Who Pays? The Wage-Insurance Trade-off and Corporate Religious Freedom Claims

By Elizabeth Sepper

Happy new year to all and thanks to the Bill of Health for the opportunity to blog this month!

The first day of 2013 saw yet another ruling in the contraception coverage controversy.  And yet another private corporation—this time a real estate management company owned by the billionaire founder of Domino’s pizza—won a temporary injunction against the mandate on religious freedom grounds.  The company’s claim boils down to this:  the Affordable Care Act forces it to pay, through its insurance plan, for healthcare (in this case contraception) to which it objects as a matter of religion.  Let’s bracket, for the moment, the question of whether an artificial entity can have religious beliefs, let alone a conscience, and ask “what wrong with this argument?”

At heart, it misses a basic fact of health economics:  health insurance, like wages, is compensation that belongs to the employee.  Study after study shows that employers pay in wages whatever they don’t pay in health insurance premiums.  Most recently, a study of Massachusetts’ health reform found that firms offering health insurance pay wages lower by an average of $6,058 (nearly exactly the cost of annual health insurance premiums).  Each employee’s actual “salary” is wages plus the employer share of the health insurance premium.  So, when a corporation purchases a health insurance plan that its employees (and their family members) may or may not use to buy contraception, it is no more paying for contraception than it does when employees use their wages to buy it.

Unfortunately, this basic fact about employer-sponsored insurance is invisible to the public.  Employees are ignorant of the effects of insurance on wages and see insurance as a gesture of goodwill with employers reaping the benefits.  This year for the first time, W-2s must list the total annual premium paid toward health insurance (thanks to the Affordable Care Act).  It’s a first step.  But I suspect that it will do little to change our societal perception of employer-sponsored insurance.  In the litigation over contraceptive coverage, I fear that courts may continue to overlook the fact that insurance (and the healthcare it buys) is paid for by employees, not employers.  If so, the courts will only open the door to future challenges to employees’ healthcare decisions, whether paid for with insurance or wages.

CFP: Symposium on Blinding as a Solution to Conflicts of Interest

When does less information result in better decisions?


A Multidisciplinary Symposium on Blinding as a Solution to Institutional Corruption

Symposium:  November 1-2, 2013
Proposal Deadline:  February 15, 2013

Harvard University

With the support of the Edmond J. Safra Center for Ethics at Harvard University, Christopher Robertson (James E. Rogers College of Law at the University of Arizona) and Aaron Kesselheim (Harvard Medical School) are organizing a multidisciplinary symposium to examine potential solutions to institutional corruption that use the strategy of concealing biasing information from decision makers.  The symposium will take place on November 1 and 2, 2013 at Harvard University.

This event is part of the Institutional Corruption Lab.  Larry Lessig (Safra Center Director and Roy L. Furman Professor of Law and Leadership at Harvard Law School) has defined ‘institutional corruption’ as the consequence of an influence within an economy of influence that illegitimately weakens the effectiveness of an institution especially by weakening the public trust of the institution.  The concept provides a more systematic approach to decision-making problems that can arise as a result of financial relationships and other conflicts of interest.

Institutional corruption may arise in many contexts, from medical research to forensic science, from political campaign finance to financial auditing.  There are many potential solutions to institutional corruption, but we are particularly interested in practical mechanisms that acknowledge the existence of potential influences, but prevent that biasing information from reaching a decision maker.  Such mechanisms may include blinding, masking, placebos, strategic ignorance, information aversion, veil of ignorance rules, blind trusts, walls of separation, or similar concepts.  We are interested in reviews of relevant literature, and new laboratory, empirical, historical, and theoretical research that explores the functions, modalities, costs, benefits, and limitations of concealing a source of information to improve decision making.   We are interested in established uses of blinding, and potential new applications.

We welcome contributions that have been previously published, as well works in progress.  We plan for this symposium to generate collaborative research opportunities, and anticipate publishing many of the presented works in an edited volume from a major academic book press or journal.

To apply, please send a one-page abstract describing your proposed contribution by February 15, 2013, as a PDF attachment, to Professors Robertson and Kesselheim ( chris.robertson at law.arizona.edu and  akesselheim at partners.org).  Include a link to or copy of your CV.  We encourage applications from newer scholars and practitioners, as well as those more established in their fields.  Travel stipends will be available for some speakers.  Please indicate whether you request such a stipend, and the likely origin of your travel.  Please also indicate whether you would be interested in publishing your contribution in the edited volume, pending further information.  The organizers also welcome preliminary inquiries about potential topics and approaches.

Here is a PDF of this Call for Proposals.  Feel free to circulate.

Elhauge on Solving the Patent Settlement Puzzle

Founding Director of the Petrie-Flom Center, Professor Einer Elhauge, has just published an article with co-author Alex Krueger on an issue that the Supreme Court just granted certiorari on in FTC v. Watson: the proper antitrust analysis of reverse payment patent settlements.  In such settlements, the alleged infringer receives a payment and agrees to stay out of the market for a number of years.  Such settlements have been particularly prevalent in the pharmaceutical industry that has such a large effect on health care costs. The appellate courts have all recognized that such settlements have anticompetitive potential to exclude entry for far longer than merited by the probability of patent victory.  However, the courts have split on whether to find these settlements presumptively anticompetitive or lawful if within the formal scope of a non-sham patent.  The latter courts have focused on the possibility that a settlement might not exclude entry for longer than merited by the probability of patent victory and the administrative difficulty of conducting case-by-case inquiries into that probability.  Professor Elhauge’s article seeks to solve this puzzle by showing that case-by-case inquiries are unnecessary when the reverse payment amount exceeds the patent holder’s future anticipated litigation costs, because one can infer that such settlements will exclude entry for longer than merited by that probability of patent victory, whatever that probability may be.