America’s history of selective consumption taxes dates back to the colonial era, when revolutionaries protested against taxes on tea and paper goods. While the Revolution was prompted in part by opposition to selective consumption taxes, this chapter describes how Alexander Hamilton implemented a selective consumption tax on whiskey to cover the American war debt shortly after America won its independence. The whiskey tax had characteristics common to selective consumption taxes we see today.
The Affordable Care Act includes taxes on medical providers and insurance companies — taxes that make healthcare more expensive. As MIT Professor Jonathan Gruber (one of the ACA’s architects) said, the “lack of transparency” of these obscure taxes “is a huge political advantage.” This chapter shows that when the revenue-raising tools for a policy plan are hidden from voters, the project will appear to be a better deal for taxpayers than it actually is. The ACA’s revenues include the individual mandate as well as taxes on healthcare providers and insurance companies rather than taxes applied directly to consumers. While the ACA is a highly visible and controversial piece of legislation, a study of its revenue systems provides broad lessons on tax policy. Politicians who are seeking to appear as if they are providing constituents with large benefits at a reasonable price will attempt to obscure the cost of the programs they implement, reducing transparency in the process.
Circumvention Medical Tourism and Cutting Edge Medicine: The Case of Mitochondrial Replacement TherapyJune 2, 2018
“Medical Tourism” is the travel of patients from a home country to a destination country for the primary purpose of receiving health care. “Circumvention Tourism” is a sub-type of such travel where the motivation is circumventing a domestic prohibition on accessing a medical service. This Article, adapted from the George P. Smith Lecture given at the University of Indiana’s school of law, focuses on such circumvention tourism for cutting-edge medicine. I use the recently reported case of travel to Mexico for Mitochondrial Replacement Therapy as a springboard for examining the legal and ethical issues raised by the practice and to discuss restrictive regulation in place in the United States.
In their article, “Biologics: The New Antitrust Frontier,” Michael Carrier and Carl Minniti provide a comprehensive review of the various kinds of antitrust violations that beleaguer pharmaceutical markets in the United States. Carrier & Minniti examine the applicability of these anticompetitive behaviors to biopharmaceutical (a.k.a. biologics) markets, and in doing so alert regulators and courts to such potential antitrust violations in the emerging area of follow-on biologics. Carrier & Minniti’s article also provides recommendations for limiting anticompetitive behavior in biologics markets that will, no doubt, serve as a valuable guide for regulators, judges, and practitioners. Yet, Carrier & Minniti’s article appears to share in an optimism about the prospects of such markets: that if we just policed them properly, competition could be guaranteed and, with it, prices would drop significantly. Such optimism is unwarranted.
The legislative and regulatory efforts to instill competition into biologics markets have been fraught, from their outset, with persistent and mostly successful counter-efforts by the brand-name pharmaceutical industry (“Industry”) to make follow-on biologics a limited and contained regulatory and commercial phenomenon. To that end, the Industry — with its lobbying spearheads, BIO and PhRMA — and its many allies in Congress, state legislatures, and state and federal administrations, have been waging war to maintain existing and erect new regulatory obstacles to the development, approval, and marketing of follow-on biologics. The Industry’s success in undercutting the emergence of truly competitive follow-on biologics markets thus far rests on four pillars: (1) an Industry-favorable, obstructed pathway for the approval of follow-on biologics; (2) acceptance and upholding of the view that regulatory filings submitted to the FDA are proprietary and confidential; (3) state laws making onerous the substitution of biologics with follow-on versions thereof; and (4) efforts to block any and all specific attempts to make, gain approval for, and sell follow-on biologics. Of these four pillars, the area of antitrust law (and, thus, Carrier & Minniti’s article) addresses mostly the fourth. Yet, the emergence of competitively robust follow-on biologics markets requires dismantling more than one pillar. Until then, efforts to open biologics markets to competition will continue to be no more than a rearguard battle over the approval and marketing of a small number of follow-on versions of a mere handful of original products with limited substitutability. The price, as always, will be borne by payors, patients, and ultimately, the public.
In this comment, I discuss each of the four pillars supporting the Industry’s success in inhibiting the development, approval, and marketing of follow-on biologics. I show that unlike the story of the Hatch-Waxman Act, that of the Biologics Price Competition and Innovation Act (BPCIA) does not and probably will not have a happy ending; that if the goal is to significantly lower biologics’ prices, then the paradigm of approval of follow-on biologics in the United States would need to change.
This paper examines the impacts of the Affordable Care Act (ACA) – which substantially increased insurance coverage through regulations, mandates, subsidies, and Medicaid expansions – on behaviors related to future health risks after three years. Using data from the Behavioral Risk Factor Surveillance System and an identification strategy that leverages variation in pre-ACA uninsured rates and state Medicaid expansion decisions, we show that the ACA increased preventive care utilization along several dimensions, but also increased risky drinking. These results are driven by the private portions of the law, as opposed to the Medicaid expansion. We also conduct subsample analyses by income and age.
This paper studies the effects of the 2012 Deferred Action for Childhood Arrivals (DACA) initiative on health insurance coverage, access to care, health care use, and health outcomes. We exploit a difference-in-differences that relies on the discontinuity in program eligibility criteria. We find that DACA increased insurance coverage. In states that granted access to Medicaid, the increase was driven by an increase in public insurance take-up. Where public coverage was not available, DACA eligibility increased individually purchased insurance.Despite the increase in insurance coverage, there is no evidence of significant increases in health care use, although there is some evidence that DACA increased demand for mental health services. After 2012, DACA- eligible individuals were more likely to report a usual place of care and less likely to delay care because of financial restrictions. Finally, we find some evidence that DACA improved self-reported health, and reduced depression symptoms, indicators of stress and anxiety, and hypertension. These improvements are concentrated among individuals with income below the federal poverty level.
Coverage Gains Among Higher-Income People Suggest the ACA’s Individual Mandate Had Big Effects on CoverageJune 1, 2018
If the probability that the mandate caused an uninsured person to obtain coverage was the same at all income levels (with narrow exceptions described in the paper), then the paper’s estimates imply that the mandate reduced the number of uninsured people by 8.0 million in 2016, as reported in Table 5 of the paper. Even if the individual mandate’s effect on people with family incomes below 400 percent of the FPL was half as large, then the mandate reduced the overall number of uninsured people by 4.6 million in 2016.