A quiet revolution: Law as an agent of health system change

Abstract

This paper considers law's impact on health system change. Federal courts and state regulators have remade the rules of the medical marketplace, restricting the methods available to managed care organizations to control costs. Legal conflict, however, has had a larger effect through its influence on market actors' perceptions and expectations. In anticipation of adverse legal outcomes and in response to consumers' and investors' anxiety, health plans changed business strategies, backing away from aggressive cost management. We conclude with four lessons about law's role in the health sphere-lessons that stress the power of legal conflict to shape perceptions and to thereby change behavior be..