Medical Freedom Zones

LB 007 Thumb A medical freedom zone is a legally recognized geographic area where health care professionals may provide services and conduct research governed by professional associations and private contracts.

Both the federal and state governments hamper doctors‘ ability to innovate in medicine and to offer more affordable or alternative care. While the federal government delays innovative medicine, state governments make affordable care more difficult by limiting the number of doctors and saddling those who do practice with difficult liability rules. Similarly, the ability of care providers and patients to fashion their own agreements governing medical procedures is entirely hamstrung through state regulation. The result? More than 500,000 Americans fled the United States in 2008 for medical tourism. The time for innovative reform is now.

This paper illustrates how one jurisdiction could take the lead in defining medical freedom in the United States and create a safe haven for innovation, alternative care, and affordable treatment. The task is not easy because many legal hurdles stand in the way. However, through careful construction, a veritable Mecca of medical excellence could be created, shaped by world-class contracts and standards. By permitting innovation and privately regulated care to exist in limited geographic areas, Wyoming could be the proving ground with little risk: those who prefer state managed care may stay in the system, while those favoring innovation and freedom may find an escape valve in medical freedom zones.

Different types of freedom zones have sprung up worldwide in a number of contexts. In 2004, the United Arab Emirates created the Dubai International Financial Centre, which incorporates the legal protections of British common law for its financial markets. Dubai also implemented the Jebel Ali Free Zone that favors foreign investment and the Dubai Healthcare City, which serves as a free zone for medical services and innovation. Iceland recently set out to become a safe haven for whistleblowers around the globe, and it is accomplishing this by developing the world‘s best laws regarding free speech and freedom of information. By creating a safe haven for free speech, Iceland is encouraging market development in internet server and publishing house relocation to Iceland to take advantage of its attractive laws. With just such an approach, Iceland may very well reinvigorate its economy while providing a powerful protective effect for free speech worldwide. Though a free zone would be new to the United States, America is not unaccustomed to attractive law, as Delaware proves. At the end of 2009, Delaware was home to 63% of Fortune 500 companies, and realized $767 million in revenue to its general fund just from corporate taxes. This is the result of stable corporate law that has lasted over 100 years, and continues to attract a majority of new corporations. Wyoming ought to pay attention to the possibilities.

The first and most readily accessible market for a medical freedom zone is medical tourism. Currently a multi-billion dollar foreign market, deregulated healthcare markets are expected to grow in a speedy manner over the course of a few years. Given the geographic desirability of American states, close proximity works in the favor of jurisdictions wishing to become destinations for medical tourism. Beyond proximity, American states can borrow from some of the best law available to construct their own efficient and responsible legal systems for health care concerns, putting them at a distinct advantage over their foreign counterparts.

Another possibility is to create a medical Silicon Valley. On the international scene, this has already been realized in the Dubai Healthcare City—a free zone with its own custom-built set of regulations and qualifications for medical care. A number of effective treatments are currently unavailable in the United States, having been developed elsewhere and awaiting FDA approval. A medical freedom zone could welcome the world‘s best researchers and scientists to bring vibrant innovation back to the United States. To properly construct medical freedom zones, several pillars of legal reform must be implemented. The Wyoming Liberty Group believes that this can be accomplished by adhering to dual federalism, that is, ensuring that the states and the federal government are each limited to specific powers, thus maximizing individual freedom. Recently, states have won challenges against the federal government precisely because of the United States Supreme Court‘s commitment to developing a theory of coherent dual federalism that protects the states‘ residuary and inviolable sovereignty. Supporters of state sovereignty must instruct and shape the Court‘s reasoning, lest this battle be surrendered to advocates of supreme federal authority.

At the time of this writing a number of states are proceeding in a lawsuit challenging the constitutionality of the individual mandate of the Patient Protection and Affordable Care Act (PPACA), relying on the Commerce Clause. The states argue that a decision not to purchase a product is not an economic activity, and thus not within the purview of the Commerce Clause. Whether the current multistate lawsuit succeeds or fails, medical freedom zones will need additional protection from any number of other federal incursions, whether based on the Commerce Clause or ever-expanding judicial misinterpretations of constitutional provisions.

The Wyoming Liberty Group approach combines a number of judicial threads to weave strong stability for freedom. The first thread accesses the history of incorporation, or the federal enforcement of the individual rights contained in the Bill of Rights against state and local governments. The most recent application of incorporation was in McDonald v. City of Chicago where the United States Supreme Court ruled that the right to bear arms applies in the city of Chicago. A second thread is Judicial Federalism, which focuses largely on making state constitutions more protective of the rights described within them. It is already well-established that if a state provides more protection for a constitutional right, there is no ground to appeal a state constitutional question to the United States Supreme Court.

These traditions must be considered in light of the Ninth Amendment, which states that the Bill of Rights is not the end-all be-all of individual rights, and that it is not a requirement for citizens to amend the U.S. Constitution in order to protect individual rights within their own state. When these threads are combined, it shows that a state protecting health care choice (including decisions to purchase health insurance and engage in risky medical treatments) must be protected from federal as well as state infringement.

It is not just the federal government Wyoming residents must be wary of; state governments pose their own threats to health freedom as well. Ancillary legal reform should focus on securing the necessary components of a free market for health care services in Wyoming. This includes securing the protection of arbitration and choice of law provisions in contracts. Wyoming‘s judicial system highly regards them both, in contrast to hazy jurisdictions that offer but partial protection due to vague public policy concerns. Wyoming has great respect for private arrangements, but law could be passed to further protect any shift from this.

Another state law concern that Wyoming should address is meaningful tort reform. Studies conclude that a comprehensive set of laws must work together to bring down the cost of malpractice insurance, litigation costs, and the use of defensive medicine. The first element to consider is limiting noneconomic damages. In this instance it would be best to recognize not only arbitration agreements, but contracts in which health providers and patients can determine a proper limit, if any. Second, Wyoming should enact a modified collateral source rule. Under the traditional collateral source rule (current Wyoming law), juries cannot hear about other types of compensation a plaintiff receives in instances of medical malpractice. Reforming the collateral source rule would not prevent plaintiffs from recovering damages, but only from double-dipping their compensation. Finally, Wyoming should implement a cap on punitive damages. The Wyoming Legislature might consider implementing a limit of $250,000, or three times the amount of compensatory damages, whichever is greater. Wyoming should also consider requiring proof of punitive damages beyond a reasonable doubt, since they stem from behavior similar to criminal wrongdoing.

The final state concern is medical licensure and education. Overinflated licensing requirements are harmful because they establish barriers to professional entry and make health care more expensive as an end result. A substantial problem related to state-based medical licensure rests in the evidence that interest groups with strong lobbies shape scope-of-practice legislation. This practice produces a turf war of sorts, building barriers to entry to protect the economic interests of a relative few over consumers‘ interests in affordable health care. Wyoming can transition to recognizing private board certification, which is offered by hospitals and insurers and is recognized as an indicator of practitioner quality. In this way, licensure would compete in the same way markets do. For education, the state could partner with privatized post-secondary institutions to form a unique medical school that is sensitive to Wyoming‘s needs and embraces innovation and alternative care.

Beyond states, tribal nations are especially suited for more entrepreneurship in health care freedom due to their semi-sovereign status as Indian nations. The Constitution has less binding effect against tribal sovereigns than on states. In that sense, tribal nations enjoy sovereignty independent from state or federal authority. Native American tribes have made headway in protecting and preserving their own sovereignty through targeted litigation successes.

In many instances, tribal nations are immune from being sued in federal and state courts. They enjoy the right to establish independent governments and declare their own citizenship requirements. Tribes also have a limited authority to tax and regulate the conduct of non-Indians on tribal land. Stressing the consensual and voluntary nature of associations, the Supreme Court has upheld the exercise of tribal sovereignty where clearly documented relationships occur between Indians and non-Indians. A recent example of tribes‘ independent basis for exerting sovereign authority over a nascent industry is found in payday lending. Unfortunately, few tribal jurisdictions have taken the development of their own statutory law seriously. Were tribes to do so, both generally and in specific areas of law, they could bring world class governing rules to their jurisdictions while steadily increasing their autonomy.

While there are recognized weaknesses and difficulties with the tribal model, it does present significant strengths when compared to state jurisdictions. The creation of medical freedom zones on tribal lands is promising because tribal sovereignty precedent is significantly stronger than state sovereignty precedent, so it offers unlitigated opportunities to broaden its scope.

People tired of unavailable treatments, expensive medicine and low-quality care frequently travel—flee may be a better word—to other countries for medical care, going as far as Asia. Although the future of the PPACA is uncertain, even if it is repealed there will remain a severely over-regulated health care system. Enterprising states or tribal nations can create legal structures that support liberty, ingenuity, and success in contrast to the central planning that has engendered our broken health care systems. This may be accomplished in medical freedom zones.

Click here to download the brief.


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