Fall 2013 Workshops
September 23, 2013
William M. Sage, Vice Provost for Health Affairs: James R. Dourgherty Chair for Faculty Excellence
The University of Texas at Austin, School of Law
"Competition Policy and the Future of Health Care Markets"
Abstract - Recent experiences with higher prices from hospital consolidation have induced antitrust enforcement agencies to defend per-service bargaining models between health care providers and health insurers. These practices, however, reflect a quiescent period for innovation in health care delivery, spanning roughly from 1997 to 2010, and are generally considered by health policy experts to have failed consumers. Health care markets are now on the cusp of major changes made necessary by persistently rising health care expenditures, limits on government’s long-term fiscal capacity, poor population health, and the recognition that established patterns of financing and delivery have wasted money and shortchanged quality and safety. Change is being accelerated by the Patient Protection and Affordable Care Act of 2010, but is not dependent on that law alone.
The legal evaluation of consumer harm from industry restructuring should be forward-looking, particularly in heavily regulated sectors such as health care where current market conditions do not reflect a private competitive equilibrium. To facilitate change, antitrust law must develop analytics that anticipate and facilitate competitive processes in health care, including a more effective framework for analyzing regulatory influences on market structure, conduct, and performance. Because an optimal approach to competitive oversight in US health care would consciously identify and promote specific dimensions and dynamics of competition that have been less than vigorous in the past, rather than assuming that markets will generate their own competitive priorities, this would be a radical departure from existing practice
October 7, 2013
Bernard Black, Nicholas D. Chabraja Professor, School of Law and and Professor of Finance at Kellogg School of Management Northwestern University
"The Impact of Health Insurance on Near-Elderly Health and Mortality," Authored with José-Antonio Espin-Sánchez, Eric French and Kate Litvak
Abstract - We use the best available longitudinal dataset, the Health and Retirement Survey, and a battery of causal inference methods to provide both central estimates and bounds on the effect of health insurance on health and mortality among the near elderly (initial age 50-61) over an 18-year period. Those uninsured in 1992 consume fewer healthcare services, but are not less healthy and, in our central estimates, do not die sooner than their insured counterparts. We discuss why a zero average effect of uninsurance is plausible, some selection effects that might explain our full results, and methodological concerns with prior studies.
October 21, 2013
Institutum Jurisprudentiae, Academia Sinica
"Optional Law in Property: A Theoretical Critique"
Abstract - Since Calabresi & Melamed’s seminal article on property rules and liability rules, a lot of law and economic articles have debated the efficiency of these two rules. Many of the follow-up articles argue that Calabresi & Melamed are wrong in arguing that property rules are more efficient when transaction costs are low. Put-option liability rules and other sub-types of liability rules have been developed, and they are claimed to be superior to property rules. As several property scholars have pointed out, however, the shadow examples in this so-called optional law literature are not property laws, and they have contended that property rules should be the default in property law. Built on this line of literature, this article argues that—Calabresi & Melamed are actually correct—property rules are indeed more efficient than liability rules in property law in low transaction-cost setting, because property rules better harness private information. In addition, this article develops a theory as to when call-option liability rules might be more efficient. This article also argues that Rules 3 and 4 are unnecessary concepts in the area of property and that put-option liability rules are less efficient than call-option liability rules in property, because calls utilize private information better than puts. Finally, this article contends that liability rules are intrinsically different from financial options and legal options; thus, the option analogy should better be avoided.
November 4, 2013
William H. J. Hubbard
The University of Chicago, The Law School
"Two Models of Pleading"
Abstract - This paper develops two game-theoretic models of litigation, pleading, and settlement. The first model explores the timing of settlement and the strategic use of pleading by plaintiffs with negative-expected-value claims in a full-information environment. The second model explores the timing of settlement and the strategic use of pleading in an environment with private information held either by plaintiffs or defendants. In each model, a key feature is the plaintiff's choice of the amount of (costly) factual detail to include in the complaint. These models show that, even in the absence of any pleading standard, low-merit cases tend not to be filed, and filed complaints sometimes or always include detailed factual allegations. In this way, these models shed light not only on the way in which pleading interacts with the larger process of settlement and litigation, but helps explain the numerous empirical studies that indicate that the higher “plausibility" standard for federal pleading announced by the Twombly and Iqbal cases has had little effect on the rates at which federal lawsuits are dismissed.
November 18, 2013
Stanford University, Department of Economics
"Dead Poets' Property - Do Stronger Copyrights Increase Price?," Authored with Xing Li, and Megan MacGarvie
Abstract - Stronger copyrights are expected to increase the profitability of creative work at the cost of limiting access. There is, however, little empirical evidence to suggest that stronger copyrights increase price, as the fundamental mechanism by which stronger copyrights might increase profitability and limit diffusion. This paper exploits a differential increase in the length of copyright under the 1814 U.K. Copyright Act – in favor of books by dead authors – to examine whether stronger copyrights increase the price of books. Difference-in-differences analyses, which compare the price of books by dead and living authors before and after 1814, indicate a large increase in price in response to stronger copyrights. These results are robust to controlling for the age of books, differences across authors, and a broad range of alternative specifications. Historical evidence points to intertemporal price discrimination as the mechanism by which stronger copyrights increase the price of books.
December 2, 2013
The University of Chicago, The Law School
"Health and Financial Fragility: Evidence from Car Crashers and Cancer Diagnoses"
Abstract - We document the endogeneity of health shocks using novel administrative data on two of the most important shocks experienced by consumers: trauma and cancer diagnoses. We link data on both types of shocks to bankruptcy filing data. Although it is well known that households exhibit substantial heterogeneity in financial fragility, we show that household financial fragility is positively correlated with the probability that households experience health shocks. This endogeneity potentially generates an upward bias in previous studies examining the effects of heath shocks on household financial outcomes, such as bankruptcy. We show that this bias can be mitigated by running within-shock regressions. Assuming shock severity is a proxy for household financial fragility prior to the shock, we subset on households who suffered comparable shocks at different points in time. Within a given period, household who experienced a shock can be viewed as a treatment group and households who experienced the same shock after that period can be viewed as a control group. Applying this framework, we find that the effect of cancer diagnoses on bankruptcy filing rates is substantially smaller than prior estimates and varies substantially by type of trauma and cancer. These findings highlight the difficulty in measuring the relationship between shocks and household outcomes: The most distressed households appear to experience the most severe shocks. These findings also raise questions about the extent to which U.S. households are insured (formally and informally) against important health shocks