Regulating through Information: Disclosure Laws and American Health Care

Abstract

Efforts to reform the American health care system through direct government action have failed repeatedly. Nonetheless, an alternative strategy has emerged from these experiences: requiring insurance organizations and health care providers to disclose information to the public. In this Article, Professor Sage assesses the justifications for this type of regulation and its prospects. In particular, he identifies and analyzes four distinct rationales for disclosure. He finds that the most commonly articulated goal of mandatory disclosure laws--improving the efficiency of private purchasing decisions by giving purchasers complete information about price and quality--is the most complicated operationally. The other justifications--which he respectively terms the agency, performance, and democratic rationales--hold greater promise, but make different, sometimes conflicting assumptions about the sources and uses of information. These insights have implications not only for health care, but also for other regulated practices and industries.

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