Employers purchase health benefits for more than 60% of the nonelderly population, making employers both important custodians of employee well-being and important actors in the health care ecosystem. Because employers typically have unilateral control over health and retirement benefits, the federal Employee Retirement Income Security Act (ERISA), enacted in 1974, imposes fiduciary obligations on employers when they manage or administer benefits. We provide evidence, from a novel survey of respondents who administer or oversee health benefits for their companies, that many employers appear to neglect even the most basic of their fiduciary obligations to their employees. This neglect may help explain the poor performance of employer plans in controlling costs and providing access to health care, and it suggests that many employers may be vulnerable to liability from ERISA lawsuits.

We conducted the first randomized controlled trial to study the effect of AI assistance on human legal analysis. We randomly assigned law school students to complete realistic legal tasks either with or without the assistance of GPT-4, tracking how long the students took on each task and blind-grading the results. We found that access to GPT-4 only slightly and inconsistently improved the quality of participants' legal analysis but induced large and consistent increases in speed. AI assistance improved the quality of output unevenly-where it was useful at all, the lowest-skilled participants saw the largest improvements. On the other hand, AI assistance saved participants roughly the same amount of time regardless of their baseline speed. In followup surveys, participants reported increased satisfaction from using AI to complete legal tasks and correctly guessed the tasks for which GPT-4 was most helpful. These results have important descriptive and normative im-plications for the future of lawyering. Descriptively, they suggest that AI assistance can significantly improve productivity and sat-isfaction, and that it can be selectively employed by lawyers in areas where AI is most useful. Because AI tools have an equaliz-ing effect on performance, they may also promote equality in a famously unequal profession. Normatively, our findings suggest that law schools, lawyers, judges, and clients should thoughtfully embrace AI tools and plan for a future in which they will become widespread.

Health insurance contracts have long excluded coverage for care that is “experimental” or not “medically necessary.” Historically, insurance policies defined these key terms of coverage using broad standards. For example, “medically necessary” care might be defined as care that is “generally accepted in the medical community.” This contractual structure provided insurers with significant flexibility when making coverage determinations, even though denying coverage could pad their bottom line. For this reason, lawmakers developed various tools to prevent insurers from exploiting their discretion to determine when care was “medically necessary” or “experimental.” These safeguards allowed insureds to challenge coverage denials internally within the insurance company, externally to an independent medical expert, and before courts via a contract law or ERISA cause of action. Additionally, state and federal mandates required insurers to cover specific medically necessary treatments and services. This Article documents a dramatic shift in health insurers’ contracts and practices from a standard-based approach to determining the medical and scientific appropriateness of health care towards a rule-based approach for making these determinations. It shows how health insurers have increasingly made incredibly detailed and specific rules of medical necessity part of their formal contractual obligations to policyholders. The Article then argues that health insurers’ shift from standards to rules for defining medically and scientifically appropriate health care undermines the effectiveness of traditional legal tools designed to constrain the risk of health insurer over-reaching. The Article concludes by exploring reforms that might effectively address the increasing rulification of medical necessity.

How well can AI models write law school exams without human assistance? To find out, we used the widely publicized AI model ChatGPT to generate answers to the final exams for four classes at the University of Minnesota Law School. We then blindly graded these exams as part of our regular grading processes for each class. Over ninety-five multiple-choice questions and twelve essay questions, ChatGPT performed on average at the level of a C+ student, achieving a low but passing grade in all four courses. After detailing these results, we discuss their implications for legal education and lawyering. We also provide example prompts and advice on how ChatGPT can assist with legal writing.

Following the 2020 presidential election, health care reform discussions have centered on two competing proposals: Medicare for All and an individual public option (“Medicare for all who want it”). Interestingly, these two proposals take starkly different approaches to employer-provided health coverage, long the bedrock of the U.S. health care system and the stumbling block to many prior reform efforts. Medicare for All abolishes employer-provided coverage, while an individual public option leaves it untouched.This Article proposes a novel solution that finds a middle ground between these two extremes: an employer public option. In contrast to the more familiar public option proposal, which would offer government sponsored health insurance directly to individuals, our plan creates a public option for employers, who can select a public plan—based on Medicare and altered to meet the needs of working populations—instead of a private health plan for their employees. Employer-based private health coverage is in decline and increasingly leaves workers vulnerable. Our proposal offers a gradual way to loosen reliance on this system.We review the policy, regulatory, fiscal, and business arguments in favor of this form of public option, which we argue is less disruptive than Medicare for All but more impactful than an individual public option. Because employer take up would be gradual and voluntary, our plan has lower fiscal costs and should face less resistance from employees and vested interests than Medicare for All. Over time, if the plan meets employers’ and employees’ needs, more people would be covered by a public option, moving away from over-reliance on private employer plans and toward something akin to Medicare-for-Many in a less politically, legally, and fiscally fraught way.

Basic principles of economics suggest that health insurers should seek to avoid covering sick individuals and attempt to minimize the amount they have to spend if, despite the insurer's best efforts, such individuals enroll in coverage. The drafters of the Affordable Care Act recognized this natural tendency of insurers and put in place multiple provisions aimed at avoiding such behavior. One such tool was the requirement that all health insurers in the individual and small group markets cover an identical, comprehensive set of benefits known as the Essential Health Benefits (“EHBs”). EHBs were designed to ensure that consumers are able to access comprehensive coverage, but also to prevent insurers from trying to avoid high-risk enrollees by designing plans that appeal only to the healthy. Congress did not, however, statutorily define the full package of benefits, instead delegating primary authority for that task to the Department of Health & Human Services (“HHS”). This article argues that HHS has implemented the EHB requirements in a manner that appears structurally incapable of achieving the goals of the statute. By utilizing a vague definition of benefits, allowing benefit substitutions, and failing to limit use of service-level selection tools, HHS has permitted insurers to compete for low-risk insureds, avoid paying for certain high-cost treatments, and prevented consumers from making fully informed purchasing decisions.

Nearly every state incorporates the federal tax code into its individual income tax system. This widespread incorporation has many supporters and has been justified on the basis that it is necessary in order for states to have a simple and efficient tax system. This article explores the practical effects and dynamics of state tax conformity through a novel examination of how states that tightly conformed to the federal individual income tax responded to the recently enacted Tax Cuts and Jobs Act which, for these states, would have both raised state taxes and changed the distribution of state tax burdens. The study reinforces concerns raised in both the theoretical and economic literature regarding conformity’s enhancement of revenue volatility and likelihood of distorting state legislative decision-making, while adding several new observations of conformity’s impact. The study illustrates that conformity imposes significant time constraints on state legislatures, conformity causes not only revenue shocks, but tax policy shocks, and even where state revenue is kept constant following a federal change, conformity may cause relative state tax burdens to change. Based on these findings, the article concludes by offering suggestions for how states can move past the idea that extensive conformity with the federal tax code is required and instead design an individual income tax system that is simple, efficient, and enhances a citizen’s relationship to the state.

Cities and states around the country have promised their workers-most often teachers, police officers, and firefighters-retirement benefits, but have in many cases failed to set aside adequate assets to fund those benefits. Several of these pension plans are predicted to become insolvent within the next decade and innumerable additional plans appear headed for insolvency in the decade that follows. Once insolvency occurs, pension benefits due to retirees will either have to be paid out of the government's cash on hand, or simply not be paid at all. Based on their current financial positions, most jurisdictions appear unable to fund pension benefits while maintaining essential governmental services, unless taxes are raised significantiy. This Article is the first to examine whether and to what extent retirees will have effective legal recourse to secure the payment of their pensions in the event of retirement plan insolvency-a critical issue not only for pensioners, but also for taxpayers. It concludes that law is unlikely to provide effective recourse for retirees due to the inability of courts to force legislatures to appropriate funds, raise taxes, or incur debt. As a result, even in cities and states with apparendy iron-clad legal protection for pension benefits, pension fund insolvency leaves payment of benefits in doubt, with any solution resting solely with the legislative branch. Understanding that it is politics, not law, that will play the primary role in solving the public pension problem is critical knowledge for all interested parties as they work toward a fair solution.

Despite the fact that the Internal Revenue Service (“IRS”) is overburdened and struggling to meet the needs of taxpayers, Congress continues to add to IRS responsibilities in areas that appear far removed from the agency’s core revenue raising function. The Affordable Care Act (“ACA”) is a commonly cited example of the non-revenue raising regulatory roles the IRS is increasingly asked to play, to the criticism of many. After providing an historical overview of the IRS’s involvement in health care regulation, the article provides a partial defense of the expanded role that the IRS has been given as a result of the ACA. The article concludes that much of the IRS’s involvement in health care regulation appears not only defensible, but efficient. For better or for worse, there is no better system for processing payments to or from a large number of taxpayers than the federal income tax system. Additionally, the use of excise taxes to shape taxpayer behavior appears to offer the best of both worlds: a powerful incentive that requires very few enforcement resources. The article concludes, however, that significant burden could be removed from the IRS by modifying or removing the IRS’s substantive rulemaking authority with respect to health care matters, deferring instead to other federal agencies, such as the Department of Health and Human Services, that have particular health policy expertise.

Pension plans for state and local employees are, as a whole, significantly underfunded. This underfunding creates intense fiscal pressure on governments and often either crowds out other desired governmental spending or results in employees and retirees losing earned benefits. Political theorists explain that underfunded public pension plans are all but inevitable given the political realities that affect funding decisions. Politicians who desire to be reelected should rationally prefer to spend money on current constituents, rather than commit scarce funds to a pension plan to pay benefits due to workers decades in the future. These dynamics are exacerbated by existing state fiscal constitutions that require balanced budgets and often restrict the ability to raise taxes. Paying a pension plan less than the amount due provides an easy way to free up money in the state budget by creating a form of debt that is ignored for purposes of balanced budget requirements. This Article presents an original analysis of the effect that state fiscal constitutions even those that contain explicit requirements to fund public pension plans have on public pension funding dynamics. It finds that even where explicit constitutional funding requirements are in place, plans often continue to be underfunded both because of political and financial pressures and because of the distinct lack of an enforcement mechanism. The Article concludes by suggesting that these weaknesses in pension funding requirements can be addressed through the creation of clear and objective funding standards and, most importantly, through the creation of enforcement mechanisms that can, where appropriate, override legislative decisions to underfund public pension plans.

Too often, discussions about health insurance coverage are one-dimensional, and focus solely on whether someone has coverage (good) or not (bad). Having health insurance coverage is undeniably a good thing and an important policy goal. However, as Professor Hoffman’s article points out, simply focusing on health insurance coverage, without examining the type of protection it provides, gives us an incomplete picture of an individual’s protection against health-related financial risks.

In the United States, the availability of tax subsidies for retirement savings is largely based on an individual's employment status and whether such individual's employer has voluntarily chosen to offer a tax-favored savings vehicle. Even where an individual has access to an employer-sponsored retirement plan, such plans are too often suboptimally designed. This article proposes an incremental reform that ensures universal access to tax-favored retirement savings irrespective of employment status or employer decisions. Borrowing from the model of the Affordable Care Act, the article calls for the creation of an optional, universally available retirement plan, which would be designed according to both retirement savings and behavioral best practices. Such a plan would be designed to increase the number of Americans saving for retirement, as well as the likelihood that individuals will accumulate sufficient savings to maintain their standard of living throughout retirement. After discussing the design details for such a plan, the article concludes by examining the legal and practical challenges of implementing a universal retirement plan at either the federal or state level.

Health care reform devotes substantial attention to resuscitating the small group health insurance markets that serve employers with fewer than fifty full time employees. Unfortunately, a number of interweaving provisions embedded within the Affordable Care Act create strong incentives that, starting in 2014, will tend to undermine this market and, in the process, increase the fiscal cost of reform. First, small employers with predominantly low-income employees will tend to opt out of the small group market. Second, small employers with mixed-income employees will have strong incentives to offer coverage that is neither technically “affordable” or of “minimum value” in order to preserve the availability of premium and cost-sharing subsidies on the individual market for their low-income employees. Third, small employers with unusually low-risk employees will have strong incentives to self-insure any group plan they do offer in order to avoid cross-subsidizing higher-risk groups. Analyzing these risks collectively, this Article offers a number of recommendations for saving the small group market. For instance, it argues that the SHOP exchanges that are intended to organize the small group market in 2014 must strategically target the weaknesses of self-insurance by offering simple and risk-free coverage options that facilitate employee choice. They must also market this coverage aggressively in light of insurance brokers’ likely financial incentives to push self-insurance on small employers. Additionally, state and federal law makers should explore various possibilities for making small employers both more likely to offer group coverage and, if they do offer group coverage, to do so through SHOP exchanges rather than self-insured plans. Possibilities explored by this Article include amending the terms of the premium and small business tax credits, regulating stop-loss insurance, and imposing various restrictions or penalties that are aimed at preventing churning between the self-insured and small group markets.

AbstractWe identify three threats to small group health insurance markets that may result from the 2014 implementation of certain provisions in the Affordable Care Act (ACA). First, small employers with predominantly low‐income employees may tend to opt out of small group markets because their employees will be better off with subsidized individual coverage. Second, small employers with employees of heterogeneous income levels will have strong incentives to offer coverage that is either “unaffordable” or fails to provide “minimum value” in order to preserve the availability of government subsidies for their low‐income employees. Finally, small employers that continue to offer group plans will face increased incentives to self‐insure those plans, further contracting small group markets and subjecting them to adverse selection. Collectively, these forces may destabilize small group markets and increase the ACA's fiscal cost. We therefore conclude by offering various reforms aimed at offsetting these risks and preserving the viability of small group markets.

Regulating the content of health insurance contracts, where the government determines which medical treatments and services must be covered, creates tension between principles of fairness and principles of welfare economics. Principles of fairness, after all, may require that all medical losses be shared within a community, while principles of welfare economics would advocate regulation only where there is some form of market failure that leads to an inefficient or suboptimal result. As part of recently enacted federal health care reform, the federal government will, for the first time, have the primary responsibility of regulating the content of privately financed health insurance policies, although the federal government is given the statutory option to borrow heavily from existing state regulation. This Article provides the first comprehensive study of the state legislative process with respect to health insurance content regulation. In the states studied, the author finds that both fairness and welfare claims influence mandate passage, with little reliance by legislators on outside evidence substantiating welfare claims. In contrast to theoretical writings on health insurance content regulation, which emphasize market failure as the primary justification for mandates, this current study finds that mandates were rarely premised on correcting defects in the insurance market. Rather, the justifications provided tend to be more paternalistic in orientation, often based on a desire to increase suboptimal utilization of a particular medical treatment or service regardless of the reason why individuals lack coverage. Even where there is an independent, expert commission providing robust data on proposed regulation, bills with virtually no impact on either health insurance coverage or treatment utilization are passed. Given these findings, this Article argues that the federal government should be hesitant to rely upon existing state-level regulation when it defines “essential health benefits” as part of health care reform.