NCPA - National Center for Policy Analysis

Managed Care Liability First Step Toward Universal Health Care

October 31, 2000

The long-term objective of the Clinton-Gore cadre is to hobble private medical providers in order to increase the probability that society will eventually find government provision of health care more desirable, says Richard Epstein, a University of Chicago law professor. Epstein argues that the proposed Patients' Bill of Rights is merely an attempt to cripple private programs by saddling them with regulation and liability which will make them unable to effectively compete.

Managed care liability is superficially attractive because it allows a patient to sue a distant and impersonal target rather than the beloved community physician. However, the current patient dissatisfaction with managed care is, he argues, a cloak for the strong physician resentment of the downgrading of their previously unquestioned professional services by managed care providers who scrutinize their decisions.

  • If successful, the push for new "rights" will necessarily compromise the critical cost containment function of managed care organizations to the point of collapse.
  • Further, such reforms will certainly limit the willingness of firms to enter the field, thus limiting the available options for the consumer patients.

However, scarcity matters even if the public sector pretends that it does not. One mistaken assumption about our health care system, states Epstein, is that the rate of return on investment is highly positive, so that we ought to invest in more of it. Such an argument fails to account for the diminishing returns on the continued investment. Given scarcity and constraints, our health care system needs decentralization and competition to survive. Yet reforms such as the proposed Patients' Bill of Rights are slowly squeezing these elements out of the system.

Source: Richard Epstein, "Managed Care Liability," Civil Justice Memo No. 39, September 2000, Manhattan Institute, 52 Vanderbilt Avenue, Second Floor, New York, New York, 10017, (212) 599-7000.


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