The healthcare system is sick. The players are incentivized to maximize their own benefit and externalize their costs onto the other parties. This paper examines the warped incentives that underlie the system. The tort system, lacking expertise and slow to adapt, is unable to overcome cognitive biases to adequately solve the problems. Clinical practice guidelines could pose a solution, but not as they are currently developed. Guidelines promulgated by healthcare associations are infected by a web of conflicts of interest with every player in the industry. Government agencies, and their revolving doors, are underfunded and also subject to the industry's web of conflicts. Even if adequate guidelines could consistently be produced, state legislatures and courts have been unwilling and unable to substantially incorporate guidelines into the legal landscape. Lastly, this article proposes a private regulation regime that could be a solution which would align all of the players' incentives to society's interests.

The role of Medicare in our national market for acute care hospital services is that of a power buyer. Medicare beneficiaries in 2008 included some 45.2 million people. Total benefits paid in 2008 were $462 billion, including 29% of all hospital spending. Medicare's dominance in the buyer's market for acute care hospital beds renders the program particularly wellsuited to scrutinize the role of acute care hospital services in producing effective and efficient outcomes for Medicare beneficiaries. “[I]f there are to be far-reaching changes in the way medicine is practiced in this country, Medicare will have to drive them.” It is a historical irony that a program, a scaled-down version of national health insurance, could have grown to this power buyer status; but the history of Medicare is full of ironies—the greatest of which may prove to be that Medicare reforms now sit at the very center of the funding mechanisms for the 2010 Patient Protection and Affordable Care Act (PPACA).

Children with significant disabilities may qualify for Medicaid benefits, regardless of household income, if their state elects to offer the Tax Equity Fiscal Responsibility Act (TEFRA) option. However, a significant number of children with serious medical problems presently are being denied eligibility for, or terminated from, this Medicaid program. This Article describes the ways in which the existing health insurance system inadequately meets the needs of children with significant disabilities, recounts the history and development of the TEFRA Medicaid coverage option, and analyzes the eligibility criteria used by the various states. It proceeds to consider how disability should be legally defined in the health care context and proposes reforms to modernize the eligibility standards so that these benefits can be more effectively, efficiently, and fairly allocated. To accomplish this goal, the federal statute and regulation that define disability, as well as corresponding state laws, must be reformed so that the law can keep pace with advances in modern medical science, and people with disabilities are not, in effect, penalized for receiving currently accepted preventative care that maintains health but will never cure the underlying disease.

Imagine the following scenario:

Biologics include a wide range of products, such as vaccines, allergenics, gene therapies, and tissues, among others. Biologics are complex combinations of sugars, proteins, or nucleic acids that are produced by biotechnology methods or other advanced technology. Biologics often represent the only medical treatment for complex medical conditions such as: Hepatitis B; Measles, Mumps, Rubella and Varicella; and Tetravalent meningococcal conjugate among others. As a result, biologic sales are growing at twice the rate of chemical pharmaceuticals and are expected to exceed $158 billion by 2015. Various interest groups, including patients, insurers, and regulatory agencies, raised concerns about the financial impact that biologics may have on health care costs. Congress and the Food and Drug Administration (FDA) faced pressure to provide a solution to the soaring biologic costs, namely through a regulatory pathway for generic biologics (“follow-on biologics”) to manufacture cheaper products. Although a regulatory pathway for generic chemical pharmaceuticals (“generic”) exists under the Hatch-Waxman Act, a similar regulatory pathway for follow-on biologics did not exist prior to 2010.