Hammurabi’s Code and U.S. Health Care

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

Sometime around 1780-70 B.C., the Babylonian King Hammurabi promulgated the now famous Code of Hammurabi, covering both civil and criminal law.

The code is said to have informed both Jewish and Islamic law. Remarkably, it has echoes also in modern health policy in the United States.

Among the 282 laws in Hammurabi’s Code, nine (215 to 223) pertain to medical practice:

215. If a physician make a large incision with an operating knife and cure it, or if he open a tumor (over the eye) with an operating knife, and saves the eye, he shall receive 10 shekels in money.
216. If the patient be a freed man, he receives five shekels.
217. If he be the slave of someone, his owner shall give the physician two shekels.
218. If a physician make a large incision with the operating knife, and kill him, or open a tumor with the operating knife, and cut out the eye, his hands shall be cut off.
219. If a physician make a large incision in the slave of a freed man, and kill him, he shall replace the slave with another slave.
220. If he had opened a tumor with the operating knife, and put out his eye, he shall pay half his value.
221. If a physician heal the broken bone or diseased soft part of a man, the patient shall pay the physician five shekels in money.
222. If he were a freed man he shall pay three shekels.
223. If he were a slave his owner shall pay the physician two shekels.

Not all of these laws have survived the millennia. Relative to Hammurabi’s draconian medical malpractice code, for example, modern medical malpractice penalties represent mere slaps on the wrist.

On the other hand, our modern, differentiated payment system for health care does resemble the Code of Hammurabi in some respects.

To illustrate, for a primary care office visit with a new patient of 30-minute duration (using Current Procedural Terminology, or C.T.P. codes, in this case Code 99203), New Jersey’s Medicaid in 2012 paid a nonspecialist $25 and a board-certified specialist $32.30. The comparable fees paid physicians for commercially insured patients are jealously guarded trade secrets, but it is reasonable to assume them to be $100 to $200. Other fees in the C.P.T. code are similarly low for Medicaid.

I recall addressing a group of New Jersey State legislators on this point a few years ago as follows:

I teach my students that the price a buyer is willing to pay for a thing signals to suppliers of that thing the monetary value the prospective buyer puts on it. It is a basic tenet of economics. Leaning on that tenet, I conclude that the value you in your role as state legislators put upon the professional work of, say, a pediatrician, if applied to a poor child on Medicaid, is less than a quarter of the value you put upon that same professional work it applied to your own commercially insured children.

Physicians clearly understand this relative valuation being signaled to them. According to a recent estimate, almost a third of American physicians are unwilling to accept any new patients covered by Medicaid. In New Jersey in 2011, only 40 percent of physicians accepted new Medicaid patients (see Exhibit 4). Given the insulting valuations many state Medicaid programs put upon the physicians’ work, that’s understandable.

Naturally, New Jersey’s legislators were not well pleased by my comment. To be fair, I doubt they had ever thought of their Medicaid budgets in that way. More probably, they tacitly assume that our health care system will give patients covered by Medicaid the same health care for a given medical condition that would be given a commercially insured patient, regardless how much legislators are willing to pay for that care.

Perhaps these legislators believe that the Hippocratic Oath, sworn to by all physicians at the onset of their careers, compels that egalitarian approach. In fact, neither the ancient nor modern version of the oath imposes on healers an obligation to treat patients at a monetary loss.

Not all states value the work of physicians on Medicaid patients as lowly as does New Jersey and, for that matter, New York, even though both states rank near the top in the United States in terms of per-capita income.

Nationwide, the fee paid physicians for an “office visit, new patient, 30 minutes” (C.P.T. Code 99203) in 2012 ranged from $29 to $165, with an average of $63.36. The minimum of $29 is probably a weighted average of the two fees for New Jersey cited earlier. There is a similarly wide range of Medicaid fees across the nation for other C.P.T. codes.

We do not know whether King Hammurabi expected physicians to give patricians, plebeians (freed men) and slaves the same health care for a given medical problem, in spite of the glaring fee differentials articulated in the code. Chances are that Hammurabi would have expected differential treatment as well; he is said to have been a straight thinker.

Americans today have a more, shall we say, “nuanced” view of the matter. One the one hand, we signal to our health care professionals vastly different valuations of their work. On the other, we expect them to be punctiliously egalitarian on their job.

Woe to physicians who give inferior care to Medicaid patients than they do to their commercially insured patients. And woe to any hospital if it even toyed with the idea of segregating Medicaid patients in separate wings of hospitals with fewer amenities and with, say, six patients to a room. Even the mildest hints at segregating Medicaid patients quickly bring outcries from the public and litigation.

In conclusion, I note that under the Affordable Care Act of 2010, the federal government is willing to pick up the added cost of raising physician fees paid by Medicaid for primary services to equality with the usually higher fees paid by Medicare for those services. That provision, if carried out, would more than double such fees in six states, including New York and New Jersey.

Alas, for the states, the federal government will pick up the bill for this policy only during 2013 and 2014. It is anybody’s guess, therefore, how many states will retain the more generous and to them costly payment policy after 2014.