Indiana Law Review


Liver Transplantation in Massachusetts:

Public Policymaking as Morality Play*

Clark C. Havighurst**
Nancy M. P. King***

In 1982, Jamie Fiske, the infant daughter of Mr. and Mrs. Charles
Fiske of Massachusetts, was dying of congenital liver disease. Her death
was imminent, except for the possibility that a liver transplant—a dif-
ficult, risky, and extremely costly surgical procedure considered by many
authorities still to be experimental—could prolong her hfe, for months
or years, under a Ufetime regimen of drugs to prevent her body's

natural rejection of the foreign tissue. No surgeons or hospitals in
Massachusetts performed liver transplants at the time. Moreover, the

Massachusetts Blue Cross and Blue Shield plans (MBCBS), the family's
health insurers, advised the Fiskes that such an experimental procedure

would not be covered under their policy. • Thus begins the complex

morality play,
*

'Liver Transplantation in Massachusetts."

In addition to the Fiskes, the players in this drama include: two

state-appointed commissions, composed of prominent citizen-experts; the

state Department of Public Health; the state Medicaid program; MBCBS
and Blue Shield's president, John Larkin Thompson; and, as a kind of

Greek chorus, the omnipresent media. The role of ''identified life"^ is

Support for the research reflected in this article was provided under Grant No. HS

05326 from the National Center for Health Services Research and Health Care Technology

Assessment, U.S. Department of HeaUh and Human Services. The authors are indebted

to personnel of the Massachusetts Department of Public Health and Blue Cross of

Massachusetts and to members of the Task Force on Organ Transplantation for their

generous help in facilitating access to information and documents and for submitting to

interviews. Conversations with numerous individuals, most of which are cited herein,

greatly assisted the authors in forming their impressions of liver transplantation in Mas-

sachusetts. The interpretations offered here are of course not necessarily shared by those

who assisted the authors or participated so conscientiously in the policymaking effort.

**William Neal Reynolds Professor of Law, Duke University. A.B., Princeton University,

1955; J.D., Northwestern University, 1958.

***Instructor, Department of Social and Administrative Medicine, University of North

Carolina at Chapel Hill. B.A., St. John's College, 1975; J.D., University of North CaroHna

at Chapel Hill, 1980.

'Because the Fiskes had initially been guaranteed coverage for the transplant by an

MBCBS employee, the Blues eventually agreed to pay for Jamie's treatment even though

the procedure was technically excluded from plan coverage.

The special function of characters Uke Jamie—endangered individuals whose jeop-

ardy could be relieved by heroic or extraordinary governmental action—in dramas of this

kind has been observed by numerous critics. Interestingly, many if not most of these

critics have been Harvard professors and citizens of Massachusetts. See, e.g.. Fried, The

Value of Life, 88 Harv. L. Rev. 1415 (1969); Fuller, The Case of the Speluncean
Explorers,

62 Harv. L. Rev. 616, 623 (1949); Schelling, The Life You Save May Be Your Own,

955



956 INDIANA LA W REVIEW [Vol. 19:955

played by Jamie Fiske, whose plight precipitated a dramatic medical

rescue and who has so far lived as happily ever after as her circumstances
permit. Absent from the play, even as off-stage voices like the unborn

children in Die Frau ohne Schatten,^ are the "statistical lives" that

policymakers reputedly find easier to ignore than identified hves in

allocating public resources. "^

The action takes place under the full glare of publicity. The setting,
the Commonwealth of Massachusetts between 1982 and 1985, features
a highly regulated health care system built on assumptions that were

common in the 1960's and 1970's but that are not universally embraced
in the United States today. To understand the plot of this drama, it is
helpful to recognize that the political ethos of Massachusetts envisions

a true health care ''system" governed centrally in accordance with exphcit

public choices. Thus, although Jamie Fiske' s fate was not directly in

the hands of the Commonwealth, the state government seemed to view
itself as responsible for seeing that nothing so pubUcly heart-rending

could happen again.

This review of the Massachusetts experience with liver transplantation

treats it as a case study of how a centrally controlled health care system
faces difficult choices concerning health care and health care technology.

Despite its many special features, the problem of liver transplantation
is not sui generis. Health care abounds with similar questions concerning

marginal trade-offs between benefits and costs. Although few of them
are as visible or as fraught with the characteristics of "tragic choices"^

as organ transplantation, the basic dilemma of whether to spend scarce

resources to achieve a particular health benefit of possibly less than

commensurate value is always the same. The choice of decisionmaking
mechanisms, pubhc or private, through which to address these inescapable

trade-offs has been the fundamental problem of health poHcy in the
United States.^

in Problems in Public Expenditure Analysis 127 (S. Chase ed. 1968); Zeckhauser,

Procedures for Valuing Lives, 23 Pub. Pol'y 419, 447, 458-59 (1975); see also Evans,

Health Care Technology and the Inevitability of Resource Allocation and Rationing

Decisions, pts. 1 & 2, 249 J. A.M.A. 2047, 2208 (1983); Friedman, Rationing and the
Identified Life, Hosps., May 16, 1984, at 65; infra text accompanying notes 37-43.

^A well-known operatic fantasy by Richard Strauss and Hugo von Hofmannsthal.
*See generally Havighurst, Blumstein, & Bovbjerg, Strategies in Underwriting the

Costs of Catastrophic Disease, Law &. Contemp. Probs., Autumn 1976, at 122, 140-45;
see also supra references cited note 2 and infra text accompanying notes 37-43.

The term is Guido Calabresi's. See generally G. Calabresi & P. Bobbitt, Tragic
Choices (1978). Tragic choices arise in situations where no decision can be satisfying

because any choice necessarily sacrifices one or more irreconcilable fundamental values.

Scarcity is the fundamental condition that necessitates such choices. Not all choices are

tragic, of course, and markets are usually tolerated to allocate mundane goods and services.
Where the opportunity cost of a particular choice includes a highly visible possibility of

a lost life or other personal tragedy, however, its potentially tragic character appears.

^See generally Havighurst & Blumstein, Coping with Quality/Cost Trade-offs in
Medical Care: The Role of PSROs, 70 Nw. U.L. Rev. 6, 9-45 (1975).



1986] LIVER TRANSPLANTATION 957

American society as a whole is somewhat less committed than Mas-
sachusetts to centralized decisionmaking on questions of what health
services should be provided. Indeed, although the enactment of Medicare
and Medicaid in 1965 started a seemingly inexorable movement toward
such centralization of authority in government hands, recent years have
seen a distinct movement in the opposite direction, particularly in federal
policy.^ Despite the promise of this new poHcy and some signs that
hopes for it are being rewarded, it is still not clear that private choices
can effectively ration expensive, potentially hfesaving therapies or that
such rationing, if effective, would be acceptable politically. Many believe
that effective and acceptable rationing can be achieved only by having
government assume direct or indirect control of technology and health
care spending. Although the Massachusetts experience with liver trans-
plants provides no answers to these policy questions, it yields some
insights into the relative merits of both approaches.^

I. Act One

Jamie Fiske's father successfully pleaded her need for a transplantable

organ (and financial assistance) before the entire country, leading to a

successful transplant at the University of Minnesota in November 1982.
As a direct result of Jamie's case and the publicity it attracted, several
things happened back home in Massachusetts. Several hospitals in Boston,
all of them nationally prominent research and tertiary care centers, began

expressing an interest in undertaking liver transplants. Other candidates

for transplant surgery began appearing and pressing for financial support

for the expensive lifesaving therapy. Such developments immediately

focused attention and pressure on state government, because Massachu-

setts hospitals were not free to offer the service without a "determination

of need" (DON) by state health planners^ and because the state Medicaid
program was one of the payers being asked to cover the cost. In addition,

although MBCBS were private entities, they were finding it difficult both
on medical grounds and as a public relations matter to insist that liver

transplantation was still "experimental" and therefore not covered by

their insurance contracts. MBCBS were hopeful that the state would

''See generally Market Reforms in Health Care (J. Meyer ed. 1983); Havighurst,
The Changing Locus of Decisionmaking in the Health Care Sector, 11 J. Health Pol,

Pol'y & h. 691 (1986).
Tor other studies providing insight on technology assessment, rationing, and tragic

choices in different health care settings, see generally H. Aaron & W. Schwartz, The
Painful Prescription (1984) (describing the rationing of health care in the United Kingdom);

Institute of Medicine, National Academy of Sciences, Assessing Medical Technol-

ogies (1985); Minnesota Coalition on Health Care Costs, The Price of Life: Ethics

and Economics (Dec. 1984) [hereinafter Minnesota Coalition Report]; Office of Tech-

nology Assessment, Medical Technology Under Proposals to Increase Competition

IN Health Care (1982).
^Mass. Gen. Laws Ann. ch. Ill, § 25B (West 1977).



958 INDIANA LAW REVIEW [Vol. 19:955

take the heat either for denying the service or for authorizing it and

the higher insurance premiums needed to pay for it. Under these cir-

cumstances, the Commonwealth government did the predictable thing—it
appointed a commission.'"

A. The Fineberg Task Force and Report

The Liver Transplantation Task Force (LTTF), which was created

in December 1982, was charged by the Commissioner of Public Health

with the task of discussing several issues, including the question, "Should

this type of program and procedures be encouraged or permitted?""

Notably, this charge directly raised the fundamental question of whether

the state should allow livers to be transplanted at all. It envisioned a

range of possible postures for the state, from prohibition to neutrality

to active encouragement. Although outright suppression of either research

on a new technology or use of a technology once developed would, in

practice, raise serious political and legal questions, the LTTF was never-
theless asked to recommend what state policy ought to be.

The LTTF's report, known as the Fineberg Report, ^^ was issued in
May 1983. It described liver transplantation as

a technically feasible, extreme and expensive procedure, de-

monstrably capable of extending the lives of some patients near

death, and with substantial uncertainties about optimal selection

of patients, appropriate criteria for excluding other patients,

optimal matching of donor organs and recipients, effectiveness

under conditions of more widespread use, and the extent of

benefits and costs. '^

The report recommended that liver transplants in Massachusetts be Hmited

to one adult and one pediatric program with extensive data to be gathered

from these programs in order to clarify the numerous "uncertainties"

it had identified.'"^ The LTTF viewed both this data gathering and
systematic evaluation of the procedure as vitally important.

'"This commission was the Liver Transplantation Task Force (LTTF), which was

created in December 1982.

"Letter from Alfred L. Frechette, Commissioner of Public Health, Commonwealth

of Massachusetts, to Harvey Fineberg, Harvard School of Public Health (Dec. 27, 1982)

reprinted in Final Report of the Task Force on Liver Transplantation in Massa-

chusetts B1-B2 (May 1983).
'TiNAL Report of the Task Force on Liver Transplantation in Massachusetts

(May 1983) [hereinafter Fineberg ReportI (known as the Fineberg Report after the chairman

of the LTTF, Harvey Fineberg of the Harvard School of Public Health).

'Ud. at 34.

'"Id. at 36, 40-41. The report also recommended that liver transplantation be initiated

under a special one-year DON exemption, so that the data gathered by the new programs
could be evaluated before a final DON determination was made. Id. at 39-40. In a



1986] LIVER TRANSPLANTATION 959

In addition, the Fineberg Report provided extensive cost estimates

on liver transplantation, derived largely from data supplied by MBCBS.*^
It identified eleven cost components, ranging from preoperative expenses,
surgery, and follow-up to the costs of complications, including
rehospitalization and additional transplants.^^ It concluded by estimating

that the average cost per Massachusetts patient surviving one year after

the transplant would be $238,800. '^ The report candidly acknowledged
that some of its assumptions may have reduced the reliability of this
estimate, noting that it took hospital charges to reflect true resource costs

and ignored both indirect economic effects and "potential savings at-

tributable to averted medical expenses" incurred in caring for a dying

patient.'* The report's completeness and candor on these points were un-
precedented; they serve to highlight the shortcomings of other prominent

studies and the great need for better data gathering.'^

The LTTF's average total cost figure obscures the possibility that
the marginal or incremental cost of a transplant may be considerably
less. Based on the observation that transplantation could be undertaken

in Massachusetts hospitals without adding equipment or personnel, the

LTTF concluded that hospitals undertaking transplantation should be
required to do so within their respective current cost ceilings under

Massachusetts' system for regulating hospital revenues.^^ Under this rec-

ommendation, a hospital could receive no additional funds by virtue of

adding a liver transplantation program and would thus have to finance

its involvement from any surpluses it might earn or by economizing on

(or terminating) the provision of other services. It appears that the LTTF
judged liver transplantation to have so little proven value to date that

new public or private outlays for it were not warranted. A payment
restriction was one of several methods by which the LTTF hoped to
achieve a "controlled dissemination of liver transplantation in Massa-

chusetts" until more data on its efficacy, cost, and desirability were

collected. ^'

Although this decisive call for caution seemed to stem from strong

reservations about the value of the new technology, the Fineberg Report

stopped short of addressing the most fundamental question raised in its

charge. Admitting great discomfort in addressing the question of whether

liver transplantation should take place at all, the LTTF passed the buck.

thoughtful discussion estabUshing the need for this data gathering, the report described

liver transplantation as being somewhere "on the continuum between 'experimental' and

'established.' " Id. at 8.

''Id. at 25.

'"•Id. at 27.

''Id.

''Id. at 29.

''Id. at 30.

^°Id. at 39-40.

^'Id. at 35.



960 INDIANA LA W REVIEW [Vol. 19:955

Declaring itself "not legitimately constituted to render these views on

behalf of society, "^^ the LTTF asked the Commissioner of Public Health
to "appoint a broadly representative advisory body to consider the

difficult value judgments about whether society can and should support

liver transplantation and to what degree. "^^ Hidden in this response, it

should be noted, is an affirmation of the assumption that a single choice

for "society" as a whole is necessary and appropriate and that this

choice should be made by a committee in the first instance and ultimately
by political processes. By recasting the question to focus on whether
society should "support" transplantation, the LTTF seemed to eliminate
the possibility that transplantation would be expressly forbidden. It is
also possible, however, that the LTTF simply recognized that the reg-
ulatory blanket covering Massachusetts hospitals was so stifling that a

decision not to "support" transplantation was tantamount to prohibiting

it.

B. The Regulatory Setting

The specific occasion for creating the LTTF was an application by
New England Deaconness Hospital to the Department of Public Health
for an exemption from state DON requirements that would allow a small
number of liver transplants in 1983.^^ On further inquiry, the Department
found that the Massachusetts General Hospital, Children's Hospital, and

the New England Medical Center were also prepared to perform liver
transplants.^^ It was hardly surprising that Boston's internationally prom-

inent research hospitals were eager to perform liver transplants after the

publicity given to Jamie Fiske's ordeal.

Like those of other states, Massachusetts' certificate-of-need program

(known as DON) makes capital expenditures and substantial changes of
service subject to approval by state authorities.^^ Such regulatory pro-

grams, the adoption of which was at one time required by federal law,^^

were established in an effort to curb the proliferation and expansion of

health care facilities so that growth would correspond to officially pro-

^^Id. at 31. The LTTF's reservations about its competency were based on the fact

that it was composed predominantly of scientists.

^^Id. at 42.

^See Letter, supra note 11. Several interviews confirmed the identity of the institution

in question.

^'These four hospitals supplied the LTTF with much of its information about the
feasibility of liver transplantation in Massachusetts. See Fineberg Report, supra note 12,

at app. D.

^^Mass. Gen, Laws Ann. ch. Ill, § 25B (West 1977).
^The Health Planning and Resources Development Act of 1974, Pub. L. No. 93-

641, 93 Stat. 606 (1974) (codified in scattered sections of 42 U.S.C), made the availability

of certain federal funds conditional on the enactment of a certificate-of-need program



1986] LIVER TRANSPLANTATION 961

jected needs.^^ The Massachusetts DON statute and regulations give
especially broad authority to the Department of Public Health to de-
termine whether a '^substantial change in services" is needed,^^ and it

was apparently conceded that a hver transplantation program needed

state approval under this provision. The immediate reason for commis-
sioning the Fineberg Report was to assist the Department in the DON
process. ^^ Without affirmative action by the Commonwealth, Boston's
research hospitals would be barred from performing liver transplantation.

For interested hospitals, getting a DON was only the first regulatory
hurdle. Massachusetts places a ceiling on hospital expenditures through

its "all-payer" Maximum Allowable Cost (MAC) system.^' Under this
system of revenue limits, each acute care hospital's annual operating

budget ceiling is determined in advance by the state, and the hospital

is then permitted to collect revenues necessary to cover its anticipated

needs from Medicare, Blue Cross, and private insurers, roughly in pro-

portion to the number of beneficiaries treated.^^ Instituted in 1982, the
MAC program assures each hospital prospectively that it will receive
payments reflecting its actual 1981 costs plus adjustments for inflation,

exceptions, and certain other factors." The provision for exceptions

permits a hospital to seek additional revenues to cover the anticipated

costs of approved new services, such as liver transplants, and capital

and operating expenses associated with other DON's.^'*

Naturally, any hospital receiving a DON to begin performing hver
transplants would also wish to receive payment for them under a MAC
exception. Under the Fineberg Report's recommendation, however, the

meeting certain standards. The federal compulsion has recently been relaxed. See Dere-

gulation Is Growing Trend for State CON Programs, Alpha Centerpiece, Feb. 1986, at
1. Pending legislation would make state participation voluntary. See Health Planning Bill

Passed, 44 Cong. Q. Weekly Rep. 268 (1986).
^«On the policy underlying certificate-of-need laws, see generally C. Havighurst,

Deregulating the Health Care Industry: Planning for Competition 26-30, 54-63

(1982); Bovbjerg, Problems and Prospects for Health Planning: The Importance of In-

centives, Standards, and Procedures in Certificate of Need, 1978 Utah L. Rev. 83, 84-

97; Havighurst, Regulation of Health Facilities and Services by "Certificate of Need,''

59 Va. L. Rev. 1143, 1148-69 (1973).

^^Mass. Gen. Laws Ann. ch. Ill, § 25B (West 1977); Mass. Regs. Code 105, §

100.020 (1977).

^"Fineberg Report, supra note 12, at app. B.

"The MAC system was put into place by chapter 372 of the Massachusetts Acts of
1982. See Mass. Gen. Laws Ann. ch. 6A (West Supp. 1985). It established a prospective

payment system for Medicaid and private insurers, modeling the approach after a Blue

Cross hospital payment contract already in use. A federal waiver made the state's payment
system binding on the Medicare program. Id.

'^See Mass. Gen. Laws Ann. ch. 6A, §§ 50-56 (West Supp. 1985).

''Id.



962 INDIANA LA W REVIEW [Vol. 19:955

exception would not be granted and the hospital would have to finance

the service out of savings elsewhere. Under these circumstances, a trans-
plant candidate with an insurer willing to pay for the procedure might

not find a Massachusetts hospital willing to provide it, because any

hospital revenue from treating that patient would have to be offset

by reduced revenue from treating others.^^ On the other hand, a MAC
exception would allow the hospital to cover the costs of transplants by

cost shifting, increasing its charges to the various payers in order to

pay for transplants needed by patients lacking adequate insurance. ^^

Under these regulatory circumstances, the willingness or unwillingness

of payers to pay for, or of patients to buy coverage for, such procedures

would have little or no effect on whether transplants would be undertaken.

This decision was essentially the state's, and if the state decided to

authorize the service, the public would pay for it one way or another.
But this payment would not necessarily be through the usual method

of openly levying taxes and explicitly appropriating funds for worthy

pubhc projects. The Massachusetts philosophy, with which no one seems

to have quarreled throughout this episode, is apparently that the state

alone, through the DON-MAC process, should finally dictate such mat-
ters. The state's potential role in frustrating transactions between a willing

buyer and a willing seller was not commented upon. As will be seen,

the state was comfortable with—though perhaps not entirely comfortable
in—its role as giver or withholder of lifesaving medical treatment.

C The Political Scene
It is a widely noted fact of our political life that when an individual

human life is placed in visible, media-covered jeopardy, a tug on the
public heart strings loosens governmental purse strings, causing expend-

itures to save that "identified life" which far exceed what government

is wilhng to spend to save an otherwise comparable "statistical life."^^

This phenomenon of our media-driven democracy can be viewed in
contrasting ways. It is either, on the one hand, an inexcusable pandering

to public passions by public officials freely using pubhc funds to establish

that they are compassionate and deserve re-election or, on the other

"Freezing the resources available to an institution places responsibility for allocating

those resources on the institution and its physicians. Decisions may not reflect the public's
priorities because internal institutional politics allow economic interests and professional

values to enter the picture. See Harris, Regulation and Internal Controls in Hospitals, 55

Bull. N.Y. Acad. Med. 88 (1979).
^^The MAC system effectively breaks most of the links between the private insurance

coverage that individuals buy and the care they receive. Hospitals are free to provide any

of the myriad of services authorized by their DON and to tax the cost proportionately
to all payers, up to the MAC limit. See supra note 35.

"See supra notes 2, 4.



1986] LIVER TRANSPLANTATION 963

hand, a healthy and reassuring affirmation that the community prizes

each individual and is not coldly calculating when human life is at stake.
Although such seemingly inefficient expenditures may be defensible be-
cause they give the community a chance to feel good about itself, it is

also possible that they cultivate false impressions and divert attention

and resources away from unfulfilled obligations.

Jamie Fiske's story had poignant consequences nationwide and il-

lustrated the dilemmas that government faces in allocating public re-

sources to health care in a political environment that demands concern

for a handful of identified lives. Following Jamie's transplant, public

and private financing mechanisms across the country faced strong public

pressure to cover the costs of the procedure for other individual victims,

frequently children. ^^ The pressure was particularly acute for state Med-

icaid programs; a number of governors and legislatures responded by

issuing ad hoc directives to finance highly pubHcized cases with state

funds. In Missouri, for example, the legislature specifically authorized

an exceptional payment on behalf of a 16-year-old girl, only 'to reverse

itself the following week when two things happened: additional candidates
appeared, demonstrating that one costly symboHc act would not be
enough to satisfy the media, and perhaps consequentially, such private

legislation was found to violate the state constitution.^^

Nowhere was the political pressure on a Medicaid program greater

than in Massachusetts—the home of Jamie Fiske, as well as a major center
for biomedical research and a state that had gone very far in accept-

ing pohtical responsibility for the operation of the health care enterprise.

Massachusetts Medicaid declared liver transplants reimburseable for eligi-

ble persons in the summer of 1983. From then until January
1984, Massachusetts was in the anomalous position of guaranteeing to

the very poor an extremely costly medical procedure that was not available

to middle-class MBCBS subscribers. Thus, taxpayers were forced to buy
for others transplants which they had not yet chosen to purchase for

themselves through insurance. Although MBCBS was also under pressure,
it was able as a private entity to hold out longer. This experience seems

to confirm that elected officials and programs accountable to them—even
more than private nonprofit organizations that strive to be perceived as
benign dispensers of good things—do indeed seize opportunities to
demonstrate their compassion by spending scarce public funds irra-

tionally.^o

^^See, e.g., Friedman & Richards, Life and Death in a Policy Vacuum, Hosps., May
16, 1984, at 79; Wessell, Medical Quandary: Transplants Increase, and So Do Disputes
Over Who Pays Bills, Wall St. J., Apr. 12, 1984, at 1, col. 1; Rust, Transplant Successes
Stir Debate on Coverage, Am. Med. News, Oct. 21, 1983, at 1.

^^Friedman & Richards, supra note 38, at 80.
''°One report asserts that this pattern is not universal, and suggests that public insurers

are on the whole reluctant to cover expensive new technologies. Evans, Transplant Coverage:



964 INDIANA LA W REVIEW [Vol. 19:955

Undoubtedly, Medicaid dollars allocated to transplants could have

been put to better use in saving statistical lives or purchasing *' quality-

adjusted Hfe years. "^^ In Cahfornia, the point was illustrated most

tellingly: the legislative decision to pay for liver transplantation came

at the same time that the legislature decided to terminate state support

for its medically indigent population, those who cannot afford insurance
for their own health care but are not deemed poor enough to warrant
public assistance/^ The eagerness of public officials to gain credit for
their humanitarianism, especially when someone else's money was at
stake, was revealed even in the White House, which made a number
of dramatic appeals to state governments and private payers on behalf

of particular individuals.^^ These scenes of elected representatives crowd-

ing onto the stage of this morality play left to the audience's imagination

the effects of government policies on those who lacked the limehght.'^'^

D. The Private Sector: MBCBS

Just as the public sector felt pressure to finance transplants for

identified patients, private insurers all over the country, particularly Blue

Cross plans, found themselves making difficult case-by-case decisions in

full view of the media. MBCBS's particular problem in this regard was

A Public Policy Dilemma, Bus. & Health, Apr. 1986, at 5. As the Missouri experience
{see supra text accompanying note 39) suggests, government's largess will stop when the

costs to policymakers exceed the political benefits of being associated with a lifesaving

effort.

"'Expanding Medicaid ehgibility and coverage of preventive services would be obvious

strategies. See, e.g.. President's- Commission for the Study of Ethical Problems in

Medicine and Biomedical and Behavioral Research, Securing Access to Health

Care: The Ethical Implications of Differences in the Availability of Heath Services,
19-20, 59-65, 79-90 (1983) thereinafter President's Commission Report] (discussing what

ought to be encompassed by "an adequate level of health care" available to all citizens

and highlighting current problems in health services delivery). On the use of "quality-
adjusted life years" as a way of assigning priorities to public investments in health and

safety, see, e.g., Zeckhauser & Shepard, Where Now for Saving Lives?, Law & Contemp.
Probs., Autumn 1976, at 5, 11-15.

'^Wessell, supra note 38.

"^M; see also Iglehart, Transplantation: The Problem of Limited Resources, 309 N.

Eng. J. Med. 123, 126-27 (1983); Meyer, Transplant Eunding: A Controversial New Area,
Washington Post, Sept. 12, 1984, at C3, col. 1.

'^In yet another demonstration of elected officials' felt need to "do something" to

respond to media attention to the transplantation issue and to get media attention for

themselves, the Massachusetts legislature, in late 1983, added a check-off box to the state's

income tax returns so that taxpayers could direct that a portion of any tax refund go

into an organ transplantation fund. In 1985, when the checkoff first appeared on tax

forms, some 37,000 taxpayers contributed approximately $187,000 to the fund, which will

probably be used primarily to help pay for cyclosporin and other follow-up care for

transplant recipients. Interview with Joan Gorga, Dept. of Pubhc Health, Boston (July

1985).



1986] LIVER TRANSPLANTATION 965

not solved by the continued failure of Massachusetts regulators to au-

thorize transplants, because insureds could still request treatment out of

state. For this reason, MBCBS did not oppose the effort by local hospitals
to get DON approval for transplantation. Indeed, MBCBS took the view
that if they were going to have to pay for transplants eventually, it

would be better to pay for in-state procedures. "^^ They anticipated that

the MAC system would control the incremental cost and that the DON
system would limit the number of facilities. "^^ Together these regulatory
programs might restrict the capacity and the incentives of the system

to perform more than a few procedures.

For the time being, however, MBCBS were reluctant to accept
responsibility for paying for liver transplants anywhere. According to

MBCBS officials, public pressure to pay for liver transplants in 1982
and 1983 was enormous. Although they did not wish to be perceived

as denying potentially beneficial care, however costly, to any insured,'*^

the plans were also hesitant to waive the contractual limitation under

which they were obUgated to pay only for generally accepted medical

procedures. One reason for this attitude was recognition of the financial
cost which transplants would impose on them immediately and which

would have to be built into future premiums charged to customers already

grumbling about high insurance costs. "^^

Another explanation, however, had to do with MBCBS's view of
their precise role in the Massachusetts system. MBCBS complained that
they were not getting clear signals from their usual sources. On the one
hand, there were the pressures from the media and the example set by

the Medicaid program. On the other hand, the health care system's
central decisionmakers were not speaking with one authoritative voice. "^^

For example, in 1982 and 1983, although liver transplants were gaining

favor, MBCBS's medical advisors could not reasonably declare liver
transplantation to be accepted therapy covered by their policies because

any reasonable chance of a procedure's success depended upon use of

a drug, cyclosporin A, which the U.S. Food and Drug Administration
(FDA) considered experimental until September 1983.^°

Apparently wedded to a vision of themselves as mere financing

intermediaries bound to give effect to any doctor's prescription made

"•'Interviews with Douglas Dickson, Ombudsman, and James Young, M.D., Medical
Director, Massachusetts Blue Cross (July 15, 1985); see also Rust, supra note 38, at 16.

"•^Dickson and Young interviews, supra note 45.

''Id.

"•^Wessell, supra note 38.

"^Rust, supra note 38. The termination of the National Center for Health Care

Technology in a 1981 funding cut left MBCBS and other third-party payers without the
prospect of an authoritative governmental opinion on which to base their payment decisions.

'"Food & Drug Administration, U.S. Dep't of Health & Human Services, HHS
News, Pub. No. 83-19 (Sept. 2, 1983).



966 INDIANA LAW REVIEW [Vol. 19:955

according to policies centrally determined by professional or governmental

decisionmakers,^^ MBCBS preferred to rest coverage decisions on the
actions of public regulatory agencies such as the FDA. They thus resisted
any suggestion that they should embark on independent assessments of

medical treatments, either paying for something officially deemed ex-

perimental or refusing on benefit/cost grounds to pay for something

that enjoyed professional and governmental approval. As nonprofit cor-
porations together constituting the dominant health insurer in Massa-

chusetts, MBCBS were dependent on the pubhc's perception of them as
a benign source of financial assistance in meeting officially recognized

medical needs. The Blues were beginning, however, to see the high cost

and difficulties of marketing themselves in this way.

In mid- 1983, MBCBS's arguments for not paying for liver transplants
began to collapse. In May, the Fineberg Report called liver transplantation

"cHnically justifiable,"" and in June, a National Institutes of Health

consensus conference stated that "liver transplantation offers an alter-

native therapeutic approach which may prolong Ufe in some patients.""
When these lukewarm semi-official endorsements of liver transplantation
were combined with media attention to the plight of transplant candidates

and the relative willingness of other insurers and Medicaid to pay for

liver transplants, they seemed to leave MBCBS with no choice. MBCBS
had to discover some way around their own guidelines or be perceived
as denying treatment solely because of the procedure's high cost. The
solution that MBCBS hit upon was to offer their subscribers a Transplant
Insurance Program, called 'TIP."^"* By this means, they hoped to bridge
the gap until the FDA would approve cyclosporin A, which would allow
MBCBS, consistent with their principles, to build transplants into their
basic coverage and rates.

TIP was a separate, optional rider offered to all employment groups

or ''accounts" at a cost of 55 cents per individual or $2 per family per

month. TIP offered full coverage for heart, heart-lung, and Hver trans-
plants, beginning five days before the procedure and continuing for

twelve months thereafter.^^ If an account chose to purchase TIP, it would

be mandatory rather than optional for the account's insureds or "mem-

'•For complex reasons, private health insurers have long denied responsibility for

influencing providers' treatment decisions, relying instead on professional or governmental

decisionmakers to establish what services should be paid for. See Havighurst, Explaining

the Questionable Cost-Containment Record of Commercial Health Insurers, in The Po-

litical Economy of Health Care (H. Freeh ed. to be published).

"Fineberg Report, supra note 12, at 2.

"National Institutes of Health, Consensus Development Conference Summary,

Liver Transplantation (1983).

'^See Rust, supra note 38, at 16-17.

"Blue Cross & Blue Shield of Mass., "Special Announcement: New Transplant
Insurance Plan" (Sept. 1983) [hereinafter Special Announcement] (mailing to accounts).



1986] LIVER TRANSPLANTATION 967

bers." Before offering TIP, Blue Cross conducted several opinion surveys

to determine whether the public pressure they were feeling would actually

translate into individual choices to purchase transplant insurance. These

surveys indicated considerable desire for such insurance on the part of

surveyed individuals and families. ^^ However, the response to TIP itself

differed significantly from the response to the surveys.

TIP was offered to MBCBS accounts in September 1983. Although
John Larkin Thompson, president of Blue Shield, called TIP "the

ultimate referendum on whether or not the public wants to pay for

these operations, "^^ TIP was not offered directly to individual members

because MBCBS feared the effects of adverse selection. ^^ It was left to
employers to act for their insured employees. Conceivably, publicity

given to the transplant issue placed employers in a political position vis-

a-vis their workers that was not dissimilar to that of MBCBS and
Medicaid vis-a-vis the larger public. Not wanting to appear to economize

at the expense of employees who might need a transplant, employers
may have been more wiUing to buy TIP than the employees themselves
would have been. On the other hand, employers might be reluctant to
buy transplant coverage because its cost might be perceived as difficult

to pass on to employees.

Each account was sent a special announcement explaining TIP, which

stated, "The public has indicated its desire to have coverage for organ
transplants."^^ The announcement was clear and complete, but gave

accounts only about a month to make a decision whether to begin TIP
coverage on November 1. It left them, however, the alternative of picking
it up at their regular renewal period during the next calendar year.

The TIP "referendum" was never completed because MBCBS dis-
continued it as of February 1, 1984. Cyclosporin A had actually received
FDA approval in September 1983,6« and in January 1984, MBCBS's
medical advisory committee finally recommended that liver, heart, and

heart-lung transplants be considered medically accepted procedures. These

developments allowed transplantation coverage to be extended to all

accounts, with a premium increase roughly equal to the TIP premium.

In contrast to the results from MBCBS's preHminary surveys, TIP
did not prove especially popular during its brief marketing. By the time
it was discontinued, only 7400 of the 24,348 accounts to which it was

offered had purchased the coverage, 7100 had refused it, and the rest

^^Dickson interview, supra note 47.

"Rust, supra note 38.

^^Dickson interview, supra note 47; Interview with Dorris C. Commander, Under-
writing Manager, Blue Cross of Massachusetts (July 1985).

^^Special Announcement, supra note 55.

^FooD & Drug Administration, U.S. Dep't of Health & Human Services, HHS
News, Pub. No. 83-19 (Sept. 2, 1983).



968 INDIANA LAW REVIEW [Vol. 19:955

—over 9800—had not responded/* Even the Massachusetts Commissioner
of Insurance, who had statutory responsibility to act as the account
decisionmaker for MBCBS's 120,000 nongroup subscribers (includ-
ing a special group of low-income individually insured), had failed to

make a decision regarding TIP before it was mooted." There are many
possible explanations for the modest response rate. Some accounts may
have intended to pick up TIP when they next renewed their coverage.
According to MBCBS, however, financial considerations probably loomed
largest in accounts' decisionmaking. In addition, some accounts, par-

ticularly large ones based in more than one state, may have preferred
to pay for transplantation in different ways so as to be able to offer

uniform coverage to employees in all states. One employer, Honeywell,
wanted the opportunity to approve the transplanting facility. ^^ MBCBS
were much more interested in seeing that someone other than themselves,
preferably the state through DON, would be responsible for approving
facilities and quality control. ^"^

At MBCBS, there was little surprise at TIP's poor showing, and
the perceived reason for it was TIP's cost. Yet no thought was ever

given to making a point of the public's apparent indifference to transplant

insurance once an actuarially fair price tag was attached. Perhaps MBCBS
saw no difference from a public relations standpoint between denying

transplants on the ground that the procedure was experimental and telling

an individual that because his employer had rejected the TIP offer, he
could not have a lifesaving procedure that the plan was providing for

others.

In any case, MBCBS made no real effort to examine and ponder
the significance of the TIP experiment. Indeed, they were quite happy
to extend their regular coverage to handle transplants. TIP had been
complicated and cumbersom.e. Because it constituted a separate insurance

program with a separate pool of funds, TIP required a lot of tracking

to separate costs attributable to the transplant from ordinary medical

costs. This tracking difficulty led, in part, to the *'five-days-before,

twelve-months-after" policy under which all medical costs incurred within

that period were deemed attributable to the transplant. Both this policy

and, later, the demise of TIP sacrificed Blue Cross's ability to extract
easily any data on transplants. All transplant data now go into the files
with every other medical procedure and, as such, are entered per hos-

pitalization rather than per individual insured; cumulative information

^'Friedman & Richards, supra note 38, at 79.
*^Dickson interview, supra note 47,

"On Honeywell's transplant coverage, see Minnesota Coalition Report, supra note
9, at 48; Utah Health Cost Management Foundation, Honeywell's Transplant Coverage
Stresses Cost Containment, Health Cost Management Nev^s, May 1985, at 3.

**Young interview, supra note 47.



1986] LIVER TRANSPLANTATION 969

on rehospitalization, outpatient care costs, and related other costs are

difficult to retrieve.
^^

Although apparently efficient, blending transplant coverage into a

system geared only to paying claims and not to evaluating the costs and

benefits of particular procedures may be a false economy. It is, however,
a predictable feature of a health care system in which private insurers

such as MBCBS perceive themselves merely as executing orders from
the top. MBCBS throughout this episode seemed troubled only that they
were unable to interpret the conflicting signals they received. Once
transplants crossed the threshold of acceptability at the FDA, the NIH,
the LTTF, and the DON agency, the Blues could go happily back to
their usual business of forcing consumers to buy things that they have

had no real opportunity to refuse.

E. Enter the Task Force on Organ Transplantation

The foregoing events left Massachusetts about to plunge into trans-

plantation. Yet a number of problems still existed; these resulted primarily

from the way in which the DON and MAC programs articulated. Simply
granting a DON without increasing the MAC allowance, as recommended
by the Fineberg Report, would give rise to the danger that hospitals,

instead of cutting back on indisputable waste to finance transplants,

would terminate other, more essential services, creating problems through-
out the system. For example, a hospital closing a maternity service and

using its MAC allowance to start transplants would leave its obstetrical
patients to burden other hospitals, which could not be assured of increased

MAC allowances to provide for these patients. In this way, the threat
of sudden introduction of a costly new therapy revealed major flaws in

the state's basic faith that hospitals' revenue needs could be predicted

by a formula without creating major anomalies, windfalls, and unfair-

nesses.

The liver transplant challenge also revealed faults in the regulatory

system. Simply granting a MAC exception on the theory that transplants
had now become just another accepted therapy would mean losing the
opportunity to ensure that the procedure was being used appropriately

and that information on its safety, efficacy, and cost would be available

for subsequent appraisal. The six-figure price tag for each procedure
made it clear to everyone that letting the system treat liver transplants
as it treats virtually everything else had significant fiscal impUcations.

It of course occurred to no one to question publicly whether letting the

system freely prescribe high volumes of other treatments with five-, four-,

three-, and even two-figure price tags might also be socially inappropriate

or wasteful. Thus, the basic belief that doctors and hopsital employ

"Commander interview, supra note 58.



970 INDIANA LAW REVIEW [Vol. 19:955

their limited resources rationally and in accordance with public objectives,

a faith on which the entire regulatory system was built, was not chal-
lenged.^ Instead, it was concluded only that the transplant issue, because

it had met the public eye and could not politically be ignored, had to
be addressed with greater particularity. Why the system could not be
trusted here, when it was trusted to make virtually all other choices,
was never made clear.

The need to control transplants specially loomed so large that another

commission, the Task Force on Organ Transplantation (OTTF), was

appointed. This new task force had a broader scope than the earlier
one. It was charged with making policy for heart and heart-lung trans-

plants as well as hvers.^^ It was also asked to provide a social evaluation,

not just a technical report. As the next act of our morality play will
show, the OTTF was equal to the challenge to pronounce on the largest
questions of public policy in health care.

II. Act Two

The OTTF was convened in October 1983, by the Commissioner of
Public Health under the chairmanship of George Annas of the Boston

University School of Public Health. It was charged "with the development

of standards and processes for evaluating the use of organ transplan-

tation."^^ The question expressly left unanswered by the Fineberg Report

—whether transplantation should "be encouraged or [even] permitted"

—

was not even raised: "The work of the Task Force can be categorized
in terms of the when, who, what and how of organ transplants."^^
Although the OTTF did hear testimony on the issue during its meetings, ^^

the objections raised concerning whether to proceed with transplantation

at all did not detain OTTF members long.^^ The political climate obviously
precluded a firm stance against the new technology.

^See supra notes 35 & 36.
^The OTTF's report was unclear why transplantation of bone marrow, kidneys, and

other organs was not treated as well, but in stating that liver and heart transplants were

"the [only] ones currently clamoring for wider introduction," the OTTF confirmed that
its inquiry was shaped by politics, not by a desire to rationalize the provision of all

expensive medical care. Report of the Massachusetts Task Force on Organ Trans-

plantation (1984) [hereinafter OTTF Report].
''Id. at 3, 119 (app. A).

'''Id. at 119 (app. A).

™Dr. Alan Sager of the Boston University School of Public Health argued before

the OTTF that "all citizens of the CommonweaUh should have equal access to all effective
care now routinely available before the range of therapies is expanded." Testimony of

Alan Sager (Oct. 31, 1983).

^'Interview with George Annas, OTTF chairman (July 1985). The recent report of
the National Task Force on Organ Transplantation, created by the National Organ Transplan-

tation Act, Pub. L. No. 98-507, 98 Stat. 2339 (Oct. 19, 1984), does not address this issue,

simply assuming that transplantation of all kinds should be covered by public and private



1986] LIVER TRANSPLANTATION 971

The OTTF's report, the recommendations of which were unanimous,
was released in October 1984, although preliminary recommendations

were released in January.

A. The OTTF's Recommendations

The OTTF's first recommendation advocates the introduction of liver
and heart transplantation "in a controlled, phased manner that provides

the opportunity for effective evaluation and review of its clinical, social,

and economic aspects by a publicly-accountable body after an initial

phase of 2-3 years of limited transplantation. "^^ This position, which

sounds and may well have been, under the circumstances, eminently
reasonable, was almost certainly inevitable, given the political impossi-

bility of saying "no" to transplants. The OTTF, hke the LTTF before
it,^^ was clearly seeking a middle ground that would accommodate the
pressure to allow transplants but not open the door to unlimited spending

on the new technology. The recommendation of a later evaluation was
necessary to preserve the appearance that the procedure was still in an

investigatory or probationary stage. As the Fineberg Report had noted,
however, it is hard to stop a program once it has begun. ^"^

The OTTF conveyed the impression that its unanimous conclusions
were reached by rational planning, deep thinking by academic experts,

and a collective social conscience. There is also the possibility, however,

that it was simply compromising conflicting views, accommodating po-

litical pressures, and rationalizing the result. Although the charge that

the OTTF's actions were in fact "political" might be taken as a criticism,
many in Massachusetts would no doubt say that because the conclusions
flowed from an open process and a representative body, the legitimacy

and soundness of the result and of the values promoted are unchal-

lengeable. Whether such faith in the politics of interest-group liberalism

is warranted should be regarded as an open question, however, ^^ and

indeed it is one of the central questions inspiring this appraisal.

The OTTF's second recommendation elaborates on the first by em-
phasizing that transplantation should not be made "generally available"
until after the recommended review by a "publicly-accountable body,"

financing programs. U.S. Dep't of Health & Human Services, Public Health Service,
Health Resources & Services Admin., Organ Transplantation: Issues and Recommen-
dations (April 1986). The Minnesota Coalition Report, noting the trend to coverage, recom-

mended that it "should remain optional for group accounts;" no opinion was expressed

on public plans' policies. Minnesota Coalition Report, supra note 8, at 47-48.

720TXF Report, supra note 67, at 10.

^^See supra text accompanying notes 14 & 21.
^'*Fineberg Report supra note 12, at 36.

^'C/. Havighurst, More on Regulation: A Reply to Stephen Weiner, 4 Am. J.L. &
Med. 243, 247-49 (1980) (disputing claims by a Massachusetts advocate of regulation that

politicized regulation is legitimized by the democratic process and should be immune to

general criticism).



972 INDIANA LAW REVIEW [Vol. 19:955

which should not be limited to assessing the technology's status as

"experimental" or otherwise 7^ The Report also makes clear that in the

task force's view, availability is synonymous with general reimbursea-

bility.^^ It opines, too, that general availability should not result only

through the state Medicaid program's becoming "the de facto insurer

for all such procedures,"''^ by virtue of inadequate private financing and

the impoverishment of transplant candidates. To prevent this result and
to "ensure fairness in the distribution of burdens regarding reimburse-

ment," the Report suggests that coverage be prescribed by a "joint

committee" of government representatives and private insurers.''^ Such

a body might violate the federal antitrust laws, however, unless its

decisions were embodied in official government action. ^°

Recommendations (3) and (4) by the OTTF introduce the issue of
costs. During the evaluation period, authority to do transplants would

be granted only to those hospitals that agree to perform them within

the MAC, with an exception for each procedure that amounts to the
costs of organ procurement and cyclosporin.^' This attempt to force

hospitals to finance a portion of the cost of transplant programs by

economizing was apparently the only way, even in this heavily regulated

state, in which the volume and hence the overall cost of transplants

could be kept down. To protect against the concomitant risk that trans-
plantation would displace other vital services, recommendation (3) sug-

gests that need determinations in the DON program be made only upon
a showing that the cost of adding transplantation can be borne without

sacrificing more desirable services. "As a principle, the Task Force
believes that if it turns out that liver and heart transplantations take

resources away from higher priority health care services, and decrease

their accessibility to the public, then transplantation procedures should

not be performed. "^^

In a section antecedent to its specific recommendations, the OTTF
gives its final word on how to prevent a modest amount of costly
transplantation from diverting resources from essential services:

760TTF Report, supra note 67, at 11.

''Id. at 11-12.

""Id.

«°In general, the Sherman Act, 15 U.S.C. § 1 (1983), prohibits collective actions of

the kind that are taken for granted in centrally governed health care systems as a useful

adjunct or alternative to direct government control. Although the McCarran-Ferguson Act,

15 U.S.C. § 1001 (1983), provides a partial exemption from the Sherman Act for "the

business of insurance," an agreement not to sell a certain type of coverage has been held

to fall within an exception to this exemption. St. Paul Fire & Marine Ins. Co. v. Barry,
438 U.S. 531 (1978).

siQTTF Report, supra note 67, at 14. Such costs would amount to about $9000

per heart transplant and $44,000 per liver. Id.

'Ud. at 13.



1986] LIVER TRANSPLANTATION 973

[T]he Task Force believes that these procedures should be per-

formed on [all] those who are likely to benefit from them, so
long as the total cost is controlled, and resources are not diverted

from higher priority medical procedures to liver and heart trans-

plantation. The question of what a "higher priority" procedure
is will be based on the total number of individuals affected,
and the importance to their lives of the intervention. For example,

it may be appropriate to shut down an underutilized maternity
program to do organ transplants. The burden of demonstrating
that such a tradeoff is appropriate, however, should be on the
hospital proposing it. Accordingly, in the [DON] process, all
currently available health care services should be presumed to

be higher priority than transplantation. The applicant should
have the burden of demonstrating that transplantation has a

higher priority than any other currently available health care

service from which organ transplantation diverts funds and/or

support systems. ^^

Such an allocation of the burden of proof would apparently require a

hospital to prove its own past inefficiency and waste of public resources
in order to quahfy for the establishment of a transplant program; a

well-run hospital doing only things highly beneficial to patients need not

apply. Such paradoxes are common under regulation. Perhaps the crown-
ing irony, which the task force itself notes in its chapter on costs, ^'^ is

that transplantation can be contemplated in Massachusetts only because

much of its high cost can be paid out of waste in the system—the very
thing that regulation was supposed to prevent. The presumption that the

OTTF created against the displacement of existing services by transplants
can hardly be taken, in context, as an expression of faith that regulation

has in fact achieved true efficiency.

Recommendation (5) addresses patient selection criteria and would

require them to be "public, fair, and equitable" and based initially on

medical suitability criteria and secondarily on the principle of first-come,

first-served, in the event demand exceeds the supply of organs. ^^ For
Massachusetts residents, the ability to pay should not be a factor, nor

should social class or family support. ^^ The report suggests an "appeal

mechanism" to ensure fairness, thereby conjuring up a vision of two law-

yers advocating their dying cUents' competing claims to a single liver before

a neutral decisionmaker. This is a particularly striking example of how
far the OTTF would go to ensure that the state appear legalistically fair

"M at 9, 10.
^'Id. at 60.

^'Id. at 16-17.

'^Id.



974 INDIANA LAW REVIEW [Vol. 19:955

in dispensing life and death. ^^ With almost equal plausibility, the report

could have required that patient selection reflect *' affirmative action"

aimed at redressing past societal injustices toward certain groups.

Finally, recommendation (6) introduces the idea that heart and liver

transplants in the Commonwealth should be undertaken by hospitals
belonging to a consortium organized to share data, experience, and

resources.^^ This idea apparently did not originate with the OTTF because
it stated that there is no economic justification for beginning organ

transplantation at more than one hospital, but that if more than one

hospital is to do the procedure, there must be a truly integrated and

cooperative effort—a "worthwhile consortium."*^ The consortium con-
cept had appeared earlier in a staff recommendation by the Depart-

ment of Public Health in connection with the pending DON apph-
cation.^ In addition, the consortium idea was dictated in part by the

state's refusal to grant a MAC exception, thereby drastically limiting
the number of procedures that any one institution could afford to

perform.

Use of several institutions put the regulators on very shaky ground,

however, in light of another prime goal of regulation—ensuring the quality
of care. Because it is widely accepted that experience improves out-

comes, the Department of PubHc Health could have been criticized
if it authorized several hospitals each to perform less than the optimal

number of procedures per year. The consortium concept, if it allows

experience truly to be shared, overcomes this objection.'' Its adoption

in Massachusetts, however, appears to have been only a face-saving com-

promise, necessitated by the pohtical unpopularity of giving all the business

to one institution.'^

«Tor warnings of the consequences of excessive "due process" in dealing with

sensitive issues of this kind, see Blumstein, Constitutional Perspectives on Governmental

Decisions Affecting Human Life and Health, Law & Contemp. Probs., Autumn 1976,
at 231; Havighurst, Blumstein & Bovbjerg, supra note 4, at 155-57. For scholarship
approving the legalistic approach, see J. Katz & A. Capron, Catastrophic Diseases:
Who Decides What? 239-40, 246-48 (1975); Note, Due Process in the Allocation of Scarce
Life Saving Medical Resources, 84 Yale L.J. 1734 (1975).

880TTF Report, supra note 67, at 18-20.

''Id.

^Id. at app. B.

^'A factitious consortium, however, could result in significantly poorer patient out-

comes. This reasoning was the substance of an ultimately unsuccessful challenge mounted

by the OTTF's chairman to the later-proposed Boston heart consortium. See Brief for

Appellant at 10-13, George J. Annas Ten Taxpayer Group v. Department of Public Health

(Health Facilities Appeals Board argued July 9, 1985) (Project No. 4-3306).

^^George Annas has described the consortium concept as "primarily a political issue

. . . grafted onto the original draft of the Report at the request of the Commissioner of

Public Health." Annas, Regulating Heart and Liver Transplants in Massachusetts: An
Overview of the Report of the Task Force on Organ Transplantation, 13 Law, Med. &
Health Care 4, 5 (1985).



1986] LIVER TRANSPLANTATION 975

The consortium approach solved problems for a number of the par-

ticipants in the drama. The consortium idea was initially attractive to the

Department of Public Health because it would reheve it of the politically

difficult task of choosing among powerful institutions. MBCBS, which
took credit for planting the seed of the consortium concept, were pro-

bably hoping to avoid having to select among or oversee competing

hospitals or to adopt their own patient selection criteria.'^ The four
hospitals seeking authority for liver transplants had figured out for

themselves the advantages of a united front both in seeking a DON^"* and

in avoiding possible future competition.

B. The Egalitarian Motif

Perhaps the most notable feature of the OTTF report is its strong
emphasis on equahty in the distribution of transplanted organs. Perceiving

this as the central question in the morality play, the task force declaimed:

On the issues of equity and fairness, we concur with the
conclusions of the President's Commission for the Study of

Ethical Problems in Medicine: society has an ethical obligation

to ensure equitable access to health care for all; and the cost

of achieving equitable access to health care ought to be shared

fairly. Transplantation of livers and hearts should therefore only

be permitted if access to this technology can be made independent

of the individual's ability to pay for it, and if transplantation

itself does not adversely affect the provision of other higher

priority health care services to the public.^^

A literal reading of the italicized lines indicates that the OTTF not
only endorsed the provision of transplants to those who cannot afford
them, but also took the startling position that paying patients should

be denied transplants in Massachusetts until such time as every equally

needful patient could get one. As noted earlier, it is easily within the

power of Massachusetts regulators—without actually making the perfor-
mance of this therapeutic procedure a criminal act^^—to prevent a dying
patient from purchasing a transplant with his own money from will-

^^Young interview, supra note 47.

^"Some members of the OTTF viewed the consortium concept with suspicion, con-
sidering it an end run around the DON process that permits four programs rather than
just one to perform transplants and makes it easier for the hospitals to demonstrate that

other services are not being displaced. Cf. Brief for Appellant, supra note 91, at 9-10

(makes this argument with regard to the proposed heart transplantation consortium).

^'OTTF Report, supra note 67, at 9-10 (emphasis added).

^^Outright state prohibitions of therapeutic procedures can raise a constitutional issue.

E.g., Roe V. Wade, 410 U.S. 113 (1973) (abortion); Rogers v. State Board of Medical

Examiners, 371 So. 2d 1037 (Fla. Dist. Ct. App. 1979) (chelation therapy). Regulatory

programs having comparable effects are more difficult to challenge legally but should

raise similar concerns.



976 INDIANA LA W REVIEW [Vol. 19:955

ing providers. The OTTF apparently approved the use of the state's
prohibitory powers in this way in order to coerce a pubhc desirous of
transplants for themselves into providing them for everyone. Probably,

however, the task force never expected that such extortionate use of the

state's regulatory power would actually be necessary to effectuate its poHcy
objective of equity in transplantation.^''

Although the OTTF may not have meant what it said about with-
holding transplants from paying patients as an inducement to the pro-

cedure's equitable provision, the OTTF was clearly unresponsive to the
interests of those citizens who would not require the state's assistance
to finance a transplant. Under the report's recommendations, transplants

will occur only on the state's own terms, and only a limited number
of transplants will be performed, regardless of the availability of organs.

Because recipients of these few procedures must be selected, some patients
who could and would pay their own way will not get treated.^* Yet, if
they were allowed to purchase their own treatment outside the MAC
system, there would be no diversion of resources from * 'higher priority"

health care. The OTTF appears content with a state policy that could
deny a transplant to a dying person who had made expHcit financial
provision for it. The best explanation for this complacency in the face

of a denial of lifesaving medical care may be simply that the OTTF
members had lost the capacity to conceive of the purchase of health
services as a private matter. If so, their attitude reveals a great deal

about the political culture of Massachusetts and its approach to health

care.

^^The DON for the liver transplantation consortium had already been granted in
January, and a heart transplantation DON was issued in May. Letter from Department
of Public Health to Dr. Richard Nesson, Brigham and Women's Hospital, May 16, 1984,
reprinted in OTTF Report, supra note 67, at 129.

^^The OTTF may have viewed this as only a theoretical danger. It may have expected,
for example, that all medically defensible transplants would in fact be provided. Disa-

greement is likely, however, over whether a particular procedure is desirable or "indicated,"

and it is well-documented that as a technology improves, the medical indications for its

use broaden. See Caplan, Organ Transplants: The Costs of Success, Hastings Center

Rep., Dec. 1983, at 23, 31. The OTTF also might have thought that anyone who could
afford the procedure could also afford to travel out of state to get it. This proposition

holds true, however, only if other states reject a Massachusetts-type hostility to trans-

plantation and also permit outsiders to obtain organs and if the patient's ability to pay

does not stem from the purchase of health insurance, which typically does not cover the

many additional expenses associated with out-of-state treatments. Although the OTTF may
have had reason to discount the risk that some self-supporting patients would be denied

desired transplants, its report expressly recognizes that the number of people waiting for

transplants might exceed the number of procedures that could be done. It is possible that

it is simply not fashionable in Massachusetts publicly to express concern about the "right

to health care" of anyone except the poor.



1986] LIVER TRANSPLANTATION 977

C. Denouement

The OTTF Report was received by the Pubhc Health Council of
the Department of Public Health and was the subject of a public hearing
on November 5, 1984. The council unanimously adopted the report's
recommendations as official policy and instructed the Department to use
the text of the report for guidance in DON proceedings. The current
state of organ transplantation in Massachusetts appears to have followed
the outlines of the OTTF's script. There are questions, however, whether
the spirit of its recommendations has been observed in practice. For
example, it is doubtful that hospitals seeking DONs for transplantation
have given any real guarantee that "higher priority" services will not
be affected. Also, it has been questioned whether the consortium is
really functioning as an integrated research program dedicated to col-
lecting useful data for later evaluation by a "publicly-accountable body."^^
It would appear that the drama is not yet over.*^°

"^See infra note 117. Both the OTTF and the Department of Public Health con-
templated a later evaluation of the liver transplantation program to see whether higher

priority services were being displaced and expected that the data collected would shed

light on this issue, on which the consortium would have the burden of proof. The first

annual report of the consortium, covering January 26, 1984, to January 26, 1985, was

brief, even cursory, and seems not to contain the data required by the DON, let alone
data that could prove anything about displacement. Boston Center for Liver Trans-

plantation, 1984 Annual Report (1985). Even the actual costs of transplantation per
survival year are impossible to calculate from the report. Patients' rehabilitation status is

only sketchily assessed, and no data are supplied as to the basis for rejection of candidates

or the current health status of those rejected. Id. Without comparative outcomes, it is

impossible to judge the procedure's value or the predictive effectiveness of the patient

selection criteria used. There is also no evidence that transplants have not displaced

desirable services.

Some OTTF members, including Chairman George Annas, argue that the coalition
is violating at least the spirit of its DON. Annas interview, supra note 71. The Department
of Public Health seems to feel, however, that because the data collection requirements

for livers were never very well defined, the coahtion's first report is satisfactory, Gorga

interview, supra note 44. At a recent conference, panelists discussing the Massachusetts

system—including Pubhc Health Commissioner Walker, transplant surgeon Roger Jenkins,
OTTF chairman Annas, and economist Marc Roberts—disagreed in almost every particular
regarding whether the Department and the consortium were doing what they were expected

to do. Conference on Transplantation and Artificla.l Organs: Issues Along the
Experiment-to-Therapy Spectrum (Nov. 1985). The lack of agreement on a variety of

issues suggests that the apparent consensus surrounding the OTTF Report resulted from
a failure to address practical issues and a papering over of potential problems. Indeed,

at the conference just cited, OTTF chairman Annas labeled the OTTF "a quasi-Quixotic
noble failure." Id.

'°^At present, however, the even more complicated debate over heart transplantation

in Massachusetts is apparently diverting much attention from the liver issue. Gorga interview,
supra note 44; see supra note 91. The parties to this debate are more experienced and

sophisticated than they were at the time of the liver debate. In particular, Massachusetts

expects to employ many of the recommendations developed by the Battelle Human Affairs



978 INDIANA LAW REVIEW [Vol. 19:955

III. Reviewing the Performance

Viewers of the morality play "Liver Transplantation in Massachu-

setts" must come away unsatisfied but instructed in the difficulties of
putting life-and-death choices on the poHtical stage. Perhaps more than

any other state, Massachusetts, aided and abetted by a powerful intel-

lectual community, has assumed the role of dominant decisionmaker in

health care matters. The case of liver transplantation provides a unique

test of the abihty of at least one model of a monolithic, highly regulated,

and politicized health care system to address difficult choices involving

expensive medical technology. *°^

In the Massachusetts system, it was necessary for the state to decide

publicly whether to allow liver transplantation at all, and the action of

the drama was ostensibly about the making of this choice. Politically,

however, the state probably never really had the option of rejecting

transplants once major research institutions resolved to perform them

and the media concluded that access to them was the right of every

Commonwealth citizen. As in a Greek tragedy, the outcome was fore-
ordained, and the characters were never truly free to alter the inevitable

result. It is in the nature of "tragic choices" that once they become

political, they are driven mainly by forces beyond the power of individuals

to control or escape.'^ To accept the decisions emerging from the black
box of Massachusetts state government as appropriate societal choices

is to ignore not only the previously-noted questionable features of the

political process, but also the shortcomings of regulation, some trou-

blesome ethical issues, and the possible availability of alternative deci-

sionmaking mechanisms.

A. Regulatory Inadequacies

Having approved transplants in principle, the Commonwealth of
Massachusetts and its respective task forces then had the problem of

Research Center. See R. Evans* National Heart Transplantation Study; Final Report

(1984) (prepared by the Battelle Human Affairs Research Center for Health Care Financing
Administration, DHHS, Washington, D.C.)

^°^See supra note 8. A particularly interesting point of comparison is provided by
the Minnesota Coalition Report which, as the product of a private organization, is much

less a political document than the OTTF report. Minnesota Coalition Report, supra
note 8.

'"^Keeping such issues out of the political arena is itself difficult. As a societal attempt

to resolve the tragic choice by finessing it, this strategy, like others, is apt to be unstable

precisely because it sacrifices important values, such as openness and explicitness. Professor

Calabresi predicts an inevitable and continuing oscillation among imperfect solutions as

society continually reasserts those values (equity, efficiency, freedom, etc.) that are being

neglected by whatever system of choosing is currently in place. See G. Calabresi & P.
Bobbitt, supra note 5, at 195-99. However, whether a stable system can be designed or

happened upon without explicit policy choice is an empirical question. In any case,

depoliticization would appear to be a vital first step toward possible stability.



1986] LIVER TRANSPLANTATION 979

rationing the costly procedure. However, the Massachusetts regulatory

scheme, despite its comprehensiveness and complexity, provided no public

mechanism for deciding explicitly how often and under what circum-
stances the procedure would be done. As one protection against high
costs, the task forces recommended against a complete pass-through of

expenditures for transplants, thus forcing hospitals to look elsewhere for

at least some of the necessary funds. Under the state's regulatory control

of hospital revenues, virtually the only way for a hospital to generate
such funds would be to cut back its other activities. The OTTF's response
to the danger that transplants would displace more valuable hospital

services was to instruct the DON agency to withhold approval of a
transplantation program that could not prove that only relatively wasteful

activities would be eliminated in order to accommodate it. As a regulatory

standard, this requirement was highly impractical and unrealistic, ^^^ but

it protected the task force against the criticism that it had authorized

a diversion of resources to lower-priority uses.

With all their regulatory paraphernalia, Massachusetts officials lack

the statutory powers they need to control directly the volume and cost

of transplants. As to these and all other medical procedures, the state
can only identify institutional providers of needed services and control,

in a rough way, the total resources at each institution's disposal. Because

these powers do not add up to effective control of medical technology,

the level of transplantation activity in Massachusetts remains ultimately

in the hands of prestigious doctors and hospitals, subject to certain

resource constraints. Although limiting the resources available to prov-

iders can control aggregate costs, the Massachusetts MAC controls relate
in no recognizable or rational way to the potential benefits or costs of
any particular procedure. Allocational decisions are thus left in providers'

hands. ^^"^ Once Massachusetts is satisfied that the resources used in organ

transplantation are not obtained by eliminating "higher priority" health

services currently being provided, it permits transplants to proceed without

regard to the additional possibility that those resources might have still

other, more valuable uses.
Thus, although Massachusetts has made it appear that it has exercised

statesmanlike control in this highly publicized area, it may have done
nothing more than give certain Boston hospitals the green light to
rearrange institutional priorities to facilitate new adventures on the fron-
tiers of medicine. The main constraint on these institutions is the risk

'"See supra note 99. Two critics of the OTTF's burden-of-proof recommendation
for DON proceedings have said, "[I]t is difficult to imagine a process that is more
conceptually confining, less amenable to empirical analysis, and more open to subjective

interpretation." Overcast & Evans, Technology Assessment, Public Policy and Trans-
plantation: A Restrained Appraisal of the Massachusetts Task Force Approach, 12 Law^,
Med. & Health Care 106 (1985).

^^See supra note 36.



980 INDIANA LAW REVIEW [Vol. 19:955

that their actions will offend future state officials or the '*publicly-

accountable body" that the OTTF recommended to evaluate transplan-
tation later on. The implicit threat that the state might take unspecified

action in the future puts the participating institutions on notice that

they had better be able to defend their use of resources or face unpleasant

consequences. Such is life in a centrally managed health care system,
where things fortuitously attracting public notice receive minute attention

while well enough is left alone. Politicization of transplantation achieves

control for its own sake but provides little assurance that resources will
be put to their best use. A regulatory system that purported to make
all the necessary allocational choices would be a more stifling form of
regulation than even Massachusetts would be Ukely to tolerate.

B. Questions of Values

Above all, Massachusetts strove for ethical high ground in establishing
its position on liver and heart transplants. Yet a careful reading of state

policy as reflected in the OTTF report reveals a willingness to countenance
the denial of transplants to paying patients—not out of any paternalistic
concern, but simply because some other person in comparable condition

could not afford the same treatment. Perhaps it was the prospect of

organ shortages and bidding wars that only the well-to-do could hope

to win that induced the OTTF to approve the denial of transplants to
paying patients. After all, the question of how to ration scarce medical
resources has long inspired ethicists to philosophical debate, ^"^^ and the

OTTF, chaired by a leading participant in that debate, ^^^ may have
assumed that it had been convened primarily for the purpose of pre-

scribing an ethically satisfying system for rationing scarce organs. ^^^ The

'°The relevant literature is voluminous. For general sources, each of which itself

draws on many others, see N. Daniels, Just Health Care (1985); In Search of Equity:

Health Needs and the Health Care System (R. Bayer, A. Caplan & N. Daniels eds.
1983); H. Smith & L. Churchill, Professional Ethics and Primary Care Medicine
(1986); Childress, Rationing of Medical Treatment, in 4 Encyc. of Bioethics 1414 (W.

Reich ed. 1978).

^'^See, e.g., Annas, No Cheers for Temporary Artificial Hearts, 15 Hastings Center
Rep. 27 (Oct. 1985); The Phoenix Heart: What We Have To Lose, 15 Hastings Center
Rep. 15 (June 1985); Allocation of Artificial Hearts in the Year 2002: Minerva v. National

Health Agency, 3 Am. J. Law & Med. 59 (1979).
'°'The OTTF's apparent eagerness to respond to that charge may be seen in its failure

to consider seriously the possibility of encouraging the sale of organs by families of

deceased potential donors to those awaiting transplants. OTTF Report, supra note 67,
at 37. A market for organs would ehminate shortages and the need for rationing systems
to allocate a limited supply. However, instead of seeking to break down the current

cultural taboo against the buying and selling of body parts, see the National Organ

Transplantation Act, supra note 71 (prohibiting the sale of organs in interstate commerce),

the OTTF took the easier political path. Indeed, it may have welcomed organ shortages



1986] LIVER TRANSPLANTATION 981

OTTF did not, however, expressly restrict its recommendations to sit-
uations where there were not enough organs to go around. As it appears,

the OTTF was entirely comfortable with a policy that would force self-
supporting transplant candidates to join (and perhaps die in) the state-

mandated queue even if an adequate number of organs was available.

In support of its willingness to deny transplants to paying patients,

the OTTF invoked a well-known 1983 report by the President's Com-
mission for the Study of Ethical Problems in Medicine and Biomedical

and Behavioral Research. ^°^ Although the President's Commission did

declare that society has an ethical obligation to guarantee a decent level

of health care to its neediest citizens, '^^ nowhere did it indicate that it

would be ethical to hold the wealthy and well-insured sick hostage without

treatment until society honored this obligation. Moreover, the President's

Commission clearly stated that it was not ethically necessary for all

citizens to receive the same health care.^'° Thus, it certainly laid no

foundation for the Massachusetts policy of forcing all transplant can-

didates to take their chances in a state-sponsored life-and-death lottery.

The OTTF again misrepresented the President's Commission in citing
its report as authority for guaranteeing procedures as costly as liver and

heart transplants to persons who cannot afford the insurance necessary
to purchase them.^'^ Although recognizing a public obligation to provide

a decent minimum level of health services to all, the Commission did
not fully define that level or specify what services should be included

in the guaranteed package. Moreover, there are numerous reasons why
one might conclude that procedures as costly as liver transplants ought

not to fall under society's guarantee until the nation becomes a great

deal wealthier and has met a great number of other needs, including

non-health needs, of its less advantaged citizens.''^ The OTTF seemed

as a constraint on the number of costly procedures and as an excuse for implementing

their rationing theories. See, e.g., OTTF Report, supra note 67, at 80, 83.
The shortage of organs is currently being addressed by donor education efforts,

ranging from promoting the slogan "Organ Donors Recycle Themselves" to legislation

requiring hospitals to request donations from families of potential donors.

'°^5ee supra text accompanying note 95 (citing President's Commission Report, supra

note 41).

'°^The President's Commission Report states as its first premise that "society has an

ethical obhgation to ensure equitable access to health care for all," and continues:

"Equitable access to health care requires that all citizens be able to secure an adequate

level of care without excessive burdens." President's Commission Report, supra note 41,

at 4 (emphasis added).

''"Id.

•"OTTF Report, supra note 67, at 74.

"^As the President's Commission explains:

[T]he standard of adequacy for a condition must reflect the fact that resources

used for it will not be available to respond to other conditions. Consequently,

the level of care should reflect a reasoned judgment not only about the impact



982 INDIANA LAW REVIEW [Vol. 19:955

to conclude that the mere fact that transplants may save lives is enough
to obligate society to pay'^^—despite the explicit finding that at $230,000 to
$340,000 per patient surviving one year, liver transplants were several

times more costly than the most costly of other generally accepted medical
treatments. ''"^ The OTTF thus backed itself into an ethically debatable
position. While arbitrarily treating transplantation as being so valuable

that it should be available to all, it also declared that because of the

expense, only those transplants that could be financed primarily out of

system waste should be provided. Thus, the OTTF's desire to demonstrate
its and Massachusetts' commitment to providing lifesaving treatment for
all led it to restrict transplants' availability to all patients, including

those who would not require public financing. Such a policy had spe-
cifically been denounced by the President's Commission as "an unac-
ceptable restriction on individual liberty. "^^^

Under the circumstances, it seems probable that the OTTF and the
Commonwealth were more concerned with performing a symboHc act
than with giving the poor the essentials of a good Ufe. Indeed, although

the OTTF expUcitly endorsed the equitable distribution of transplantation
as an available means of "prevent[ing] the gulf between the haves and

have nots from widening,'"*^ the primary beneficiaries of the transplant

of the condition on the welfare and opportunity of the individual but also about

the efficacy and the cost of the care itself in relation to other conditions and

the efficacy and cost of the care that is available for them.

President's Commission Report, supra note 41, at 36; see supra notes 41 & 70.
"^The OTTF's conclusion that organ transplantation should be part of that adequate

level of care is apparently justified by the stated pubhc perception that transplantation

is "life-saving." OTTF Report, supra note 67, at 5. The President's Commission Report,
however, does not contemplate and indeed does not seem geared toward addressing the

inclusion of extreme and expensive technologies in the guaranteed minimum level of care.
For example, it states:

Society will reasonably devote some resources to health care but reserve most

resources for other goals. This, in turn, will mean that some health services
(even of a lifesaving sort) will not be developed or employed because they would

produce too few benefits in relation to their costs and to the other ways the

resources for them might be used.

President's Commission Report, supra note 41, at 19.

"^On cost figures, see OTTF Report, supra note 67, at 43-69. These figures have
been criticized as excessive. E.g., Overcast & Evans, supra note 102, at 107. See supra
text accompanying notes 17 & 20.

"^President's Commission Report, supra note 41, at 20; see also id. at 4, 18; Pauly,

Equity and Costs, 13 Law, Med. & Health Care 28 (1985). A better reading of the
President's Commission Report surely would conclude that the state ought to ensure

equitable access to lower-cost, higher-priority services, leaving expensive technologies outside

the "decent minimum" but available for purchase by those who choose to devote personal
resources to that end.

"^OTTF Report, supra note 67, at 75; see Pauly, supra note 115, at 29. The OTTF
surely places disproportionate emphasis on catastrophic health care as a way to rectify
perceived injustices in the social order. It is open to challenge not only by those who



1986] LIVER TRANSPLANTATION 983

policies adopted were not the less well-off populations, from which a

few transplant candidates might come, but those who could take public
credit for making the humanitarian choice. The OTTF members, the
pubUc officials involved, and the citizens of Massachusetts as a whole

avoided appearing cold-hearted and uncaring in the face of imminent

death by symbolically extending lifesaving assistance to a handful of

afflicted patients. The troubling question remains, however, whether the

Commonwealth has so far discharged its other, perhaps greater respon-

sibilities to its disadvantaged citizens that those basking in the glow of

this good work are truly entitled to feel good about themselves.

C. The Alternative of Off-Stage Choices

Whenever tragic choices are made upon a public stage, it is probably
inevitable that the actors will play to the audience, sacrificing some

values, particularly allocative efficiency, in order to be seen as acting

vigorously in the defense of human life. Before one can criticize the
performance in Massachusetts, therefore, it is necessary to ask whether

there is any way in which these difficult issues could have been resolved
without public posturing and with a greater expectation that resources

would not be used in pursuit of health benefits too modest to justify

the outlays. Can the role of politics in these difficult matters be limited?
One discussion of this question frames the challenge as follows:

would be prevented from purchasing transplants but also by the have-nots in question,

who might reasonably choose to have the resources applied where they have greater need

and can expect greater benefit. It appears, however, that the OTTF had a larger political
agenda. Chairman Annas has acknowledged as much in responding to criticisms such as

those suggested here:

The Task Force . . . saw its charge as an opportunity to express our views on

how the system ought to work. The Task Force believed that fairness and equity

are critical values that are more important than perpetuating a system where

only the rich and those with the right insurance or publicity acumen can obtain

transplants. The fact that we have not tried for equity and fairness elsewhere

in the system does not make it somehow wrong to take the opportunity we

have in heart and liver transplantation to try to introduce equity and fairness

in the real world. We must begin somewhere. Anywhere will entail some ar-
bitrariness. But the symbolic nature of transplantation, and its ability to capture

the public's attention and support, commend it as a reasonable place to begin.

Far from presuming "the vahdity of the status quo," the Task Force believed

that transplantation provides a unique opportunity to modify some of the the

health care system's fundamental operating assumptions.

Annas, The Dog and His Shadow: A Reply to Overcast and Evans, 13 Law, Med. &
Health Care 112, 113 (1985). Annas's visionary goal is, however, as remote as ever.

The OTTF Report's passionate concern for equity ironically succeeds only in raising to
the level of principle the political preference for identified over statistical lives, while

doing little to clarify the debate over the extent to which government should guarantee

the provision of health care services.



984 INDIANA LAW REVIEW [Vol. 19:955

[A]lthough there are good reasons for our society to seek to

spare its individual members catastrophic health care costs, in
doing so it will almost inevitably commit more resources than

it really wants to commit, or should commit, to such a purpose.

This result is probable because government will find it difficult

to impose, or even tolerate, needed limits on very expensive

medical efforts to save lives and preserve health without seeming

to deny the sanctity of human life. The challenge is thus to
design social institutions which neither unduly sacrifice society's

humanitarian ideals nor overspend on medical services not war-

ranted by the benefits they yield. . . . [G]overnment cannot

safely assume too central a role in decisionmaking on life-and-

death and similar issues and . . . society will be better off if

institutional arrangements are such that death and suffering from

catastrophic disease continue to be perceived as "more an act
of God than of the legislature." Careful attention to program
details and to the allocation of decisionmaking responsibility is

necessary if society is to succeed, in the context of expanded

protection against catastrophic medical expenses, in preserving

both humanitarian values and democratic government's benign

—if not its beneficent—image. 1 17

The quoted study "identifies a critical need to keep government's profile

low in order to facilitate saying 'no' when it is appropriate to do so"
and "seeks to help government limit its moral as well as its financial

exposure while honoring a substantial commitment to assist victims of

catastrophic disease. "'^^

The Massachusetts performance reviewed here casts only a little light

on the possibility that government can be removed from center stage

in these dramas and that there can be introduced instead the deus ex

machina of an unregulated, demand-driven market for health services.

The foundation of the Massachusetts system is, after all, the assumption

that regulation is essential to prevent inefficient growth and wasteful

spending on health services of all kinds. Although there was a time

when this assumption seemed unchallengeable, actual reforms in some
health care financing mechanisms have recently begun to reveal the

potential of private purchasing decisions in a competitive marketplace

to curb the excessive flow of resources into the health care sector and

to confine spending to activities that are relatively cost-effective. ^^^

"^Havighurst, Blumstein & Bovbjerg, supra note 4, at XIZ-IA (quoting Artificial
Heart Assessment Panel, Nat'l Heart & Lung Inst., The Totally Implantable
Artificial Heart 247 (1973) (separate views of C. Havighurst)).

"»M at 124.
"'See, e.g., Arnett, Health Spending Trends in the 1980's: Adjusting to Financial

Incentives, Health Care Fin. Rev., Spring 1985, at 1; Davis, Is Cost Containment
Working?, Health Aff., Fall 1985, at 81.



1986] LIVER TRANSPLANTATION 985

Certainly what is known about the efficacy and costs of Uver trans-
plantation does not suggest that only irrational or impoverished persons

would ever choose to forgo this treatment even in the face of certain

death. ^^ It thus may be socially desirable and practically feasible to
leave decisions about whether or to what extent to cover liver trans-

plantation to private choices of employers, health insurers, and organized

health plans, all of which are accountable to consumers in a competitive

market.'^' Even where public financing is necessary, government may
recede from its current role as dominant decisionmaker by cashing out

current in-kind benefits and letting beneficiaries shop for private coverage

with financial help in the form of a government-supplied voucher. '^^ In

this fashion, government can fulfill its responsibility for providing a

decent minimum level of health services without having to rule definitively
on what services beneficiaries must select.

Whether the performance of a competitive, demand-sensitive market

for health care will satisfy the full range of public expectations is still

an open question, but there is at least some evidence that health care

consumers and providers are now economizing in ways previously resisted.
Thus, it may be possible

to eschew trying to solve the [catastrophic disease] problem in

any definitive fashion and instead to take steps to enhance each

'2°Available data suggest not only that liver transplantation is uniquely expensive but

that it can plausibly be viewed as of questionable benefit. Although the OTTF Report's
survey of liver transplantation morbidity and mortality is brief, OTTF Report, supra note
67, at 29-32, other sources raise some important questions concerning the toxicity of

cyclosporin, the effect of long-term administration of immunosuppressive drugs on the

growth and development of children, and the near-total lack of measures of the quality

of survivors' lives. See Nat'l Center for Health Services Research, DHHS, Liver
Transplantation (1983); Starzl, 1 Transplantation Proceedings (1985). The OTTF
addressed these major concerns only in connection with the prospect that too many
transplant seekers might die in the state-mandated queue; if this happens, the OTTF
Report advocates that individuals meeting the medical criteria for inclusion "be persuaded

not to attempt to join the queue" by telling them the truth about transplantation. OTTF
Report, supra note 67, at 83. The implication is that if people understood all of the

risks, consequences, and side effects of transplantation and their implications for the

duration and quality of life of survivors, a significant number of candidates would

voluntarily forgo the procedure. One would suppose that potential candidates deserve the
opportunity to achieve that full understanding regardless of the size of the organ supply.

The OTTF was even farther, of course, from seeing any connection between doubts about
the value of the procedure and the procedure's extraordinary costs; it was also opposed

to letting individuals compare likely benefits and costs before deciding whether to invest

in the necessary insurance. Id. The Minnesota Coalition Report specifically contemplates

such choices. Minnesota Coalition Report, supra note 8, at 47-48.

'^'Allowing individual consumers to exercise free choice creates problems of adverse

selection and may be questionable policy for other reasons. See infra note 124.
^^^See Minnesota Coalition Report, supra note 8, at 38-41. This report discusses

two alternative strategies for "implementing the 'basic level of health care' principle."

Id. One of these is a voucher-type strategy that would leave the private sector substantial
decisionmaking freedom.



986 INDIANA LAW REVIEW [Vol. 19:955

individual's ability to solve his own personal problem by choosing
among a variety of available options, with public financial as-
sistance where necessary. Such a strategy lacks the tidiness and

specificity which policymakers often desire and would doubtless

leave many residual problems. . . . But the fundamental values of
pluralism and freedom . . . suggest an obHgation not only

to tolerate but also to foster diversity on matters as intensely

personal and private as the means of coping with life-threatening

disease and the attendant tragic choices. '^^

Such an approach provides a major challenge to society's ability to

educate consumers and foster rational decisionmaking about low-prob-

ability events.
^^"^

The Massachusetts experience with liver transplantation yielded one

interesting datum helpful in appraising the market alternative when
MBCBS offered TIP at an actuarially fair price to their group accounts
and fewer than one third of them accepted the offer. Unanswered, of

course, are many questions, including the ultimate one—whether a
situation in which some citizens are protected against a highly visible

health care need and others are not is a stable and tenable one or one

that would disintegrate upon the appearance of a transplant candidate who

^^^See Havighurst, Blumstein, & Bovbjerg, supra note 5, at 189.
'^The simple view is that "organ transplantation is the epitome of an insurable event;

transplants are random, rare, their risk probabilities are measurable, and transplants are

prohibitively expensive for most individuals." Minnesota Coalition Report, supra note

8, at vi. But letting individuals choose is not necessarily the optimal policy. For example,

Calabresi observes:

I'd Uke to know, for instance, if any individual does value his own hfe in a
way that can meaningfully be used in choosing between life and death risks. If

each of us were paid to take a one in a million chance to lose our life,

reaUstically, how much would we ask? How much more would we ask if the
chance of death were one in one thousand? Or one in two? I would suggest

that the value that most of us would give to our lives would not be the same

value in the three cases, after discounting by mathematical risk. In other words,

the value we as individuals put on our life is not independent of the gamble

we are taking. This fact makes it very, very difficult as a practical matter to

define any value as the appropriate one in creating incentives for safety.

Calabresi, Commentary, in Ethics in Health Care 48, 52 (1974). For findings from

psychological research suggesting inconsistencies and incoherence in consumer decisions

that require the weighing of risks and valuation of alternative outcomes, see Kahneman
& Tversky, The Psychology of Preferences, 246 Sci. Am. 12 (1982); Tversky & Kahneman,
The Framing of Decisions and the Psychology of Choice, 211 Sci. 453 (1981). Although

these difficulties suggest the shortcomings of individual choice, most market choices of

insurance coverage are not made by uninstructed consumers. Instead, they are most likely
to emerge from collective processes in employment groups and to reflect the sophistication

of employers, insurers, and medical care providers. Such collective choices are likely alone

to reflect both shared values and the existence of alternative uses of the resources at

stake.



1986] LIVER TRANSPLANTATION 987

turned down the available protection. This empirical question deserves
more thoughtful attention than it has yet received. For example, it would
not be conclusive evidence against relying upon market choices to ration
transplantation if an occasional patient should receive, at an employer's

or insurer's expense, a treatment that was not included in purchased

coverage. Informal provision of such charity for occasional exceptionally

appealing cases is not an unthinkable alternative to the Massachusetts

rationing system. Indeed, it could supply just the buffer against highly

publicized denials of care that is needed to maintain an effective barrier

to spending vast resources on marginally beneficial treatments.
Attention must also be given to the design of coverage that can

survive the inevitable questioning and legal challenges. One can imagine,
for example, insurance policies that provide liver transplants for the

most appealing patients, such as children, but deny them to victims of

less attractive diseases, such as alcohoHsm. Other mechanisms for con-

trolling costs and ensuring quality include limiting coverage to transplants

obtained in centers that have been identified by the insurer as efficient

and low-cost. Although much remains to be learned about whether and
how to purchase this costly and still questionable service, privatization
of catastrophic insurance, perhaps with tax and other incentives to

encourage coverage broad enough to minimize the demoralizing effects

of tragic choices, would seem to make possible sensible rationing tech-
niques that the public sector could not itself sustain. ^^^

Perhaps the best way to conclude this reflection on how society
handles these difficult matters is to ask how these problems will be
addressed a hundred years from now. Is there any doubt that society

will somehow reassess its commitment to saving lives without regard to
cost and will come to accept as a matter of course some deaths that
could be prevented by the application of high technology? There are

many different ways in which patients can be selected for treatment,
not all of which require reliance on government to act directly or indirectly

as the giver or denier of life itself. Without question, our attitudes

toward such matters are changing. Ultimately we must give up some
cherished but so far unexamined collective beliefs. The frightening but
certain truth is that we are acting out our own morality play—one in
which some simpUstic values, of the kind that flourish most in a political
environment, must eventually give way to some hard realities of the human
condition. As in any great drama, the central question is whether other,
more vital values will be preserved.

'"Current proposals to provide catastrophic health insurance protection, see, e.g..

Perspectives, Catastrophic Insurance, Washington Rep. on Med. «& Health, Apr. 21, 1986,
would benefit from being examined in light of the concerns expressed herein about placing

government in a central decisionmaking role.