RICHARD EPSTEIN ON HEALTHCARE
By Stephen R. Latham*
Richard Epstein does not claim to be a health-law expert. A less
startlingly prolific law professor might argue that two books' and
several article-length publications2 in a given area are enough to justify
a claim of expertise in it, but not Epstein. This level of scholarly
production is, for him, just about the right one for legitimately staking
out a secondary field of interest. In any case, even if Epstein's
scholarship could ground a claim of healthcare expertise, it is not a
claim he would want to make. He wants to be considered an outsider to
health-law-one who, untainted by special interests and unattached to
the standard assumptions of the field, is free to rethink it according to
first principles.3 Epstein strides into the health-policy arena like a heroic
* Assistant Professor of Law and Director of the Center
for Health Law and
Policy, Quinnipiac College School of Law. I would like to thank Professor Leonard
Long for organizing the symposium on The Works of Richard Epstein for which this
essay was produced. I would also like to take this opportunity to thank Richard Epstein
for the assistance and encouragement he so kindly offered me during my time in
Chicago.
1. RICHARD A. EPSTEIN, MORTAL PERIL: OUR INALIENABLE RIGHT TO HEALTH
CARE? (1997) [hereinafter MORTAL PERIL]; RICHARD A. EPSTEIN, ANTIDISCRIMINATION
IN HEALTH CARE: COMMUNITY RATINGS AND PREEXISTING CONDITIONS (1996).
2. For law-review articles dealing with health law, health insurance, and
bioethics, see, for example, Richard A. Epstein, Why is Health Care Special?, 40 U.
KAN. L. REv. 307 (1992); Richard A. Epstein, Rationing Access to Medical Care: Some
Sober Second Thoughts, 3 STAN. L. & POL'Y REv. 81, (1991); Richard A. Epstein,
Surrogacy: The Case for Full Contractual Enforcement, 81 VA. L. REv. 2305 (1995);
Richard A. Epstein, Market and Regulatory Approaches to Medical Malpractice: The
Virginia ObstetricalNo-FaultStatute, 74 VA. L. REv. 1451 (1988); Richard A. Epstein,
The HistoricalOrigins and Economic Structure of Workers' Compensation Law, 16 GA.
L. REv. 775 (1982); see also Richard A. Epstein, A Rush to Caution: Cloning Human
Beings, in CLONES AND CLONES: FACTS AND FANTASIES ABOUT HUMAN CLONING (Cass
R. Sunstein & Martha C. Nussbaum eds., 1998). Shorter healthcare pieces include
Richard A. Epstein, Thinking the Unthinkable, BOSTON GLOBE, July 19, 1998 at El
(regarding the sale of organs); Richard A Epstein, Sell Your Body, Save a Life, WALL
ST. J., April 16, 1998 at A2; and Richard A. Epstein et al., Articulating a Social Ethic
for Health Care, 279 JAMA 745 (1998).
3. MORTAL PERIL, supra note 1, at 5.
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sheriff into Tombstone: this town is a mess, and the job of cleaning it up
requires, precisely, a tough-minded stranger.
The centerpiece of Epstein's healthcare work is his dauntingly long
(and broad) book, Mortal Peril; the 1997 work came out in paperback
just in time to play a role in the newly revived national debate on health
policy. 4 The book's fundamental approach-opposed "as a matter of
first principles" to governmental subsidization or provision of
healthcare, opposed to the establishment of any, even minimal, positive
rights to healthcare, and strongly in favor of unimpeded private-market
transactions as the best means of distributing health-related serviceshas angered many critics. One reviewer has likened Epstein to
Ebenezer Scrooge;5 another has denounced his trademark blend of
libertarian commitments with law-and-economics analysis as a "meanspirited" political theory.6
Mean-spirited it is not. Indeed, although Epstein occasionally talks
a tough game with regard to the need to ration scarce healthcare
resources, most of his concrete proposals are justified by their overall
tendency to expand access to healthcare or to improve overall social
health. Thus, if Epstein prefers a free market for organ sales to the
current government-regulated organ-donation scheme, that is because he
believes that the supply of organs will increase if people can sell them
freely. If he opposes EMTALA's requirement that hospitals screen and
stabilize patients before inquiring into their insurance status, that is not
because he wants to see hospitals turning the uninsured out into the
streets, but because he predicts that the imposition on hospitals of the
costs of such emergency treatment will result in reduction of overall
service availability. If he wants healthcare facilities to cut off care to
certain intransigents who repeatedly injure their own health through
drug or alcohol abuse, it is partly because he thinks the treatment dollars
4. The paperback was published in May 2000, by Perseus Books.
5. Henry T. Greely, Richard Epstein's Mortal Peril: Ebenezer Scrooge Meets the
American Health Care System, 1998 U. ILL. L. REv. 727. The comparison strikes me
both as ad hominem and inapt-inapt because, while Epstein sings the praises of private
charity as the preferred solution to the failure of the free market to address the
healthcare needs of the poor, and rejects any role for government in addressing those
needs, Scrooge famously declined to contribute to charities by pawning off moral
responsibility for the poor to the government: "Are there no prisons?... The Treadmill
and the Poor Law are in full vigour, then?" CHARLES DICKENS, A CHRISTMAS CAROL
(Dover 1991) (1843).
6. Troyen A. Brennan, Moral Imperatives Versus Market Solutions: Is Health
Care a Right?, 65 U. CHI. L. REv. 345, 356 (1998) (reviewing RICHARD A. EPSTEIN,
MORTAL PERIL: OUR INALIENABLE RIGHT TO HEALTH CARE? (1997)).
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RICHARD EPSTEIN ON HEALTHCARE
spent on them could be better spent elsewhere, and partly because a
credible threat of medical cutoff will actually assist them in altering
their suicidal ways. Even his broad condemnation of Medicare (and of
all other schemes of social health insurance) is justified by a broad
belief that the wealth-reduction and transfers that such schemes create
when they are first enacted will, in the end, cut into the potential gains
in overall health of later generations.
As it happens, I disagree with Epstein's analysis on virtually every
one of the above-mentioned points. On the other hand, I agree with him
on a number of others: his criticism of the ADA as too simple a solution
to the complex questions it is brought to bear upon, his rejection of the
idea that medical licensure should be used to compel conduct rather than
simply to control quality, his general position on physician-assisted
suicide, his analysis of the problems with limiting expenditures on futile
care. And, for the record, even where I disagree with his ultimate
positions, I approve strongly of his efforts to bring economic analysis to
bear both upon health policy and upon related fields (such as bioethics)
where it is too seldom used; and agree, also, with the general position
that private markets can and ought to play a greater role in the delivery
of healthcare, and in the management of healthcare liability, than has
previously been allowed.
I shall not engage in a point-by-point review of Epstein's very
many policy positions in healthcare, however. Such a review would be
largely duplicative: a number of health policy scholars have already
offered detailed criticisms, and Epstein has responded to the most
7. In addition to Brennan, supra note 6, see Mary Ann Bailey, Our Irrelevant
Right to Health Care, 16 YALE L. & POL'Y REV. 407 (1998); Ezekiel Emanuel, Book
Review: Mortal Peril: Our Inalienable Right to Health Care?, 337 NEJM 5 (1997);
Thomas L. Greaney, How Many LibertariansDoes It Take to Fix the Health Care
System?, 96 MICH. L. REV. 1825 (1998); Uwe E. Reinhardt, Wanted: A Clearly
Articulated Social Ethic for American Health Care, 278 JAMA 1446 (1997); and the
excellent collection of critical essays collected in Symposium, Is America's Health Care
System in Mortal Peril?, 1998 U. ILL. L. REV. 683. These include Thomas S. Ulen, An
Introduction to Mortal Peril, 1998 U. ILL. L. REV. 683; Laura G. Dooley & Robert S.
Gaston, Stumbling Toward Equity: The Role of Government in Kidney Transplantation,
1998 U. ILL. L. REV. 703; Greely, supra note 5; Mark A. Hall, Public Choice and
Private Insurance: The Case of Small Group Market Reforms, 1998 U. ILL. L. REV. 757;
Richard L. Kaplan, Taking Medicare Seriously, 1998 U. ILL. L. REV. 777; Russell
Korobkin, Determining Health Care Rights from Behind a Veil of Ignorance, 1998 U.
ILL. L. REv 801; David Orentlicher, The Alleged Distinction Between Euthanasia and
the Withdrawal of Life-Sustaining Treatment: Conceptually Incoherent and Impossible
to Maintain, 1998 U. ILL. L. REV. 837; Robert F. Rich & William D. White, Federalism
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[Vol. 19:727
trenchant of them.8 My intention is instead to concentrate not on the
details of Epstein's analysis, but on the theoretical bases upon which he
advances them.
My plan is as follows: First, I shall outline what I take to be some
technical problems with the opening theoretical argument of Mortal
Peril. From there, I shall turn to some general practical and theoretical
consideration of the "argument from charity" that appears in Mortal
Peril and elsewhere in Epstein's works. I end with a brief argument,
contra Epstein, for the idea that healthcare might be an economic
"public good" that private markets will not adequately supply.
This short critical essay is animated by my general admiration for
Epstein's work in healthcare. I agree with Epstein that there is
insufficient consideration given to individual liberty in health policy, the
largely ineffectual murmerings of bioethicists about "autonomy"
notwithstanding; and insufficient consideration of market solutions to
problems of scarcity in the healthcare field. And I start from the
assumption that Epstein's healthcare work-like much of his broader
work in legal theory-is not mean but utopian in spirit. He wants to
show us a better way to live-and he wants to show it to us in spite of
his recognition that we may never choose to live in that way.9 The
critical bite of utopian proposals lies in their ability to expose our
foolish refusal to change our ways, even though we have the power so
to change them. The free-market, simple-common-law-rules critique
that Epstein brings to bear upon so many subjects often has that critical
bite, even if we do not finally accept its prescriptions in every case.
and Health Care Policy, 1998 U. ILL. L. REv. 861; and Gary T. Schwartz, Medical
Malpractice, Tort, Contractand Managed Care, 1998 U. ILL. L. REv. 885.
8. See Richard A. Epstein, Living Dangerously: A Defense of Mortal Peril, in
Symposium, Is America's Health Care System in Mortal Peril?, 1998 U. ILL. L. REV.
909.
9. This is the definition of utopian writing offered by Judith N. Shklar in her MEN
AND CITIZENS: A STUDY OF ROUSSEAU'S SOCIAL THEORY (1969). For Epstein's
recognition that his policy suggestions will be refused, see MORTAL PERIL, supra note 1,
at 79, 182-83.
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RICHARD EPSTEIN ON HEALTHCARE
I.
WEALTH/UTILITY GAP(S) IN THE HEALTHCARE MARKET
A. Epstein's Straw Man
Epstein's preference for markets over governments as institutions
for the distribution of scarce social resources is well-known. The
preference is grounded in intertwined considerations of liberty and
economy; markets, he believes, are both more free and more efficient
than democracies. He appears to subscribe to some version of the
Interest Group theory of politics, and believes (correctly) that
governmental regulation is often hijacked by groups whose interests in
framing the regulation (or deregulation) are high and whose transactioncosts of organization are low. Even in a well-run democracy, those
interest groups will be able to use regulation to impose rules of conduct
on others against their will, and thus to extract rents. Individual market
transactions, in contrast, are voluntary, and force nothing upon the
unwilling. Thus they enjoy an advantage from the point of view of
liberty even where, in a given case, regulation might be slightly more
efficient than an imperfect market. To this libertarian intuition, Epstein
adds the economist's truism that individual actors are better informed
about their preferences and capacities than are third-party regulatorseven objective, non-hijacked third-party regulators. °
This well-known position of Epstein's gives special power to an
unusual gambit with which he chooses to begin Mortal Peril. At the
start of Chapter One, Epstein proposes to advance the best possible case
for a positive (that is, government-supported) right to healthcare. His
rhetorical intention, of course, is to advance that case and then to defeat
it, thus persuading his readers from the very start that the proper
starting-point for discussions about health policy should be the
traditional negative-rights common-law regime of voluntary unregulated
exchange, rather than any regime of state-guaranteed healthcare rights.
True to his common-law roots, Epstein suggests that the strongest
argument for a positive right to healthcare must be one that can show
why free markets would fail to allocate healthcare resources efficiently;
specifically, he suggests that it is one that "exploits the wedge between
10.
Epstein has articulated these general views in numerous places. See generally
RICHARD A. EPSTEIN, PRINCIPLES FOR A FREE SocIETY: RECONCILING INDIVIDUAL
LIBERTY WITH THE COMMON GOOD (1998); RICHARD A. EPSTEIN, SIMPLE RULES FOR A
COMPLEX WORLD pts. I, 11 (1995) [hereinafter SIMPLE RULES].
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maximizing social wealth and maximizing utility."1' Let us examine
Epstein's straw-man, pro-positive-fights argument and his response to
it.
Parties' voluntary market transactions, Epstein argues, normally
increase both the parties' wealth and their utility; indeed, where
transactions are completed, the correspondence between wealth and
utility is "well nigh complete." But the two cease to move hand in hand
"when certain transactions do not get completed because the prospective
buyer lacks the necessary funds."' 2 In a free market for healthcare
goods and services, poor people might suffer substantial disutility due to
their inability to purchase the healthcare they need. Rich people could
outbid poor people for scarce medical resources, even in circumstances
where those resources would increase poor people's utility more than
the rich people's. Thus, an exclusive regime of negative fights in
healthcare-one which permitted free-market transactions in all aspects
of healthcare, but which included no positive rights to healthcare, and
which confined the government's role to prohibiting force and fraud,
breaking up monopolies and subsidizing only true economic "public
goods"-might, compared to a regulatory regime that provided some
positive fight to healthcare, do rather well at maximizing social wealth,
but comparatively poorly at maximizing social utility.
Having laid out this "strongest" argument for positive rights to
healthcare, Epstein attempts to defeat it by claiming that the utility gap
left open by the inability of the poor to purchase healthcare could-and,
in a system of negative rights, would-be plugged by voluntary
charitable transactions. Those transactions would increase the utility
both of giver and of recipient, would enable the poor to receive adequate
care, and-a bonus, technical point for the consequentialist theorists in
the crowd-would, because they are voluntary, obviate the need for the
government to make theoretically problematic interpersonal
comparisons of utility.
I see several difficulties with the above argument. In what follows,
I shall argue that Epstein has overstated the case for the probable
success, in wealth and utility terms, of completed transactions in a free
healthcare market.
His analysis ignores some well-known
idiosyncrasies of the market for healthcare services (i.e., its various
imperfections and defects), as well as some well-known features of all
11.
MORTAL PERIL, supra note 1, at 31.
12.
Id. at 34.
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RICHARD EPSTEIN ON HEALTHCARE
markets (i.e., that they have losers) which may be of special concern to
health policy.
B. Market Failure
Recall Epstein's opening assertion that a series of completed
voluntary market transactions in a world of strictly negative rights
advances wealth and utility simultaneously. We can accept, for the sake
of argument, that this is true in the limited case of a hypothetical perfect
market-though even that assumption will be unsettled if we allow for
the possibility that transactions affect the utilities of non-parties through
mechanisms of sympathy and, more damagingly, of envy. 3 Would
social wealth and social utility rise hand-in-hand in a real-world free
market for healthcare goods and services?
There are some serious reasons to doubt it. Just look at the
voluntary transactions that Americans complete today, with their health
in mind: the pointless millions spent on alternative therapies and dietary
supplements whose efficacy is unproven, on weight-loss programs
whose inefficacy is proven, on fad exercise machinery, on outright
quackery. There is plenty of evidence that people are not very good at
balancing their long and short-term healthcare interests; at
understanding, and acting rationally upon, statistical risk; at assimilating
available information about healthcare goods and services; at facing
their own mortality. Imagine what further terrible healthcare decisions
might be made in less regulated markets-markets without an FDA,
licensure and certification for health facilities and professionals,
prescription requirements, drug labeling laws, and so on.14
More subtly, even if we assume counterfactually that healthcare
consumers make good self-interested decisions when given the
opportunity, there are a number of reasons to believe that a free market
in healthcare services might not afford them that opportunity.
Healthcare markets suffer from a number of imperfections that virtually
13. On the problem of envy and Pareto optimality, see Thomas Rice, Can Markets
Give Us the Health System We Want?; Martin Gaynor & William B. Vogt, What Does
Economics Have to Say About Health Policy Anyway? A Comment and Correction on
Evans and Rice; and Thomas Rice, A Reply to Gaynorand Vogt, and Pauly; all of which
are in HEALTHY MARKETS? THE NEW COMPETITION IN MEDICAL CARE (Mark A. Peterson
ed., 1998). I believe Rice wins the debate on this narrow but important point.
14. Our imaginations need not be unguided by history here. See JAMES HARVEY
YOUNG, THE TOADSTOOL MILLIONAIRES: A SOCIAL HISTORY OF PATENT MEDICINES IN
AMERICA BEFORE FEDERAL REGULATION (1961).
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assure that a series of completed voluntary transactions will not
maximize social utility. For example: demand for health services is
irregular and unpredictable; uncertainty as to the quality and efficacy of
proposed medical treatments plagues both the demand and the supply
side, and is not resolved by post-treatment observation of outcomes; the
pervasive use of insurance creates risks of moral hazard; and even
without insurance there are ineradicable agency problems in the patientdoctor relationship.15
These objections (and others) are quite familiar in the literature,
and Epstein is well aware of them. Indeed, on page 2 of Mortal Peril,
he cites Kenneth Arrow's seminal 1963 paper 6 for the proposition that
"[t]he health care market has special problems of monopoly,
information deficits, volatility, uncertainty, surprise, insurability, and
inequality of bargaining power that do not plague ordinary competitive
markets."' 7 He nonetheless dismisses the arguments of those who would
use "pervasive market failure" as an excuse to press for government
intervention and redistribution in health care. His reasoning is that
governmental intervention, far from solving market failure, gives rise to
regulatory failure that "only exacerbates problems of information,
uncertainty and monopoly."' 8
Now, I join Epstein in being wary of this by-now-familiar gesture
toward "market failure" as an excuse for banishing market solutions
from healthcare policy debates. The question must always be, "The
market as compared to what?" and as Neil Komesar has pointed out,
market, judicial and regulatory failures tend to occur simultaneously.' 9
Even within the health care field, market failure can be compensated
for, is not universal, and is not always worse than regulatory failure.
15. For important debates on the imperfections of the healthcare market, see
Kenneth J. Arrow, Uncertainty and the Welfare Economics of Medical Care, 53 AM.
ECON. REV. 5, 941 (1963); the critique of Arrow in PAUL STARR, THE SOCIAL
TRANSFORMATION OF AMERICAN MEDICINE 225 (1982); and HEALTHY MARKETS? THE
NEW COMPETITION IN MEDICAL CARE (Mark A. Peterson ed., 1998), especially the
debate on the applicability of economic theory to healthcare among Thomas Rice,
Robert G. Evans, Mark V. Pauly, Martin Gaynor and William B. Vogt. See id. at 27129.
16. See Arrow, supra note 15, at 941.
17.
MORTAL PERIL,
supra note 1, at 2.
18. Id.
19. "Institutions [e.g., markets, courts and the political process] often move
together-when one is at its best, the others are often at their best; when one is at its
worst, the others are often at their worst."
NEIL K.
KOMESAR,
IMPERFECT
ALTERNATIVES: CHOOSING INSTITUTIONS IN LAW, ECONOMICS AND PUBLIC POLICY
(1994).
271
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RICHARD EPSTEIN ON HEALTHCARE
There is, to my mind, an important role for market forces to play in the
delivery and financing of healthcare services and products, and a fair bit
of deregulation to be done. My quarrel with Epstein here is simply that
the market imperfections he acknowledges in his Introduction seem
forgotten by the time he makes his "strongest argument for positive
rights in healthcare" in Chapter One.
In Chapter One, Epstein argues as though, in a free market for
health care, the principal gap between wealth-maximization and utilitymaximization would be created by the inability of the poor to complete
certain transactions. But the existence of market imperfections should
certainly make us less sanguine than Epstein evidently is about the
ability of completed transactions in an unregulated healthcare market
dependably to maximize either social utility or wealth. In a market
replete with such imperfections, not only incomplete transactions but
also faultily-completed ones-those, for example, completed by parties
whose decisions are made for them by agents whose interests are not
perfectly aligned with their own; or on the basis of imperfect
information; or under the influence of perverse financial incentiveswill sometimes fail to advance utility or wealth, and will often fail to
optimize them.
C. Market Losers and Their Victims
There is another point to be made about the misfiring of completed
market transactions. While it is certainly true that people are the best
judges of their own subjective preferences from moment to moment, it
is not at all clearly true that people (or firms) are always very good at
pursuing their own interests through market transactions. Epstein's
discussions of the market seem sometimes to miss the distinction
between markets reaching efficient equilibria and people making
efficient choices. Indeed, in a world of market participants who have
imperfect knowledge and foresight, competitive markets reach efficient
equilibria in part because large numbers of players in them make terrible
decisions and fail. Some others make perfectly sensible decisions and
fail because of bad luck, as, for example, when the bus-stop that used to
be outside their coffee-shop door gets eliminated, or an unusual run of
warm winter weather limits the ski-resort's revenue. Forty percent of
start-up restaurants fail. This vigorous Darwinian competition is of
course painful for the restaurateurs themselves; but it also imposes
minor costs of dislocation upon customers, and more major costs of
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dislocation upon cooks and waiters and suppliers and landlords. The
poor decisions and bad luck of market losers do not affect only
themselves. We tolerate the disutility created by closing restaurants,
however, because that disutility is generally overwhelmed by the
tremendous welfare gains that competition affords to diners everywhere,
in terms of lower costs, higher quality, greater variety, and so on.
There are analogous injuries from competition to be observed
everywhere in today's vigorously competitive market for healthcare
finance-a market to which, surprisingly, Epstein pays very little
attention. Management Service Organizations are unwinding because of
an inability to increase efficiency and capture managed-care contracts, 20
provider mergers are dissolving because of an inability to settle turf and
management battles." Such failures move the market toward more
efficiency, but they have tremendous human cost in terms of loss of
continuity of care, loss of coverage, consumers' transaction costs, and
so on.
It seems likely that these costs are often quite highsubstantially higher than those associated with the dislocations in the
restaurant business, for example. A single provider's poor market
choices can impose externalities on patients by the thousands; an
insurer's poor choices can impose enormous dislocation costs upon
employees, patients, providers, and even local governments.
Consumers' poor market choices can literally kill them, or impose lifealtering financial burdens on their families. It is an important question
for national health policy whether we wish to pay for the long-run
efficiency of a competitive market by letting the harsh burdens of
business and consumer failures within that market fall where they may.
As I write, Harvard Pilgrim Health Plan is about to emerge from a
period in receivership, during which time the Massachusetts Attorney
General attempted to broker a publicly guided refinance, reorganization
and rescue plan." This is in part because he did not want to incur the
human costs of letting the Plan fold--costs that might have included
personal and economic displacement for many, loss of previously-paid-
20.
See Uwe E. Reinhardt, The Rise and Fall of the Physician Practice
Management Industry, 19 HEALTH AFFAIRS 1, 42 (2000).
21. See, e.g., Lawton R. Bums et al., The Fall of the House of AHERF: The
Allegheny Bankruptcy, 19 HEALTH AFFAIRS 1, 7 (2000). For a detailed portrait of
competition in physician practice management, see JAMES C. ROBINSON, THE
CORPORATE PRACTICE OF MEDICINE (1999).
22. See Massachusetts Supreme Judicial Court Temporary Receiver's Second
Status Report, cited in Ruthardt v. Harvard Pilgrim Health Care, No. SJ-2000-003
(Mass. Mar. 3, 2000).
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RICHARD EPSTEIN ON HEALTHCARE
for benefits by people who have paid premiums for years but who now
have medical conditions that would preclude their acquiring new
coverage, loss of medical records, administrative costs, shopping costs
for consumers, and so on.
In sum: Epstein is overly optimistic about the ability of free-market
transactions to optimize welfare (whether calculated in terms of wealth
or utility) among those who participate in them, both because he
underestimates the importance of classical market failure in the
healthcare market, and because he ignores the enormous costs of
displacement associated with the failure of large-scale healthcare
businesses even in a reasonably efficient market. These wealth/utility
gaps are considerably harder to plug with charity than the gap affecting
poor market non-participants. They affect not just the poor, but those
wealthy enough to participate in the market but who make poor business
or personal choices; and those who make rational probability-based
choices (say, about health coverage) but who are unlucky enough to get
hit by lightning; and those whose healthcare is impacted by the poor
choices and bad luck of others. Given the difficulties of amassing
proper information and of discriminating between different claims of
damage and need, can we imagine a charitable-giving solution to the
problems that would be created if, for example, Harvard Pilgrim were
allowed to fold? I think not.
These arguments, of course, are not enough to invalidate Epstein's
policy prescriptions. It may be that the disutility and wealth loss
associated with governmental intervention in the healthcare market
would be worse than that which would be experienced in an unregulated
market. But the theoretical argument in favor of markets is not as clean
or easy as Epstein makes it seem.
II. THE ARGUMENT FROM CHARITY
Since the publication of Mortal Peril,Epstein has encountered and
responded to another argument for positive rights to healthcare-one
which he regards as powerful, and perhaps as more powerful than the
utility-gap argument he uses in Mortal Peril. It is a Rawlsian argument
for positive healthcare rights-one advanced, in this instance, by Russel
Korobkin,23 though similar arguments have earlier been advanced by
24
Korobkin imagines parties
others, most notably Norman Daniels.
23.
See Korobkin, supra note 7.
24.
See NORMAN DANIELS, JUST HEALTH CARE (1985).
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behind a Rawlsian veil of ignorance, unaware of whether they will be
born in good or bad health. Forced to choose between a world whose
basic social institutions include some positive rights to health care and
one whose basic social institutions do not, Korobkin argues, selfinterested risk-averse parties would choose at least some limited form of
publicly-funded emergency care, and a requirement of communityrating on private health insurance.
Epstein's answer to Korobkin's pro-positive-rights argument 5 is
the same as his earlier answer to his own straw-man, utility-gap
argument: he invokes voluntary charity. Just as voluntary charity could
plug the utility-gap left by the free market, so it could alleviate the
concerns of parties behind the veil of ignorance for the healthcare of the
least-well-off members of society. Epstein argues that, in a negativerights regime, the natural phenomenon of human empathy will ground a
strong enough moral duty of charitable assistance to assure that those
who find themselves unhealthy upon emergence from behind the veil
will not lack the primary social good of health-at least insofar as that
can be attained by receiving healthcare.
It is tempting to read Epstein as a good Rawlsian here. Justice, as
Rawls famously puts it near the opening of his A Theory of Justice, is
26
the first virtue of social institutions. Institutions, on Rawls' account,
are not only or even especially political entities such as parliaments or
administrative agencies; they include markets, systems of property,
public rituals-indeed, any publicly recognized system of rules "which
defines offices and positions with their rights and duties, powers and
immunities, and the like., 27 Thus, when Epstein argues that a "moral
duty of charitable assistance" would supply the needs of the poor, he
may-provided he conceives of that moral duty as one that would be
publicly recognized, shared, and broadly enforced by social normssimply be proposing that the demands of Korobkin's parties for some
positive rights to healthcare would in fact be met by a just social
institution: the institution of private charity.
The difficulty with reading Epstein as a Rawlsian in this way is
that the demands of Rawlsian justice would only be met if the
"voluntary charity" were in fact voluntary only in name. The parties
behind the veil will not settle for a mere possibility, or even a
likelihood, that their needs will be met by some goodhearted soul; they
25.
26.
27.
Epstein's response to Korobkin is in Epstein, supra note 8, at 912-14.
See JOHN RAWLS, A THEORY OF JUSTICE 3 (rev. ed. 1999) (1971).
Id. at 47-52.
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RICHARD EPSTEIN ON HEALTHCARE
want some level of guaranteebuilt into their social institutions. To the
extent that a duty of private charitable giving is to be publicly enforced,
it is likely to lose its attraction to the libertarian Epstein, whether that
enforcement is achieved by use of government force or by powerful
social sanction. I suspect, also, that it would lose its attraction to the
economist Epstein. In Simple Rules for a Complex World Epstein
argued, precisely against those who criticize charitable giving because
they "believe that individuals have an affirmative right to receive
support that must be made secure by government," that "[t]he
precariousnature of charitable giving is one of the features that make it
most effective."28 This is because the strictly voluntary nature of
charitable giving allows benefactors to abandon failed projects easily,
and thus to make optimal use of their resources. So, on Epstein's view,
a publicly enforced norm of charitable giving would interfere both with
the liberty of the givers and with the efficiency of their giving. So much
for reading Epstein as Rawls.
But so much, also, for charity's standing as an answer to
Korobkin's arguments. Charity is contingent in a way that justice is not,
and this contingency alone is enough to leave Epstein's response to
Korobkin wanting. This point can be driven home by the simple
observation that the recipients of charity are generally required to be
grateful. This is so even if the charitable giver feels a deep moral
obligation to give. But gratefulness is not required of one who receives
only his just deserts-unless it be a gratefulness that operates on a
different level, by offering thanks for the fact of living in a just regime.
Charity of the genuinely superrogatory sort that Epstein favors cannot
satisfy the theoretical demands of the parties behind the Rawlsian veileven if it could, in fact, meet their practical needs.
This leads us, of course, to the more mundane question whether
charity actually could meet those practical needs. Is it realistic to hope
that voluntary charity could meet the needs of the least-well-off, or plug
the utility-gap created by the inability of the poor to participate in
healthcare markets?
Again, there are some serious reasons to doubt it. One may begin,
as a few of Epstein's critics have, with some daunting empirical data.
Contemporary healthcare costs are enormous-so enormous that they
completely dwarf the sum total of charitable giving in America, whether
28.
SIMPLE RULES,
supra note 10, at 142.
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in health or non-health areas.2 9 In addition, we are aware that some
currently-existing needs for healthcare are not being met by charity. Is
it realistic for Epstein to believe that, if government programs were
abolished, charity would step in to carry such an enormous burdenespecially given that it is failing to carry a much smaller evident burden
even now?
Epstein has an answer to this criticism: namely, that it is wrong to
think that the amount spent on healthcare would remain the same in a
negative-rights regime. Government subsidization of medical care
through Medicare and Medicaid, Epstein argues, has led the elderly and
the poor to overconsume healthcare. Current cost-levels are inflated,
because people who receive goods for free tend to use more of them.
The moral hazard so well documented in the Rand experiments of the
1980s 30 has driven healthcare costs up beyond what a free-market
regime would have allowed. In addition, current charity levels are
deflated, because the American public is used to healthcare for the poor
being the government's business. Epstein essentially argues that
government programs such as Medicare and Medicaid have, to some
extent, crowded out private charity. Had the programs never existed,
spending levels would be lower and charity levels would be higher.'
He points to the higher levels of charity that existed in the era of laissez
faire, and to the long tradition of charitable giving in healthcare, in
particular.32
The moral-hazard and crowding-out arguments advanced by
Epstein do not strike me as powerful enough to justify his faith that
voluntary charity could truly cover the tremendous costs of healthcare
for the poor. First, as to moral hazard: most of the modem increase in
healthcare cost has not been due to overconsumption by the insured, but
to the inflationary pressure of underlying technical advances in medical
machinery
and pharmaceutical
products."
The "managed
care
revolution" of the 1990s has supplied an illustration of this truth: the
widespread introduction of financial incentives for patients and
providers to reduce rates of healthcare consumption had powerful shortterm effects in keeping healthcare costs down, but it is currently
29. See Greely, supra note 5, at 750. See generally Hall, supra note 7.
30. See Emmet B. Keeler & John E. Rolph, The Demand for Episodes of
Treatment in the Health Insurance Experiment, J. HEALTH EcON. 7, 337 (1988).
31. See Epstein, supra note 8, at 918.
32. See MORTAL PERIL, supra note 1, at 36.
33. See Henry Aaron & William B. Schwartz, Rationing Health Care: The Choice
Before Us, 247 SCIENCE 418 (1990).
20001
RICHARD EPSTEIN ON HEALTHCARE
emerging that those savings were "one-shot deals": the underlying
engine of healthcare cost inflation-technological advance-is still
chugging away. Thus, managed care companies that were boasting of
stabilizing costs five years ago have been jacking up premiums this
year . 4 Overutilization of services was a cost problem, but it was never
the core cost problem: the core problem is that healthcare is simply not
the same product it used to be. Let government programs be eliminated,
and utilization will of course go down; but costs will still be very high
and growing. Of course, if we posit a world in which a regime of
negative rights had always obtained, we might indeed see less
healthcare cost-but we would also see substantially lower-quality
medicine. Public funding has subsidized the educations of most medical
researchers-and their research, as well-over the last many decades.
This has included subsidization of a great deal of productive medical
research which it is likely that private industry would not have
undertaken at sufficient levels on its own. 35
As to the "crowding out" argument: there is little to do other than
to register my skepticism that government involvement in healthcare is
what prevents our natural human empathy from grounding an ethic of
charity forceful enough to meet the enormous needs of the poor of the
nation for healthcare. There are poor people whose healthcare and other
needs are not currently being met by the government, and charity is not
filling the gap. If government presence in some areas of healthcare is
enough to "crowd out" charity even in areas where government does not
work, I am left wondering how strong the human impulse to charity
really is.
Finally, charity has some other features which make it troubling as
a potential substitute for government-supported positive rights to
healthcare. First, even if the quantity of charity were very large, its
targets would remain discretionary. Individual needy persons might
find themselves neglected by voluntary charities on grounds of
prejudice that would be impermissible in public programs.
Second, and more importantly, charitable transactions are not
always as purely utility-enhancing as Epstein imagines. Charity is
34.
Mary Chris Jaklevic, Healthcare Costs Rise in 1998, 30 MOD. HEALTHCARE 2,
2 (2000).
35. This is because social returns to research far exceed returns to the parties that
undertake it. See Zvi Griliches, Returns to Research and Development Expenditures in
the Private Sector, in NEW DEVELOPMENTS IN PRODUCTIVITY MEASUREMENT AND
ANALYSIS (John W. Kendrick & Beatrice N. Cavaccara eds., 1980).
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[Vol. 19:727
neither always nobly motived nor always gratefully received. A number
of philosophers-Hegel3 6 and Kant 7 among the continentals, Emerson38
and Thoreau39 here at home-have noticed that the impulse to charity
can be more self-aggrandizing than self-effacing. Charity can as easily
be motivated by pity for the smallness of the other as by love for him as
an equal. It can invite in the giver a lordly feeling of superiority which
is inappropriate in one who is dispensing justice--or dispensing aid
which is meant to be a substitute for justice. And it can inspire in the
recipient feelings of profound alienation, resentment and rebellion.
Finally, to move from the psychological to the pragmatic, it should
be pointed out that not all charity is given by the rich to the poor. It is
highly probable that, if the healthcare needs of the poor were to be left
to charity rather than to social subsidy, a large proportion of the charity
in question would be given by the poor to the poor, most especially by
family members who, for lack of government aid, would sacrifice
opportunities for employment and education in order to care for their
ailing elders or their disabled children. A social insurance policy,
grounded in a Rawlsian contract, can be funded in such a way as to limit
burdens on the least-well-off. The burdens of charity cannot be thus
easily distributed.
III. HEALTH AS A PUBLIC GOOD?
Central to Epstein's defense of the market as a means for the
distribution of scarce healthcare resources must be the notion that
private investors will devote the proper amount of resources to the
production and distribution of healthcare goods. This is why, in his
article responding to critics of Mortal Peril,Epstein takes Sarah Singer
36. See G.W.F. HEGEL, THE PHENOMENOLOGY OF SPIRIT 517 (A.V. Miller trans.,
1977) (The spirit of the gratitude of one who finds that his personality is "dependent on
the contingent personality of another, on the accident of a moment, on a caprice ... is,
therefore, the feeling of the most profound dejection as well as of extreme
rebellion .. " The "beneficent spirit of wealth ... knows itself to be independent and
arbitrary, and at the same time knows that what it dispenses is the self of another.
Wealth thus shares its dejection with the recipient; but in place of rebellion appears
arrogance."). I plan to explicate these and other mysterious anti-charity arguments in
my forthcoming essay, The Sting of Charity.
37. See IMMANUEL KANT, LECTURES ON ETHics 235-36 (Louis Infield trans.,
Hackett Publ'g Co. 1963) (1930) ("The giving of alms flatters the giver's pride....
Alms degrades men.").
38. See Ralph Waldo Emerson, Self Reliance, in EMERSON'S ESSAYS (Houghton,
Mifflin, & Co. 1980) (1840).
39. See HENRY DAVID THOREAU, WALDEN (The Heritage Press 1939) (1849).
2000]
RICHARD EPSTEIN ON HEALTHCARE
and Alain Enthoven to task for mischaracterizing universal access to
healthcare as a "public good. '0 He accuses them of attempting to
"piggyback their claims for a positive right to health care on the
narrower economic conception of a public good";4 ' the latter referring
only to the narrow class of goods which (like street lights) will be
underproduced in the private market because they produce nonexcudable benefits. He is certainly correct-Singer and Enthoven do
not use the term in its classical economic sense.4'2 But, having correctly
dismissed their illegitimate use of the term, he too swiftly dismisses the
possibility that health, itself, might be a public good in the real,
economic sense."
Consider my own health. It certainly seems as though the social
benefits from my being healthy exceed those that I, myself, enjoy.
When I am healthy, I feel good, and am able to earn my wages and
enjoy my leisure. But my health has considerable benefits to others,
too-and not only in obvious ways such as the herd-immunity benefits
they derive from my immunization. When I am healthy, the plans I
make with my colleagues and students and family and friends are all
subject to relatively little uncertainty. When I fall ill, meetings need to
be cancelled, alternative childcare arrangements need to be made,
substitutes need to be trained, deadlines are missed. My illness imposes
costs on others beyond those that it imposes upon me, and my health
confers benefits on others beyond those it confers on me.
It would seem, then, that consumption of my health is non-rival:
my enjoyment of my health does not prevent my colleagues from
enjoying it, and no other person's enjoyment of my health "uses it up"
either. My students, my spouse, my friends may all enjoy it.
It would seem, also, that consumption of my health is nonexcludable. I could attempt to collect monthly fees from others in the
amount that each of them has benefited (e.g., in terms of reduced
uncertainty) from my remaining healthy. But, even assuming that I
could surmount the daunting calculative difficulties and generate an
accurate fee schedule, the scheme would quickly fall apart because it
40.
Epstein, supra note 8, at 911-12.
Id.
42. See Alain C. Enthoven & Sara J. Singer, Markets and Collective Action in
RegulatingManaged Care, 16 HEALTH AFFAIRS 6, 26-27 (1997).
43. The following arguments are advanced with apologies to Dan Polsby. See
Daniel D. Polsby, What if This Is as Good as It Gets?, 2 GREEN BAG 115, 122 (1998)
(reviewing RICHARD A. EPSTEIN, PRINCIPLES FOR A FREE SOCIETY: RECONCILING
INDIVIDUAL LIBERTY WITH THE COMMON GOOD (1998)).
41.
744
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would be impossible for me to withhold my health selectively from
those who declined to pay.
It follows, then, that my health is a public good. The social value
of my health is greater than its value to me, and I have no means of
capturing that differential. I will therefore fail to spend as much time
and effort on keeping myself healthy as would be socially optimal.
Perhaps I need a subsidy.