Exam Time

Sorry, Faithful Readers, but I am consumed with that semiannual joy of law professors, exams. I finally finished writing my exams -- and wow, that took a long time -- and now it's time for the worst task of all, grading them. Blogging will be minimal from now through the end of the year.

Happy holidays to all. Health and prosperity to you in 2010.

Medicare and Cost

I usually try to blog about subjects where I have some value to add based on expertise. But most pundits today seem happy to mouth off about subjects they know nothing about, so why not me?

Mr. Rick Pollack, executive vice president of the American Hospital Association, expressed concern yesterday about the Senate proposal to allow persons age 55 or older to buy into the Medicare system. He explained: "Medicare pays less than the cost of delivering services. And as more patients are reimbursed at levels that are below the cost of providing the service, it obviously makes it difficult to maintain essential public services that patients and communities depend upon."

Now, can this possibly be true? If Medicare really pays less than the cost of delivering a service, then why would hospitals serve Medicare patients? They're losing money on each one.

Apparently, as summarized by Pollack's interviewer, part of the answer is that "Hospitals typically make up that shortfall by passing the cost to privately insured patients who pay more." But if other patients are willing and able to pay some higher cost that is necessary to make up for the loss hospitals incur on Medicare patients, then hospitals could make even more money by charging other patients that higher rate and still not serving the Medicare patients.

Do hospitals serve Medicare patients out of a sense of civic responsibility? Is it a public service? Or do they actually make money on Medicare patients but hide it with complicated accounting?

Are they just confusing marginal cost with average cost? If you imagine that each patient has to bear part of the cost of keeping the heat and lights on and paying the hospital's debt service -- all of which the hospital would do whether or not that patient showed up -- you can easily show a loss on patients when actually you're making a profit on them. The correct calculation would consider only the marginal (i.e. additional) costs that the hospital incurs because of treating that patient.

Here's a skeptical take on this costs question. But I don't really know the answer. Perhaps someone can elighten me.

Come Back Later

Interesting opinion today from the Supreme Court. Apart from being Justice Sotomayor's first opinion, the case presents the interesting question of whether a district court's order denying a claim of attorney-client privilege should be immediately appealable.

The normal rule in federal litigation is the final judgment rule: no appeal of a district court's order is allowed until the case reaches its final judgment, at which time all the orders the district court has made in the course of the case can be appealed. This rule saves time and energy by blocking parties from appealing each order the district court makes, one at a time. Also, if the party that would have appealed an order ends up winning the case anyway, or if the case settles, appeal may be unnecessary. So the final judgment rule is a good general rule.

But sometimes appeal after final judgment may not do anything for the appellant. For example, if the defendant in a criminal case seeks bail pending trial and is denied, an appeal after the trial is over does no good -- the harm of not getting bail is irreversible at that point. So the Supreme Court has allowed appeal of "collateral" orders -- orders that are collateral to the merits of a case, that raise an important issue, and that are not effectively remediable by appeal of the final judgment.

So why doesn't the denial of a privilege claim fall in that category? After all, if a party is made to reveal a privileged communication, the communication can't be unrevealed by an appellate reversal years later. The party needs appellate review before revealing the communication.

The Supreme Court's almost-unanimous opinion focuses more on the need to avoid too many piecemeal appeals than on the strict logic of the collateral order doctrine. The Court said that the attorney-client privilege, considered as a whole, can be protected sufficiently by appeal, even if the privilege is wrongly lost in some individual cases. That will be cold comfort to litigants whose privilege is wrongly denied by district courts.

The Court's opinion perhaps makes good policy sense, but it reveals some weaknesses in the official statement of the collateral order doctrine.

Estate Tax Compromise?

You always knew that the Bush plan for the estate tax couldn't possibly be allowed to happen: it first called for estate tax to fall a little, bit by bit, with the exemption raised bit by bit, over a decade, until it got down to 45% in 2009, with a $3.5 million exemption, where it in fact is now. Then it's supposed then to be zero in 2010. Not just lower, not just a higher exemption, but zero, nada, no estate tax at all. But only for people who die in 2010! Then it's supposed to snap back to the old rate of 55% with a $1 million exemption for anyone who dies after that.

Talk about your death panels! The Bush estate tax plan has wealthy parents hiring bodyguards and cancelling plans to invite their kids over for the holidays next year.

Just kidding -- I hope -- but it's certainly true that the plan creates the most perverse economic incentive ever. If your parents are wealthy (and are leaving their money to you), then if they die in 2010, you keep it all, but if they live one extra day, it could cost you millions.

Anyway, that's why I've been saying all along that the estate tax will never go to zero, but neither will it ever snap back to the old rates, which were too high. And now the House has voted to keep the 2009 rates on a permanent basis. Personally, I thought the best answer was a lower exemption and a rate of about 30%, but I'll live with the House proposal -- and hopefully, my parents can now keep living too!

Procedures Under Review

In the endless babbling about the White House party crashers (who say that they weren't party crashers), the thing I find most amusing is the suggestion that the Secret Service will have to review its procedures as a result of the incident.

What's to review? Here's my suggestion for procedures:

1. Check if people are on the guest list.

2. If they aren't, don't let them in.

There, I solved the problem.

You're welcome.

Unanswered Questions Indeed

As the news reports, there are "plenty of questions" after Tiger Woods got in a car crash that sent him to the hospital. According to the story, Tiger hit a fire hydrant and a tree right near his own driveway, and his wife Elin had to smash a rear window with a golf club to get him out.

But the story is asking the wrong questions. "Where was he going at 2:25 am Friday? Why was there no word from the Woods' camp for nearly 13 hours?" That's not what golfers want to know. There's only one question on golfers' minds:

What club did she use?

That Holiday Spirit

With the holiday season officially kicking off tomorrow, an interesting decision arrives from the Third Circuit. The question: can a school district adopt a policy forbidding religious music in holiday celebrations, including school concerts?

The South Orange-Maplewood school district in New Jersey adopted such a policy in an effort to achieve religious neutrality. After receiving a complaint from a concerned parent following a holiday concert that included traditional Christmas carols, the district's Director of Fine Arts indicated that schools should avoid music representing any religious holiday of any faith and suggested instead secular seasonal selections of the "Frosty the Snowman" type. Needless to say, this decision raised concerns with different parents, who brought a lawsuit.

Although these kinds of issues have become excessively polarizing, this case has a fairly straightfoward answer, which all the judges (including appointees of Presidents Carter, Clinton, and G.W. Bush) reached. Although the court was handicapped by having to apply the somewhat tangled official doctrines surrounding Establishment Clause issues, the decision follows from pretty basic distinctions.

A school's decision not to have its students present religious music in the holiday concert is different from the decision to have the students sing such music. The school district can hardly be obliged to present religious music in school. If the school district's policy violated the Constitution, it would follow that an individual school's similar decision would too, with the impossible result that every school's choral director would be legally required to present Christmas music in the school concert, not to mention music requested by other religions represented among the school's families.

Of course no one is trampling on a parent's right to have their children exposed to religious holiday music -- and children will get ample such exposure. Just not in the South Orange-Maplewood schools. Just because you have a right to teach your children something doesn't mean you have a right to have the school teach that same thing, if it doesn't want to.

Sigh. I remember my high school holiday concerts fondly, with I and the other Jewish kids cheerfully singing Christmas songs and not worrying about it. The South Orange-Maplewood policy does seem unnecessarily churlish. But it's constitutional.