Einer Elhauge ’86 on the fragmentation of health care
Einer Elhauge ’86 is the founding director of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School. An expert in antitrust, contracts, and health care law, he served as chairman of the Antitrust Advisory Committee for the Obama campaign and is the author of several books, including “Statutory Default Rules” and “United States Antitrust Law & Economics.” Most recently, he edited and contributed to a new book on health care in the United States, “The Fragmentation of U.S. Health Care: Causes and Solutions” (Oxford University Press, 2010). The book was born out of a conference on fragmentation held at the Petrie-Flom Center in June 2008. Below, Elhauge discusses the issue in a Q-and-A with Allison Hoffman, an academic fellow at the Petrie-Flom Center.
What was learned from the discussions started at the conference and what are some of the insights that have been included in the book?
I think that before the conference there was a general sense that there was a lot of fragmentation in health care, but it wasn’t clear what was causing it. It wasn’t clear whether it was really that bad, and what were the effects of it. And at least I underappreciated the theoretical reasons why we would expect it to have bad consequences. So on the causes, we invited a very interdisciplinary set of professors to figure out why there is this fragmentation. And I was somewhat surprised that the fairly clear answer to me that came out of it was that the law was causing a lot of this fragmentation. A lot of these papers also uncovered evidence that there’s not just a lot of fragmentation, which we kind of knew, but pretty stark evidence that linked it to actual bad health results. So the unstructured nature of hospitals, administration, and control over doctors and all the professionals really working on a common illness, the fact that it leads to increased medical errors, was important. The fact that you could show that the average Medicare patient sees seven to 10 doctors in a year, and that the more doctors they see, in fact, the worse the health outcomes, was also, I thought, quite striking. We knew about fragmentation over time—that you’d see multiple insurers, so they don’t have enough incentive to invest in your long-term health care and invest in preventive care, among other things. But to actually see the data show that the more switching there was among insurers, the less they invest in preventive care, was, I thought, an important confirmation of that. There’s also some evidence of the huge administrative costs. All in all, a powerful empirical confirmation that we really have a problem that is worth addressing, and important to address.
What are some of the most troubling stories of fragmentation that were raised?
The most troubling, because it’s so obvious on any normative ground that they’re undesirable, is the fragmentation within hospitals and across providers treating one patient. There’s also fragmentation across patients regarding whether health care’s really allocated well across patients. That’s, I think, a very important one, but that inevitably gets into more controversial normative judgments about how to allocate health care. What’s striking is that even when the goal is relatively clear—improving the health of one particular patient—the system is so fragmented, even within one building, like a hospital. Because of the legal structure, the hospital is operating in the same building separately from all the different physicians treating the same patient, which leads to bad health outcomes. Or even for one common illness, the fact that the patient sees lots of different specialists, none of whom has real incentives and control to really organize the entire case, also leads to, I think, very bad results. So those are the ones I think are the most troubling, and seem most obviously wrong, and that we could and should do something about.
Does the recently enacted health care reform legislation get at this piece of fragmentation on the delivery side of health care?
Maybe. Not as much as I would like. I think that the focus of the plan, and properly so, is on insuring a larger population, and achieving more equity across individuals and patients. However, there are a variety of pilot projects in the statute, some authorizing accountable care organizations that might fulfill some of this role. The bill is thousands of pages long, but at least from an initial perusal, it seems like a lot is going to turn on how its regulatory authority is exercised. There’s provision after provision that vests in the secretary of Health and Human Services the authority to adopt regulations that can have a potential to restructure the market, or to approve pilot projects that could restructure the market. So depending on how that’s exercised, it could potentially prove significant.