Health Care News Well-Represented at Cato Conference

Published September 1, 2001

The Cato Institute’s July 31 conference, Making A Federal Case Out of Health Care: Five Years of HIPAA, offered panelists and audience members alike a tightly focused day-long program examining the many aspects of five years under the rule of HIPAA law.

Health Care News contributing editor Grace-Marie Turner, assistant editor Greg Scandlen, and I joined an impressive array of respected experts in health care policy to dissect the 1996 Health Insurance Portability and Accountability Act (HIPAA).

Keynote speaker House Majority Leader Dick Armey (R-Texas)—who voted for HIPAA—candidly apologized for his error in judgment. “[HIPAA] set a dangerous precedent for the federal regulation of health insurance (that became) the first installment of ClintonCare,” Armey noted. The full text of his remarks can be found in this centerspread.

Portability, Privacy

The first panel of the day, moderated by Tom Miller, director of health policy studies at Cato, focused on “The Price of Portability Promises.” Mark Pauly of the Wharton School of Business at the University of Pennsylvania and Mark Hall of Wake Forest University School of Law joined me on the panel.

I concluded our session with “Five Years of HIPAA: We Feel the Pain,” and introduced the audience to The Law of Probable Dispersal. Briefly stated, “Any law passed to benefit one group of people, or achieve one social goal, will invariably work to hurt the interests of another group of people, or to frustrate the accomplishments of some other goal.” In other words, “whatever hits the fan will not be evenly distributed.”

Panel 2 examined “Health Privacy: The Beginning of the End, or the End of the Beginning.” Moderated by Mary Grealy of the Health Leadership Council, the panel featured presentations by Fred H. Cate of the Indiana School of Law; Edith S. Marshall of Powers, Pyles, Sutter, and Verville; and Jonathan W. Emord of Emord and Associates.

Richard Epstein of the University of Chicago Law School delivered a lively luncheon speech on “Reconciling Medical Research with Health Privacy.” Epstein’s insightful commentary on the life-threatening consequences of HIPAA’s health privacy regulations merits a far wider audience than it achieved at even this well-attended conference.

Criminalization, Innovation

Panel 3 of the day, “The Criminalization of Medical Practice,” was moderated by Michael Tanner, director of health and welfare studies at Cato. Madeline Cosman of Medical Equity, Inc., addressed “white-coat crime,” and David A. Hyman of the University of Maryland School of Law discussed HIPAA and health care fraud.

Grace-Marie Turner rounded out the panel. She noted how politicians “ducked hard choices” when HIPAA became law. There was an absence of good data, she said, on how much fraud and abuse there really is, where it is, and how bad it is. “Congress,” said Turner, “was legislating in the dark.”

Walt Francis of Consumers’ Checkbook moderated the final panel, “Reassessing Incremental Health Regulation.” Karl Polzer of George Washington University and Cato’s Miller were followed by Greg Scandlen, a senior fellow at the National Center for Policy Analysis, who spotlighted HIPAA’s barriers to health insurance innovation.

Scandlen explained how excessive regulations stifle innovation and that HIPAA is layered over a maze of pre-existing health care regulations that include COBRA, ERISA, state and federal benefit mandates, guaranteed issue laws, community-rating, standardized benefit plans, and separate regulations for commercial insurers, HMOs, and Blue Cross/BlueShield plans . . . not to mention different laws for individuals, small group, and large group insurance markets.

Closing Remarks

Cato’s Miller summarized the day’s most important “take home messages.” Among them:

  • HIPAA is the most significant federal health care legislation in more than 20 years. Sold to America as a modest attempt to address health insurance portability and “job-lock,” HIPAA substantially expanded the federal government’s control over the private health insurance market.
  • HIPAA did little to improve access to the individual market, and its regulatory provisions succeeded only in increasing the cost of insurance.
  • HIPPA’s medical privacy regulations obscure private markets for health information under a cloud of complex, costly, and contradictory language.
  • HIPAA’s regulatory structure creates legal uncertainty and increases the risk of contradictory and duplicative regulatory treatment for defined contribution plans.

For more information . . .

The speakers were required to submit papers to support their remarks, and these papers will be published as an issue of the Cato Journal possibly by Fall, 2002. Meanwhile, unedited papers are available. If you missed the conference, check the Cato website for “Making a Federal Case Out of Health Care: Five Years of HIPAA,” at or email Tom Miller at [email protected].