FDA believes it should get to regulate on not just analytical validity but clinical validity and clinical utility. The problem is that FDA’s rule is variant specific. It would be like FAA requiring airline to only show that a single one of its airlines is airworthy. There is a whole “fleet” of genes and the Device law administered by FDA has to reflect that. The problem is that the patent law, pre-Myriad, gave a vertically integrated monopoly – one company administered test and interpreted it. They were a refinery. They take variants of unknown significance and make them ones of known significance. There are some aspects of this that make sense as a natural monopoloy. Post-Myriad and Prometheus Supreme Court cases there are still vertically integrated incumbents and now new upstarts. But the upstarts don’t have access to the genome structure databases. So they will be unable to do much on the unknown significance variants. The incumbents have no incentive to share their database. But the upstarts need access. We have seen this set-up industrially before, such as with pre-breakup AT & T. In the past, it has led to antitrust solution of breaking up industry. But with genetics there is a downside. In these other industries the infrastructure was already built, but in genetics it is still being built.
Question and Answer.
Conley and Kohn were asked about how their papers hang together: what to do about improving congruence when it would cause individuals to do the kinds of treatments that Conley does not want to make available. Kohn said that she views the Conley proposal as separate and independent from hers, you can love it or hate it and still want to improve surrogacy congruence. Conley says she would not allow either patient or surrogate to choose certain things.
A suggestion for Moncrieff: Bankruptcy laws allow people to externalize some of the costs of the care, which is another reason for the mandate sounding in collective action.
A question for Conley: do insurers ever deny coverage for people in comas as not medically necessary and what has happened. Conley said she was not aware of insurers denying for that reason — your coma is permanent. There may not be a crisis point where the insurer gets to say “aha now it is permanent” – what is more likely is you just exhaust your benefits.
A question for Evans: Now that Myriad has lost its test monopoly, the Coase theorem would suggest they start selling their consultation/interpretation services. Is that happening? Answer: There is a possibility for standalone unbundled interpretation services. I think this is where the industry will go. Right now the incentive is not there to volunteer the stand-alone services. If you have the data asset you want to keep it as trade secret to support the rest of your business.
A question for Matt Lawrence: the problem is efficiency and over-proceduralism. But aren’t you introducing a new procedural decision that may itself be boundedly rational and also add inefficiency. Answer: My proposal is NOT simpler, but instead more complex. This is a modest proposal for modest benefits. The additional choice on procedure would not be too costly for big entities. For beneficiaries they may not even notice and will flow with default. So a little more complex but manageable.
A question for Kohn: Do incongruence problem apply even when the surrogate knows a lot about the preferences/values of the patient. Answer: You would hope the answer was share your information, sit down, and we will get better congruence. Unfortunately, these conversations in whatever version have much weaker effect.
A question for Moncrieff: Why isn’t free rider justification one of the strongest? Can you discuss the relationship between the mandate and preference heterogeneity? Answer: The question of whether to get health insurance at all is actually often a costly decision for individuals. You need to know what the value of health insurance is. When you know you have back stop of EMTALA and bankruptcy, you have a reason not to get health insurance. But to know if that makes sense, you need to know how likely you are to have a catastrophic event pushing you to that backstop and how unattractive that backstop is (bankruptcy is bad!) So it takes work to realize that it is optimal to have health insurance. That assumes that it is the case that health insurance, if priced actuarially, is always best. Libertarians will object to that, but she thinks that may just be a knee-jerk.
A question for Kohn: Are there reasons to want surrogates other than their congruence? Maybe individuals don’t actually know what they want? Also the cross-cultural element to it? Answer: Medical providers may just want ANY decision that is not them making a decision. Older adults tend to care a lot about the process by which decisions are made. The proposal is pretty consistent with the process. The proposal is meant to improve accuracy where it is a goal, even if not the only or primary goal for some people.
A question for Conly: Does the ACA’s limits on lifetime limits for care exacerbate the problem. Answer: I don’t know what the effect will be on funding for people in permanently unconscious states. If I was queen of the world, I would prefer to frame this as futile care not “this is really expensive,” so better to push the no-benefit and inconsistent with values than focused on the cost.
A question for Lawrence: Could you just deny all the Scooter Store type claims and just work it out on the back end on price by? Answer: I am a little concerned about that for constitutional reasons and also effect on assignment, but worth looking more in-depth into it.
A question for Moncrieff: Is the price of individual market insurance the real problem. Answer: that is the result of the transaction costs, not the cause.
A question for Kohn: At one time it looked from literature that physician’s values that were driving these issues. Maybe you should look at your physician’s advanced directive? Answer: Great idea. Another way patients would get more from info about their providers.
A question for Evans: Couldn’t FDA focus on health claims by device makers (i.e., testing companies). The FDA only regulates molecules when they make a health claim. Answer: You could do post-marketing collection of information as the information on what variants do became available. You can do it but it would be difficult. When you unbundle the interpretation it gets harder. If I as a law professor open up a shop to interpret, can FDA regulate me? It is just speech not a drug or device. Maybe fraud? Would I be practicing medicine?