Reaching Disclosure

It is easy to forget but crucial to remember that when lawmakers decide to regulate an activity, they must select a method. The law of bioethics particularly favors one method—requiring disclosure of information. The doctrine of informed consent obliges doctors to tell patients their treatment choices. The administrative law of research ethics insists that researchers warn subjects of the risks of experiments. The Patient Self-Determination Act compels medical institutions to remind patients about advance directives. The federal government's new privacy regulations instruct medical institutions to describe their privacy regime to patients.

Not just the law of bioethics, but health law in general, repeatedly recruits disclosure requirements. For example, they are central to the recurring proposals for patients' bills of rights. Likewise, "virtually every bill . . . to regulate managed care devotes major portions to information disclosure and dissemination."¹ Proposals for "consumer-directed health care" tantalize us with the dream that well-informed patients can make markets for health care work effectively.

If disclosure requirements are popular, surely they are effective? Don't people making decisions need information, want it, and use it? Doesn't an irresistible array of arguments justify disclosure rules? The moral rationale for disclosure is that it liberates people from the servitude to others that ignorance creates. The prophylaxis rationale assumes that people can be deterred from abusing each other by requiring predators to warn the prey. The market rationale holds that the production and allocation of goods are best regulated through markets and that markets work best when purchasers know most. The welfare rationale suggests that one way to enhance people's well-being is to give them the information they need to protect themselves.

Perversely, there is good reason to doubt that disclosure requirements in health law work as intended. One way to assess disclosure rules in health law is to ask whether they succeed in the many other areas of law that require them. Are people buying worthless stocks? Securities laws say, "Disclose!" Are people borrowing money at usurious rates? Consumer protection laws say, "Disclose!" Are people injured by things they buy? Products liability law says, "Disclose!" Are police bullying criminal suspects into waiving their rights? Miranda says, "Disclose!"

Roughly speaking, the goal of disclosure requirements is to improve the decisions recipients make. The baseline for evaluation, then, is the quality of the decisions people would make were there no disclosure laws. Crudely defined, success means improving decisions enough to justify the costs of the disclosure requirement to the government, the disclosers, and the recipients.

If disclosure requirements prosper anywhere, it should be in securities markets, since they are dominated by institutions that have incentives and resources to exploit disclosed information. But even there, scholars cannot agree that companies would disclose less were there no securities laws (since companies have economic reasons to disclose information to investors) or that the disclosures that are made improve investors' decisions.

Nor is it clear that other disclosure regimes justify their costs. Take Miranda warnings. They "'have little or no effect on a suspect's propensity to talk . . . Next to the warning label on cigarette packs, Miranda is the most widely ignored piece of official advice in our society.' . . . Not only has Miranda largely failed to achieve its stated and implicit goals, but police have transformed Miranda into a tool of law enforcement."² And while the evidence of failure is hardly uniform, "the efforts of researchers to prove by scientific means that on-product warnings are indeed effective to modify safety-related behavior in actual or simulated real-world applications have generally yielded disappointing results."³

Why don't disclosure requirements work better? Principally, disclosure succeeds only if many often-onerous conditions are all met. Let us briskly review eight of them.

First, information must actually be provided. However, disclosers may have reasons to withhold it; disclosures cost money and can compromise disclosers' interest. Disclosers can respond by following the letter of the law but not the spirit, by obscuring and even suppressing information, by presenting information misleadingly, and by dressing disclosures prettily. And disclosure requirements are hard to enforce: they usually affect so many transactions that the law...