Einer Elhauge, Petrie Professor of Law at Harvard Law School and Founding Director of the Petrie-Flom Center, has a new essay on “Obamacare and the Theory of the Firm” in the forthcoming book The Future of Health Care Reform, Malani and Schill, eds. (University of Chicago, 2014).
Health care fragmentation today raises costs and worsens health outcomes. The theory of the firm indicates that cost and quality problems could be addressed by permitting greater vertical integration among complementary health care providers. The puzzle is why such integration does not occur. The answer is that a host of regulatory and payment laws create artificial obstacles to such integration. Various provisions in Obamacare could and should be used to lift these obstacles and allow health care integration that could potentially save tens of thousands of lives and hundreds of billions of dollars.