Federalization snowballs: The need for national action in medical malpractice reform

Columbia Law Review

Volumn 109, Issue 4, 2009, Pages 844-892

  Moncrieff, Abigail R ^a  

^a HARVARD LAW SCHOOL   (United States)

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EID: 67149140340     PISSN: 00101958     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (220)

1. See Note, Fixing Medical Malpractice Through Health Insurer Enterprise Liability, 121 Harv. L. Rev. 1192, 1192 & n.3 (2008) (noting and collecting multitude of scholarly calls for reform of malpractice system).
2. See Paul C. Weiler et al., A Measure of Malpractice 16-19 (1993) (reporting results of Harvard Medical Practice Study and arguing that malpractice system simultaneously undercompensates patients and overdeters negligence, resulting in defensive medicine without accomplishing compensation).
3. Ceci Connolly, Malpractice Situation Not Dire, Study Finds, Wash. Post, Mar. 10, 2005, at A8 (quoting then-President George W. Bush as citing increasing malpractice insurance premiums and increasing healthcare costs as justifications for federal legislation that would have capped damages in malpractice litigation).
4. Academic writings from the 1970s noted the "crisis." See, e.g., Martin H. Redish, Legislative Response to the Medical Malpractice Insurance Crisis: Constitutional Implications, 55 Tex. L. Rev. 759 (1977);
5. Comment, An Analysis of State Legislative Responses to the Medical Malpractice Crisis, 1975 Duke L.J. 1417;
6. see also Neal C. Hogan, Unhealed Wounds: Medical Malpractice in the Twentieth Century 129 (2003) (recounting emergence of malpractice crisis and dating it back to the 1950s);
7. Cecilia Loh, An Overview of Medical Malpractice and the Tort Reform Debate, April 23, 2003, at http://www.case.edu/med/epidbio/mphp439/Malpractice. htm (on file with the Columbia Law Review) (dating first medical malpractice "crisis" to 1840).
8. This generalization has one notable exception: Bill Sage and Eleanor Kinney have argued recendy that the Medicare program should implement a comprehensive federal system for enforcing quality controls against doctors and for compensating Medicare and Medicaid beneficiaries who have suffered from negligent care. This proposal is a limited version of my suggestions here because it represents a federal attempt to control doctor quality and patient safety. See generally Eleanor D. Kinney & William M. Sage, Dances with Elephants: Administrative Resolution of Medical Injury Claims by Medicare Beneficiaries, 5 Ind. Health L. Rev. 1 (2008)
9. [hereinafter Kinney & Sage, Dances with Elephants] (arguing in favor of administrative resolution of malpractice claims through Medicare);
10. Eleanor D. Kinney & William M. Sage, Resolving Medical Malpractice Claims in the Medicare Program: Can It Be Done?, 12 Conn. Ins. L.J. 77 (2005)
11. [hereinafter Kinney & Sage, Resolving Medical Malpractice Claims] (assessing legal and practical feasibility of Medicare-led malpractice reform);
12. William M. Sage, The Role of Medicare in Medical Malpractice Reform, 9 J. Health Care L. & Pol'y 217 (2006) [hereinafter Sage, Role of Medicare] (arguing real malpractice crisis is lack of connection between malpractice system and healthcare system).
13. There is a scholarly consensus emerging that the core problem is one of patient safety rather than malpractice litigation. See, e.g., Tom Baker, The Medical Malpractice Myth 3 (2005) [hereinafter Baker, Malpractice Myth] (arguing "the real problem is too much medical malpractice, not too much litigation").
14. Cf. James F. Blumstein, A Perspective on Federalism and Medical Malpractice, 14 Yale L. & Pol'y Rev. 411, 14 Yale J. on Reg. 411, 427-28 (1996) (Joint Symposium Issue) (noting few limited roles that federal government might properly play in medical malpractice reform but also concluding that it should not take charge of comprehensive reforms).
15. For the most forceful and robust presentation of this view, see Gary T. Schwartz, Considering the Proper Federal Role in American Tort Law, 38 Ariz. L. Rev. 917, 922 (1996)
16. [hereinafter Schwartz, Proper Federal Role].
17. I distinguish here between theoretical scholarship and scholarly commentary on political debates. Because the 2008 presidential candidates proposed and debated federal malpractice reform, some scholars have recently addressed the federalism argument in popular media, including the blogosphere. See, e.g., Rick Hills, Caps Off for Obama? Med Mal and the '08 Election, Prawfs Blawg, Mar. 27, 2008, at http://prawfsblawg.blogs.com/prawfsblawg/2008/03/caps- off-for-ob.html (on file with the Columbia Law Review). There has not, however, been a serious scholarly consideration of the question since the mid-1990s.
18. See, e.g., Betsy J. Grey, The New Federalism Jurisprudence and National Tort Reform, 59 Wash. & Lee L. Rev. 475, 534 (2002) (using medical malpractice reform as example of federal reform that is less likely to pass constitutional muster because such reform is directed at "individual" rather than "economic" activity);
19. Samuel Issacharoff & Catherine M. Sharkey, Backdoor Federalization, 53 UCLA L. Rev. 1353, 1383-84 (2006) (using medical malpractice as example of matter that is "quite localized in [its] impact" and therefore does not need to be federalized).
20. See, e.g., Robert M. Ackerman, Tort Law and Federalism: Whatever Happened to Devolution?, 14 Yale L. & Pol'y Rev. 429, 14 Yale J. on Reg. 429, 456 (1996) (Joint Symposium Issue) ("Beyond products liability, the case for federal tort legislation is not nearly as clear . . . , Despite the growth of tertiary care facilities, medical practice remains largely local.");
21. Robert L. Rabin, Federalism and the Tort System, 50 Rutgers L. Rev. 1, 29 (1997) ("[M]ost cases of accidental harm arising in the course of everyday life retain a distinctly local character; motor vehicle accidents, premises-related mishaps and medical malpractice injuries account for a very substantial part of the tort docket.");
22. Schwartz, Proper Federal Role, supra note 8, at 922 (arguing that medical malpractice is localized concern appropriate for state regulation).
23. This argument is not a constitutional one; my focus here is purely functional.
24. See Ctrs. for Medicare & Medicaid Servs., National Health Expenditure Web Tables, at tbl.1, at http://www.cms.hhs.gov/NationalHealthExpendData/ downloads/tables.pdf (last visited Feb. 18, 2009) (on file with the Columbia Law Review)
25. [hereinafter CMS, NHE Web Tables] (depicting that federal government spending accounted for $707.6 billion of more than $2.1 trillion spent on healthcare in United States in 2006).
26. Federal spending is limited to certain patient groups, so the distribution of malpractice costs among payers depends on the distribution of malpractice costs among patient groups. It seems likely, though, that the distribution of general expenditures among patient groups is about the same as the distribution of malpractice-induced expenditures among patient groups, such that the payment distribution will be roughly the same for malpractice-induced costs. For more discussion on this point, see infra Part II.A.3.
27. For the derivation of this percentage, see infra Part II.A.2.
28. Under an uncontroversial representation theory, the federal government must internalize all national costs and benefits. A a whole, the federal government represents the interests of all parties in the nation, possibly including the states. This internalization account often fails in practice-just as the rational actor model I use to analyze state-based decisionmaking often fails in practice-but that practical failure does not defeat the empirical and theoretical point that federal healthcare spending systematically skews states' incentives. The point here is only that if the current political system worked perfecdy as theorized, we would want the federal government rather than the state governments to set malpractice policy.
29. The original argument to this effect is Charles Tiebout's. Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416 (1956) (demonstrating that competition among local governments will allow those governments to set appropriate levels of expenditure on public goods). Tiebout's general insight has been fleshed out in the theoretical literature.
30. See Bruce H. Kobayashi & Larry E. Ribstein, Introduction to Economics of Federalism, at xi, xi-xx (Bruce H. Kobayashi & Larry E. Ribstein eds., 2007) (summarizing Tiebout's theory and surveying literature developing that theory);
31. John D. Donahue, Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate, J. Econ. Persp., Fall 1997, at 73, 74-77 (describing Tiebout's "market metaphor" for interjurisdictional competition and limits thereto);
32. Robert P. Inman & Daniel L. Rubinfeld, Rethinking Federalism, J. Econ. Persp., Fall 1997, at 43, 45-52
33. [hereinafter Inman & Rubinfeld, Rethinking] (noting that three main theories of federalism allow central governments to intervene, at least to some extent, to fix spillover problems among states). For specific considerations of spillovers in the areas of antitrust and environmental law, see Frank H. Easterbrook, Antitrust and the Economics of Federalism, 26 J.L. & Econ. 23, 38-40 (1983) (discussing effect of "monopoly overcharges" by industries based primarily in one state);
34. Richard B. Stewart, Pyramids of Sacrifice? Problems of Federalism in Mandating State Implementation of National Environmental Policy, 86 Yale L.J. 1196, 1215-16 (1977) (discussing spillover of physical pollution).
35. Critically, my point here is not the oft-made point that the federal government tends to grow; I am not making a claim about bureaucratic power grabbing or "centralization creep."
36. See infra Part III.B. My point is that by federalizing some healthcare regulation, we created an actual need and justification for further federalization. Even if federal bureaucrats were perfect agents of the people who fully internalized and fully appreciated values of state sovereignty, they would want and need to take some control of medical malpractice law.
37. See infra Parts IV.B.3-4.
38. See Daniel Kessler & Mark McClellan, Do Doctors Practice Defensive Medicine?, 111 Q.J. Econ. 353, 354-55 (1996)
39. [hereinafter Kessler & McClellan, Do Doctors] (finding that malpractice reforms that decrease liability pressure on doctors result in decreased utilization but not increased mortality or morbidity and therefore concluding that defensive medicine occurs and may be decreased by changes in litigation environment);
40. see also Cong. Budget Office, Medical Malpractice Tort Limits and Health Care Spending 2 (2006), available at http://www.cbo.gov/ftpdocs/71xx/doc7174/04- 28-Medical Malpractice.pdf (on file with the Columbia Law Review) [hereinafter CBO, Medical Malpractice Tort Limits] (noting that tort reform might affect utilization by decreasing defensive medicine); Patricia M. Danzon, Liability for Medical Malpractice, in Handbook of Health Economics 1339, 1343 (Anthony J. Culyer & Joseph P. Newhouse eds., 2000) (noting that liability might induce "either cost-justified injury prevention that the system is intended to encourage or defensive practices that are not costjustified") ;
41. Daniel P. Kessler, Evaluating the US Malpractice System and Paths to Its Reform 4-5 (Dec. 2006) (unpublished manuscript, on file with the Columbia Law Review) [hereinafter Kessler, Evaluating US Malpractice] (summarizing theory of defensive medicine).
42. Baker, Malpractice Myth, supra note 6, at 3 ("[T]he real costs of medical malpractice have little to do with litigation. [They] are the lost lives, extra medical expenses, time out of work, and pain and suffering of tens of thousands of people every year [who are injured by physicians], the vast majority of whom do not sue."); Inst, of Med., To Err Is Human 1 (2000)
43. [hereinafter IOM, To Err] (concluding, based on empirical work, that between 44,000 and 98,000 "Americans the each year as a result of medical errors").
44. For an overview of government attempts at tort reform, see Rogan Kersh, Medical Malpractice and the New Politics of Health Care, in Medical Malpractice and the U.S. Health Care System 43, 46-49 (William M. Sage & Rogan Kersh eds., 2006).
45. See Connolly, supra note 3 (quoting then-President Bush as saying, "If you're a patient, [the malpractice problem] means you're paying a higher cost to go see your doctor").
46. Cong. Budget Office, Economic and Budget Issue Brief, Limiting Tort Liability for Medical Malpractice 1 (2004), available at http://www.cbo.gov/ ftpdocs/49xx/doc4968/01-08-MedicalMalpractice.pdf (on file with the Columbia Law Review) ("But even large savings in premiums can have only a small direct impact on health care spending-private or governmental-because malpractice costs account for less than 2 percent of that spending.");
47. Danzon, supra note 20, at 1343 ("Malpractice premiums account for roughly one percent of total health care spending, hence are not a significant contributor to the level or growth of health care costs.").
48. It is important to understand that the one percent figure still represents a significant expenditure in dollar terms. National health expenditures in 2006 were $2.1 trillion, CMS, NHE Web Tables, supra note 13, at tbl.1, meaning that the malpractice system costs about $21 billion per year in litigation costs alone. Furthermore, these costs are passed on to healthcare consumers, so even doctors' and hospitals' litigation costs become consumers' healthcare costs in the U.S. system.
49. See Mark V. Pauly, Who Pays When Malpractice Premiums Rise?, in Medical Malpractice and the U.S. Health Care System, supra note 22, at 71, 77-80 (noting evidence that when malpractice premiums increased, doctors' fees increased "with an elasticity sufficiently large to imply 100 percent forward shifting").
50. See Baker, Malpractice Myth, supra note 6, at 24-25 (describing most common approaches to measuring rates of negligent injury and noting approaches' weaknesses);
51. CBO, Medical Malpractice Tort Limits, supra note 20, at 35 (noting "the difficulty of disentangling any effects of tort limits from other factors that affect levels of spending for health care");
52. Danzon, supra note 20, at 1343 (noting that "there remain no good empirical measures of the changes in medical care that are induced by liability" and that those changes "are alleged to contribute significantly to total healthcare costs");
53. id. at 1366-68 (surveying empirical studies);
54. Michelle Mello & David M. Studdert, The Medical Malpractice System: Structure and Performance, in Medical Malpractice and the U.S. Health Care System, supra note 22, at 11, 23-25 (noting difficulties in measuring rates and kinds of defensive medicine).
55. Danzon, supra note 20, at 1364-69 (reviewing empirical sources and theoretical underpinnings of defensive medicine and iatrogenic injury).
56. See id. at 1343 (noting that liability might induce extra care that might constitute "either cost-justified injury prevention that the system is intended to encourage or defensive practices that are not cost-justified");
57. Kessler & McClellan, Do Doctors, supra note 20, at 354 (noting that defensive medicine "may even have adverse effects on patient health outcomes, if liability induces providers either to administer harmful treatments or to forgo risky but beneficial ones");
58. Mello & Studdert, supra note 26, at 25 (noting examples of medically useless and harmful defensive medicine).
59. Kessler, Evaluating US Malpractice, supra note 20, at 6-7 (collecting sources).
60. Id. at 8-9 (collecting sources).
61. See David A. Hyman & Charles Silver, Medical Malpractice Litigation and Tort Reform: It's the Incentives, Stupid, 59 Vand. L. Rev. 1085, 1088-92 (2006) (reviewing empirical literature on frequency of suits and concluding that too few injured patients file claims).
62. See IOM, To Err, supra note 21, at 1-2 (finding high rates of injury and death, resulting in high systemic costs associated with iatrogenic injury).
63. See Baker, Malpractice Myth, supra note 6, at 24-25 (describing most common approaches to measuring rates of negligent injury and noting weaknesses of each).
64. IOM, To Err, supra note 21, at 40-41 (giving $17 billion per year as best estimate of total costs, only part of which constitutes healthcare costs).
65. See, e.g., Kersh, supra note 22, at 43 (drawing and defining distinction between "first-generation" and "second-generation" reforms);
66. see also William M. Sage, Medical Malpractice Insurance and the Emperor's Clothes, 54 DePaul L. Rev. 463, 463-64 (2005) (noting that politicians have the wrong end of the stick by focusing on first-generation reforms, especially damages caps, and that academics are on the better track).
67. See generally Henry Cohen, Cong. Research Serv., Medical Malpractice Liability Reform: Legal Issues and Fifty-State Survey of Caps on Punitive Damages and Noneconomic Damages, available at http://shelby.senate.gov/ legislation/Medical Malpractice.pdf (last updated Apr. 11, 2005) (on file with the Columbia Law Review)
68. [hereinafter Cohen, Medical Malpractice Liability Reform] (oudining individual states' tort reform proposals and discussing their costs and benefits from legal perspective); Ronen Avraham, Database of State Tort Law Reforms (Oct. 2006) (unpublished manuscript, on file with the Columbia Law Review), available at http://ssrn.com/abstract=902711 (providing comprehensive data regarding state tort reform laws).
69. For surveys of the empirical literature, see CBO, Medical Malpractice Tort Limits, supra note 20, at 1-3, 20-27 (summarizing existing empirical estimates and reporting inconclusive empirical estimates from new analyses of Medicare spending);
70. Danzon, supra note 20, at 1371-78 (cataloging "traditional" tort reforms and concluding that most "result, at best, in simply shifting costs from medical providers to patients and taxpayers; at worst, total social costs may actually increase if, for example, deterrence incentives are weakened");
71. Kessler, Evaluating US Malpractice, supra note 20, at 12 (finding approximately three to four percent reduction in healthcare spending in jurisdictions that have passed statutory tort reforms, but questioning causal link). For studies completed after those surveys were published, see, e.g., David A. Hyman et al., Estimating the Effect of Damage Caps in Medical Malpractice Cases: Evidence from Texas, 1 J. Legal Analysis (forthcoming 2009) (analyzing effect of 2003 Texas cap of noneconomic damages on verdicts, payouts, and settlements);
72. Nancy L. Zisk, The Limitations of Legislatively Imposed Damages Caps. Proposing a Better Way to Control the Costs of Medical Malpractice, 30 Seattle U. L. Rev. 119, 122-23 (2006) (noting "the mounting evidence against the effectiveness of damages caps");
73. Ronen Avraham & Max Schanzenbach, The Impact of Tort Reform on Private Health Insurance Coverage (Northwestern Univ. Sch. of Law, Public Law and Legal Theory Series No. 07-16, 2007), available at http://ssrn.com/abstract= 995270 (on file with the Columbia Law Review) (using empirical data to assess tort reform's effect on health insurance coverage).
74. Allison H. Eid, Tort Reform and Federalism: The Supreme Court Talks, Bush Listens, Hum. Rts., Fall 2002, at 10, 11 (describing President Bush's arguments in favor of "federal limitations on medical malpractice suits").
75. For summaries of arguments for and against all of these proposals, see Danzon, supra note 20, at 1376-82;
76. Note, supra note 1, at 1197-1203. For examples of papers proposing or refuting these ideas, see Kenneth Abraham, The Forms and Functions of Tort Law 261 (3d ed. 2007) (describing no-fault insurance);
77. Jennifer Alen & W. Bentley MacLeod, Malpractice Liability for Physicians and Managed Care Organizations, 78 N.Y.U. L. Rev. 1929 (2003) (discussing enterprise liability);
78. Paul J. Barringer, III, A New Prescription for America's Medical Liability System, 9 J. Health Care L. & Pol'y 235 (2006) (proposing creation of health courts);
79. Richard A. Epstein, Contractual Principle Versus Legislative Fixes: Coming to Closure on the Unending Travails of Medical Malpractice, 54 DePaul L. Rev. 503 (2005) (proposing private contracting);
80. Timothy Stoltzfus Jost, Health Courts and Malpractice Claims Adjudication Through Medicare: Some Questions, 9 J. Health Care L. & Pol'y 280 (2006) (discussing Sage's proposal of health courts run through Medicare);
81. Kinney & Sage, Resolving Medical Malpractice Claims, supra note 5 (proposing health courts run through Medicare);
82. Sage, Role of Medicare, supra note 5 (same);
83. Kathryn Zeiler, Turning from Damage Caps to Information Disclosure: An Aternative to Tort Reform, 5 Yale J. Health Pol'y L. & Ethics 385 (2005) (proposing information disclosure);
84. Emily Chow, Note, Health Courts: An Extreme Makeover of Medical Malpractice with Potentially Fatal Complications, 7 Yale J. Health Pol'y L. & Ethics 387 (2007) (arguing against health courts);
85. Jennifer Arlen, Contracting over Malpractice Liability (N.Y. Univ. Sch. of Law, Law & Econ. Research Paper No. 08-12, 2008), available at http://ssrn.com/abstract-1105368 (on file with the Columbia Law Review) (refuting private contracting).
86. See generally Danzon, supra note 20, at 1376-82 (noting theoretical advantages and disadvantages of all proposals without setding on any option as best theoretically).
87. See, e.g., Better HEALTH Act of 2003, S. 1374, 108th Cong. § 603 (2003) (proposing "National Patient Safety Research Demonstration System" to collect data on patient safety and to test improvements).
88. See Comment, supra note 4, at 1419 n.6 (listing state statutes limiting liability of healthcare providers).
89. 1975 Cal. Stat. 3949.
90. See Am. Tort Reform Ass'n, Medical Liability Reform, at http://www.atra.org/issues/index.php?issue=7338 (last visited Apr. 2, 2009) (on file with the Columbia Law Review) (describing medical liability laws of each state);
91. Comm. on Law & Criminal Justice, Nat'l Conference of State Legislatures, Medical Malpractice: State Medical Liability Laws 2007, at http://www.ncsl.org/standcomm/sclaw/StateMedliablitylaws2007.htm (last visited Apr. 2, 2009) (on file with the Columbia Law Review) (same).
92. William J. Curran, Public Health and the Law: A National Commission on Medical Malpractice, 61 Am. J. Pub. Health 2313, 2313 (1971);
93. Kersh, supra note 22, at 45.
94. See, e.g., Health Care Quality Improvement Act of 1986, H.R. 5110, 99th Cong. (1986);
95. Federal Incentives for State Health Care Professional Liability Reform Act of 1985, S. 1804, 99th Cong. (1985);
96. Aternative Medical Liability Act, H.R. 5400, 98th Cong. (1984);
97. National Medical Malpractice Insurance and Abitration Act of 1975, S. 482, 94th Cong. (1975);
98. National Medical Injury Compensation Insurance Act of 1975, S. 215, 94th Cong. (1975);
99. Federal Medical Malpractice Insurance Act, S. 188, 94th Cong. (1975); S. 1211, 94th Cong. (1975);
100. Medical Malpractice: Hearing Before the Subcomm. on Health and the Env't of the H. Comm. on Energy and Commerce, 99th Cong. (1986);
101. Aternative Medical Liability Act: Hearing Before the Subcomm. on Health of the H. Comm. on Ways and Means, 98th Cong. (1984).
102. Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2003, H.R. 5, 108th Cong. (2003);
103. Health Coverage Availability and Affordability Act, H.R. 3160, 104th Cong. §§ 271-283 (1996).
104. See H.R. 5; H.R. 3160; see also Cohen, Medical Malpractice Liability Reform, supra note 36, at 3-4 (summarizing preemption provisions of HEALTH Act of 2003).
105. National Medical Error Disclosure and Compensation Act, S. 1784, 109th Cong. (2005);
106. see also Robert A. Clifford, The Candidates and Tort Reform, Chi. Law., Feb. 1, 2008, at 42 (reporting records of Senators Clinton and Obama on tort reform, including medical malpractice reform).
107. Cf. Clifford, supra note 49, at 42 ("Regardless of who becomes president in November, our government should not make it more difficult for people who have been injured to receive compensation . . . . It remains to be seen whether November's election will bring more hardship for those injured by wrongdoers.");
108. Joseph Curl, McCain Vows Tax, Spending Restraint; Calls Democratic Foes 'Liberal,' Wash. Times, Feb. 18, 2008, at A06 (quoting Republican candidate Senator John McCain as calling for malpractice reform) ;
109. Deb Price & Kim Kozlowski, Market-Based Solutions Touted: GOP Contenders Push Plans in Financially Unhealthy Mich., Detroit News, Jan. 10, 2008, at IB (reporting that both Senator McCain and his primary rival, Governor Mitt Romney, support medical malpractice reform). But see Kersh, supra note 22, at 66-67 (arguing that federal politicians may be deadlocked and malpractice reform might instead be implemented through judicial decision).
110. Again, Bill Sage and Eleanor Kinney represent a notable exception to this generalization, having proposed a comprehensive federal system for Medicare and Medicaid beneficiaries. See supra note 5. Sage and Kinney, however, write from the perspective of substantive institutional competence rather than the perspective of federalism theory, arguing only that the Medicare agency would bring a substantive expertise to the malpractice problem that generalist state legislatures lack. They do not argue, as I do, that there is any functional need for federal intervention in malpractice reform efforts.
111. See Hills, supra note 9 (noting regional nature of tort laws and well-setded choice of law rules for medical malpractice cases); see also Ackerman, supra note 11, at 456 ("Beyond products liability, the case for federal tort legislation is not nearly as clear. . . . Despite the growth of tertiary care facilities, medical practice remains largely local.");
112. Schwartz, Proper Federal Role, supra note 8, at 922-24 (critiquing federalism interest in malpractice and pointing out logic of tort law developed and administered at state level).
113. Although "medical tourism"-or travel across state or national lines for medical care-has become more common, it remains the case that doctors serving out-of-state patients can be sued only in their home forum. Out-of-state courts lack personal jurisdiction over a doctor that practiced only at home, even if the injured patient is not a resident of the doctor's home state. See, e.g., Wright v. Yackley, 459 F.2d 287, 288-89 (9th Cir. 1972) (finding no jurisdiction in Idaho over South Dakota doctor who treated Idaho citizen in South Dakota).
114. But see Cubbage v. Merchent, 744 F.2d 665, 671-72 (9th Cir. 1984) (allowing jurisdiction over nonresident doctor who intentionally solicited business from state). An exception might arise if the doctor owns property or has other significant ties in the patient's home state such that she could be sued there, but such a situation would be too rare to justify uniformity of malpractice standards.
115. See Issacharoff & Sharkey, supra note 10, at 1386-89 ("Products liability law raises the specter of spillover effects, whereby a state . . . exports the cost of its regulation to out-of-state manufacturers and product consumers . . . .");
116. Schwartz, Proper Federal Role, supra note 8, at 932-37 (discussing structural bias theory that when states increase products liability, costs are exported out-of-state and benefits remain in-state).
117. See supra note 53.
118. Ackerman, supra note 11, at 443 (noting that "current federal funding of Medicare and Medicaid" could "serve as a [constitutional] rationale for federal intervention in the law of medical malpractice" under spending power);
119. Blumstein, supra note 7, at 425 ("The Supreme Court has construed the Commerce Clause so broadly that large-scale federal intervention in the medical malpractice area is almost certainly constitutionally valid.");
120. E. Donald Elliott, Sanjay A Narayan & Moneen S. Nasmith, Administrative "Health Courts" for Medical Injury Claims: The Federal Constitutional Issues, 33 J. Health Pol. Pol'y & L. 761, 765 (2008) (concluding that health courts legislation would be constitutional if properly drafted);
121. Nim Razook, A National Medical Malpractice Reform Act (and Why the Supreme Court May Prefer to Avoid It), 28 Seton Hall Legis. J. 99, 125-26 (2003) (using HEALTH Act of 2003 to demonstrate difficulties in commerce clause jurisprudence);
122. Victor E. Schwartz, Mark A. Behrens & Leavy Mathews III, Federalism and Federal Liability Reform: The United States Constitution Supports Reform, 36 Harv. J. on Legis. 269, 272 (1999) (analyzing several tort reform bills, including some related to medical injury, and concluding that such reforms have "ample basis for support in the Constitution") ;
123. Eid, supra note 38, at 11 (noting that Supreme Court would uphold medical malpractice reform if regulated activity were understood to be economic activity of purchasing healthcare services rather than arguably noneconomic activity of injuring patients);
124. see also Henry Cohen & Vanessa K. Burrows, Cong. Research Serv., Federal Tort Reform Legislation: Constitutionality and Summaries of Selected Statutes (2003) (concluding that both federal products liability reform and federal medical malpractice reform would be constitutional).
125. But see Perry H. Apelbaum & Samara T. Ryder, The Third Wave of Federal Tort Reform: Protecting the Public or Pushing the Constitutional Envelope?, 8 Cornell J.L. & Pub. Pol'y 591, 593 (1999) (noting that so-called "third-wave" tort reforms, including medical malpractice reform, raise new and harder constitutional issues);
126. Grey, supra note 10, at 534 (concluding that federal tort reform "that regulates a commercial area with direct economic impact-such as the airline industry-will fare better than legislation directed at individual activity-such as medical malpractice");
127. Collin Suit, Note, Questionable Medicine-Why Federal Medical Malpractice Reform May Be Unconstitutional, 47 Aiz. L. Rev. 195, 198 (2005) (expressing skepticism' about HEALTH Act's constitutionality under "Supreme Court's more recent pronouncements defining the scope of congressional power under the Commerce Clause").
128. See supra notes 5-8 and accompanying text.
129. CMS, NHE Web Tables, supra note 13, at tbl.1.
130. The total estimate of $225.8 billion is the sum of the Joint Committee on Taxation's estimates for lost income taxes ($152.5 billion) and Selden and Gray's estimate for lost payroll taxes ($73.3 billion). See Joint Comm. on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2006-2010, at 38-40 (2006), available at http://www.house.gov/jct/s-2-06. pdf (on file with the Columbia Law Review) [hereinafter Joint Comm., Estimates of Federal Tax Expenditures] (estimating aggregate value of all individual and corporate exemptions related to healthcare as $152.5 billion in 2006, which includes only foregone income taxes);
131. Thomas M. Selden & Bradley M. Gray, Tax Subsidies for Employment-Related Health Insurance: Estimates for 2006, 25 Health Aff. 1568, 1570-71 & tbl.1 (2006) (estimating value of federal employer-sponsored insurance exemption in 2006 as $185.2 billion, which includes $73.3 billion in foregone income and payroll (or "FICA") taxes).
132. See infra Part II.A.3.
133. See infra Part II.B.2.
134. Federal Financial Participation in State Asistance Expenditures, FY 2006, 69 Fed. Reg. 68,370, 68,370-73 (Nov. 24, 2004) (listing "federal financial participation" (or "FFP") levels for all fifty states for fiscal year 2006).
135. The breakdown of health expenditures is as follows: Of the $2.1 trillion in health expenditures nationwide, $707.6 billion represent federal expenditures. CMS, NHE Web Tables, supra note 13, at tbl.3. That federal total includes Medicare expenditures of $402.3 billion, Medicaid expenditures of $174.9 billion, SCHIP expenditures of $5.4 billion, and other expenditures amounting to $125 billion. Id. (listing federal Medicare and Medicaid expenditures);
136. Statehealthfacts.org, Federal SCHIP Expenditures, FY 1998-2007, at http://www.statehealthfacts.org/comparetable.jsp?ind=234&cat=4 (last visited Apr. 18, 2009) (on file with the Columbia Law Review) (listing federal SCHIP spending). The federal expenditure total does not include the cost of tax breaks or the cost of the Federal Employee Health Benefit Plan (FEHBP).
137. See Mark V. Pauly, Health Benefits at Work 33 (1997) ("The economic viewpoint argues that anything that affects health insurance impacts workers, not their employers.").
138. Joint Comm., Estimates of Federal Tax Expenditures, supra note 59, at 39-40.
139. Id. at 39. The other healthcare tax breaks are: exclusion of medical care and TRICAlE insurance for military dependents, retirees, and retiree dependents; deduction for health insurance and long-term care insurance for the self-employed; deduction for medical expenses and long-term care expenses; exclusion for medical benefits included in workers' compensation benefits; health savings accounts; exclusion of interest on state and local government qualified private activity bonds for private nonprofit hospital facilities; deduction for charitable contributions to health organizations; tax credit for orphan drug research; and tax credit for purchase of health insurance by certain displaced persons. Id.
140. Id. at 3.
141. Selden & Gray, supra note 59, at 1570-71.
142. The CMS data incorrectly exclude the federal tax breaks from both federal public and total national health expenditures. See CMS, NHE Web Tables, supra note 13, at tbl.1. This 39.9% figure is the fraction that results from adding $225.8 billion to both the numerator and denominator; the federal public portion of total national health expenditures in 2006 was (707.6 + 225.8)/(2112.7 + 225.8) = 0.399145. Including the tax expenditure as a health expenditure reduces the direct federal percentage from 33.5%, or 707.6/2112.7, to 30.2%, or 707.6/(2112.7 + 225.8).
143. This figure is the best estimate discernible from available data, but it excludes two important categories of federal spending. First, the direct spending data from CMS exclude public spending on federal employees' insurance benefits, provided through the Federal Employee Health Benefits Program (FEHBP). That spending is incorrectly included in private spending. Second, the tax data exclude expenditures related to nonprofit treatment of hospitals and nursing homes. The federal government has granted favorable tax status to several healthcare organizations and has thereby foregone revenue from those organizations.
144. U.S. Gen. Accounting Office, Medical Malpractice: Medicare/Medicaid Beneficiaries Account for a Relatively Small Percentage of Malpractice Losses 2 (1993), available at http://archive.gao.gov/t2pbat5/149700.pdf (on file with the Columbia Law Review) (summarizing studies on incidence of malpractice claims and reporting that "Medicare and Medicaid patients . . . are less likely than other patients to file malpractice claims").
145. See Laurence C. Baker, Asociation of Managed Care Market Share and Health Expenditures for Fee-for-Service Medicare Patients, 281 J. Am. Med. As'n 432, 435-36 (1999) (finding managed care activity influences expenditures for nonmanaged care patients and suggesting "physicians . . . may adopt managed care practice patterns for all their patients");
146. Uwe E. Reinhardt, Editorial, The Economist's Model of Physician Behavior, 281 J. Am. Med. As'n 462, 464 (1999) (arguing Baker's findings support hypothesis that physicians apply same practice style to all patients);
147. cf. Judith Feder et al., How Did Medicare's Prospective Payment System Affect Hospitals?, 317 New Eng. J. Med. 867, 870 (1987) (finding that introduction of Medicare's prospective payment system reduced average length of stay for both Medicare and non-Medicare patients, although reductions for non-Medicare patients were "much smaller").
148. Feder et al., supra note 72, at 870-72.
149. Weiler et al., supra note 2, at 46-47, 49 tbl.3.5.
150. A of January 1, 2009, Medicare Part A (which covers hospital inpatient reimbursements) refuses reimbursement for treatment of twenty-nine specified "never events" (certain preventable injuries) and for treatment of three identified hospital-acquired conditions, but it continues to reimburse for treatment of iatrogenic injuries that are not on the lists of twenty-nine never events and three conditions.
151. See Press Release, Ctrs. for Medicare & Medicaid Servs., Medicare and Medicaid Move Aggressively to Encourage Greater Patient Safety in Hospitals and Reduce Never Events (July 31, 2008), available at http://www.cms.hhs.gov/apps/ media/press-releases.asp (on file with the Columbia Law Review) (describing new rules meant to "improve the quality of care in hospitals and reduce the number of 'never events'");
152. see also Centers for Medicare and Medicaid Services, 73 Fed. Reg. 23,528 (Apr. 30, 2008) (codified at 42 C.F.R. §§ 411-413, 422, 489 (2008)) (proposing new regulations). Medicare Parts B and C (which cover outpatient and managed care) continue to pay for all post-injury care. The Medicaid programs in some states have also stopped reimbursing providers for some or all of the never events that Medicare has identified.
153. See, e.g., Rick Valliere, Medical Errors: Massachusetts Programs Will Not Pay for Costs Attributable to Medical Errors, 17 BNA Health L. Rep. 877, 877 (2008) (reporting that Massachusetts stopped reimbursing for all never events that Medicare refuses to reimburse and that Minnesota refuses payment for some such never events);
154. Jean DerGurahian, N.Y. Medicaid Ups the Ante, Mod. Healthcare, June 16, 2008, at 6 (reporting that New York's Medicaid program refuses to pay for fourteen never events).
155. Medicare Part A covers inpatient services, Part B covers outpatient services, Part C provides private coverage such as HMO coverage, and Part D covers prescription drugs. Enrollment statistics vary by part, but approximately ninety-seven percent of the population over sixty-five is enrolled in at least one Medicare plan. See Ctrs. for Medicare & Medicaid Servs., Medicare Enrollment: National Trends 1966-2007 (2007), at http://www.cms.hhs.gov/ MedicareEnRpts/Downloads/HISMI07.pdf (on file with the Columbia Law Review) (reporting 36.25 million aged persons enrolled in Medicare in 2006);
156. U.S. Census Bureau, Table 2: Annual Estimates of the Population by Sex and Selected Age Groups for the United States: April 1, 2000 to July 1, 2007 (NCEST2007-02) (2008), at http://www.census.gov/popest/national/asrh/NCEST2007- sa.html (on file with the Columbia Law Review) (estimating 37.25 million Americans over sixty-five as of 2006). For a breakdown of over-sixty-five enrollment in Medicare Part A and Medicare Part B, see Ctrs. for Medicare & Medicaid Servs., Medicare Enrollment-Aged Beneficiaries (2006), at http://www.cms.hhs.gov/MedicareEnRpts/Downloads/06Aged.pdf (on file with the Columbia Law Review).
157. See supra note 75.
158. See Weiler et al., supra note 2, at 49 tbl.3.5 (depicting effect of age on injury rates and post-injury care spending).
159. There was evidence that self-pay patients in the Harvard study's sample also bore a higher than average risk of negligent injury, but the study concluded the effect was not practically significant because it appeared to be caused not by self-paying status itself, but by higher rates of negligence at hospitals with a higher proportion of minority patients, who were more likely to self-pay. Harvard Med. Practice Study, Patients, Doctors, and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York, at 6-2 (1990), available at http://biotech.law.lsu.edu/cases/medmal/index.htm (on file with the Columbia Law Review).
160. Tiebout, supra note 17, at 419-21.
161. Id. at 422-23.
162. Id. at 419.
163. See Robert P. Inman & Daniel L. Rubinfeld, Making Sense of the Antitrust State-Action Doctrine: Balancing Political Participation and Economic Efficiency in Regulatory Federalism, 75 Tex. L. Rev. 1203, 1221-22 (1997)
164. [hereinafter Inman & Rubinfeld, Making Sense] (" Interjurisdictional externalities are common in the local public economy.");
165. Kobayashi & Ribstein, supra note 17, at 6 (discussing public goods spillover from one jurisdiction to another) ;
166. Mark V. Pauly, Optimality, "Public" Goods, and Local Governments: A General Theoretical Analysis, 78 J. Pol. Econ. 572, 574-77 (1970) (describing purely public goods between communities);
167. Alan Williams, The Optimal Provision of Public Goods in a System of Local Government, 74 J. Pol. Econ. 18, 18 (1966) (arguing interdependence of local communities is essential to understanding consequences of public goods); Inman & Rubinfeld, Rethinking, supra note 17, at 46 (asserting "significant intercommunity interdependencies" weaken Tiebout's assumption).
168. Tiebout, supra note 17, at 423 ("In cases in which the external economies and diseconomies are of sufficient importance, some form of integration may be indicated.").
169. Id.
170. This utility loss could be based on purely altruistic or hedonic motivations if citizens abstractly value environmental quality, or it could be based on more concrete motivations if citizens are likely to travel to neighboring states and are likely to prefer a clean environment at their travel destination.
171. See supra Part II.A.2.
172. David Blumenthal, Employer-Sponsored Health Insurance in the United States-Origins and Implications, 355 New Eng. J. Med. 82, 83 (2006).
173. Id.
174. Lawrence R. Jacobs, The Medicare Approach: Political Choice and American Institutions, 32 J. Health Pol. Pol'y & L. 159, 160 (2007).
175. Federal rather than state regulation of public insurance might be functionally justified. In a Tiebout competition, the states might underprovide public insurance if they believe that robust state-sponsored healthcare would attract sick residents.
176. See Alice M. Rivlin, Reviving the American Dream: The Economy, the States, and the Federal Government 177-82 (1992) (discussing which tasks and responsibilities are appropriate for federal and state undertaking).
177. See Daryl J. Levinson, Empire-Building Government in Constitutional Law, 118 Harv. L. Rev. 915, 940 (2005) (discussing whether empire building behavior of federal and state governments is main problem of federalism).
178. See, e.g., Saul Levmore, Irreversibility and the Law: The Size of Firms and Other Organizations, 18 J. Corp. L. 333, 334 (1993) ("[T]here is a kind of ratcheting, or irreversibility, in the evolution of a firm such that it is easier to expand than to contract").
179. Lynn A. Baker & Ernest A. Young, Federalism and the Double Standard of Judicial Review, 51 Duke L.J. 75, 112-17 (2001).
180. Levmore, supra note 94, at 337.
181. Of course, if the federal programs that give rise to the snowball problem themselves arise from empire building, then a federal response to the snowball could be considered part of that same attempt to build an empire. That is, if we imagine that the 1965 Congress simply wanted to grab state power when it passed Medicare and Medicaid, then federalization of malpractice regulation to fix the snowball could be considered a further empire build-another mere grab of state power-even though the snowball provides a solid functional justification for federalization; if that were the case, then we should prefer dismantling Medicare and Medicaid to federalization of malpractice as a response to the snowball problem. A I noted supra Part III.A and as I will discuss further infra Part IV.B.1, however, Medicare and Medicaid were not mere power grabs; they were based (at least in part) on sound federalist logic. A a result, federalization of malpractice is not an entrenchment of power grabbing or a further power grab; it is a reasonable response to the mistaken partialness of federal regulatory control.
182. For discussion of Tiebout's scholarship, see supra Part II.B.1.
183. See, e.g., Richard A. Posner, Toward an Economic Theory of Federal Jurisdiction, 6 Harv. J.L. & Pub. Pol'y 41, 41-42 (1982) ("[T]he relationship between the states and the federal government cannot be regarded solely as an expedient one, designed to promote efficiency and hence alterable from time to time . . . .").
184. In Part IV, I discuss the possibility of interstate coordination through mechanisms other than the federal legislature.
185. This point is clear enough when Congress considers national health insurance today. For example, when Congress debated national health insurance in 1993, the relevant bill included comprehensive medical malpractice standards. Health Security Act, H.R. 3600, 103d Cong. (1994); see also Henry Cohen, Cong. Research Serv., Medical Malpractice Provisions of the President's Proposed Health Security Act: A Legal Analysis 5-14 (1994) (describing provisions of proposed Health Security Act with pilot program establishing practice guidelines). Congress and President Clinton recognized that full federalization of healthcare funding would require federalization of medical malpractice as well. See Schwartz, Proper Federal Role, supra note 8, at 924 ("In short, a federal takeover of the system of delivering medical services would carry with it a justification for federal control of malpractice rules. But the Clinton bill, proposing such a federal plan, went down to a resounding political defeat").
186. Waivers would allow individual states to deviate from federal substantive requirements and systems in order to try alternatives. The Medicaid Program, for example, includes a waiver provision that allows the states to deviate from federal substantive requirements of the Medicaid Act in order to try alternative approaches to public health insurance. See Medicaid Act, 42 U.S.C. § 1315 (2000).
187. Demonstration projects would be federally funded and centrally administered experiments with various approaches to medical malpractice. The Medicare Program, for example, occasionally runs temporary demonstration projects to try different payment structures.
188. See supra Part II.B.1.
189. See Inman & Rubinfeld, Making Sense, supra note 83, at 1215-17 (noting evidence supporting theory that smaller government increases citizen influence and participation).
190. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting) ("It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory . . . .").
191. See supra Part I.B.2.b;
192. see also David L. Shapiro, Federalism: A Dialogue 48-49 (1995) (noting taxes, emergency relief, and professional activities as ideal areas to have uniformity).
193. See Shapiro, supra note 107, at 40-41 (exposing extreme externalities in areas where states independendy regulate private activity).
194. See, e.g., id. at 45 (positing expansive singular government prevents any one party or interest from exercising completely selfish power);
195. see also The Federalist No. 10 (James Madison) (arguing broad democracy is best means to guard against small powerful factions and special interests).
196. The balance here is still debated among public choice theorists. See Daniel A. Farber & Philip P. Frickey, Law and Public Choice: A Critical Introduction 13-17 (1991) (explaining possible impact of interest groups in state and federal settings).
197. Shapiro, supra note 107, at 46-48 (discussing specific instances of emergency relief and revenue raising where federal government's unilateral actions led to more effective outcomes).
198. See infra Part IV.B.3.
199. See supra notes 88-90 and accompanying text.
200. Jonathan Oberlander, The Politics of Medicare Reform, 60 Wash. & Lee L. Rev. 1095, 1100 (2003) (noting that Medicare is considered the most successful innovation of the welfare state).
201. See generally R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1 (1960).
202. Daniel A. Farber, The Coase Theorem and the Eleventh Amendment, 13 Const. Comment. 141, 142 (1996) (explaining legal rules, including rules governing state sovereignty and federal power, are unimportant when cost of bargaining is negligible).
203. See Shapiro, supra note 107, at 41 (pointing to lack of sufficient resources as deterrent to agreement in complex governmental bargaining processes);
204. Inman & Rubinfeld, Making Sense, supra note 83, at 1224-25 (noting political motivations of different jurisdictions likely to interfere with fair or efficient bargaining process).
205. See, e.g., Inman & Rubinfeld, Making Sense, supra note 83, at 1224 (elaborating on increased likelihood bargaining process will break down as more actors are involved and have competing interests).
206. See id. at 1222-24 (discussing five potential problems facing bargaining efforts between governments).
207. See generally Wallace E. Oates, Fiscal Federalism 65-105 (1972) (discussing economic theory and empirical use of intergovernmental grants);
208. Jerry L. Mashaw & Dylan S. Calsyn, Block Grants, Entitlements, and Federalism: A Conceptual Map of Contested Terrain, 14 Yale L. & Pol'y Rev. 297, 14 Yale J. on Reg. 297, 300-06 (1996) (Joint Symposium Issue) (defining block grants and discussing their operation).
209. For the derivation of this ratio, see supra notes 58-61 and accompanying text.
210. See supra Part I.B.2.b.
211. Cf. Matthew C. Stephenson, Public Regulation of Private Enforcement: The Case for Expanding the Role of Administrative Agencies, 91 Va. L. Rev. 93, 110 (2005) (defining agency slack as "tendency of government regulators to underenforce certain statutory requirements because of political pressure, lobbying by regulated entities, or the laziness or self-interest of the regulators themselves").
212. Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2003, H.R. 5, 108th Cong. (2003). The HEALTH Act would have federalized all of the first-generation reforms that the states have tried thus far. It would not, therefore, have done much by way of bolstering patient safety standards in the states. Nevertheless, it provides a model of preemptive legislation and demonstrates that Congress has actively considered such legislation in recent years.
213. Cohen, Medical Malpractice Liability Reform, supra note 36, at 2-3 (summarizing provisions of HEALTH Act).
214. See Gretchen B. Chapman & Eric J. Johnson, Incorporating the Irrelevant: Anchors in Judgments of Belief and Value, in Heuristics and Biases: The Psychology of Intuitive Judgment 120, 120-21 (Thomas Gilovich, Dale Griffin & Daniel Kahneman eds., 2002) (defining cognitive anchors and surveying empirical evidence of their effect).
215. For explanation of waivers and demonstration projects, see supra notes 102-103.
216. See supra Part I.B.1.
217. For example, Medicare and Medicaid contain special treatment for Disproportionate Share Hospitals (DSH). 42 U.S.C. § 1396r-4 (2000 & Supp. 2005); 42 C.F.R. § 412.106 (2007).
218. Americans with Disabilities Act, Pub. L. No. 101-336, 104 Stat. 327 (1990) (codified at 42 U.S.C. §§ 12101-12213 (2000)).
219. 42 U.S.C. §§ 1381-1383.
220. 29 U.S.C. §§1001-1461 (2000).