Hostname: page-component-7c8c6479df-5xszh Total loading time: 0 Render date: 2024-03-28T22:54:13.728Z Has data issue: false hasContentIssue false

The Private Insurance Market: Not Very Big and Not Insuring Much, Either

Published online by Cambridge University Press:  01 January 2021

Abstract

Creating a single national health insurance pool is not likely to destabilize the economy by supplanting the private health insurance industry. This industry insures a relatively small percentage of the population and holds very little of the risk such insurance implies. In effect, insurance companies function as middlemen, bundling risk packages to distribute to other, larger companies and so serve a limited purpose. Were insurers to handle claims for a national pool as they do for the Medicare program, any destabilization to the economy more broadly would be further minimized.

Type
Symposium Articles
Copyright
Copyright © American Society of Law, Medicine and Ethics 2018

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Dieleman, J., Campbell, M., et al., “Evolution and Patterns of Global Health Financing 1995–2014,” The Lancet 389, no. 10083 (2017), Table 1.Google Scholar
According to a Gallup poll released on March 26, 2018, 55% worry a great deal and 23% worry a fair amount about “the availability and affordability of healthcare.” Gallup, J. M. Jones, U.S. Concerns about Healthcare High; Energy, Unemployment Low (Mar. 26, 2018), available at <https://news.gallup.com/poll/231533/concerns-healthcare-high-energy-unemployment-low.aspx?utm_source=alert&utm_medium=email&utm_content=morelink&utm_campaign=syndication> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
See, for example, , H., Fiedler, M., et al., “Turmoil in The Individual Insurance Market,” NEJM Catalyst (2017).Google Scholar
Centers for Medicare & Medicaid Services, Wisconsin Fact Sheet (July 29, 2018), available at <https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/Wisconsin-fact-sheet.pdf> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
42 U.S.C.A. § 18052.Google Scholar
See the Wisconsin 1332 Waiver Application, April 18, 2018, 3-4, available at <https://oci.wi.gov/Documents/Regulation/1332%20Waiver%20WI%20Application.pdf> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
42 U.S.C.A. § 1395kk-1.Google Scholar
CMS Fast Facts, July 2018 version.Google Scholar
Tricare, Number of Beneficiaries, available at <https://www.tricare.mil/About/Facts/BeneNumbers> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
U.S. Dep’t of Veterans Affairs, About VHA, available at <https://www.va.gov/health/aboutvha.asp> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
Centers for Medicare & Medicaid Services, People Enrolled in Medicare and Medicaid (Feb. 2018), available at <https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/Downloads/MMCO_Factsheet.pdf> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
The number of uninsured in 2018 is most likely larger than this number, but, as of the publication date, there is no reliable data available for dates beyond 2016. For 2016 data, see KFF Health Insurance Coverage of the Total Population, available at <https://www.kff.org/other/state-indicator/total-population/?dataView=1&currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
For an excellent, though somewhat dated, discussion of these incentives, see Korobkin, R., “The Battle Over Self-Insured Plans, or ‘One Good Loophole Deserves Another,’” Yale Journal of Health Policy, Law & Ethics 5, no. 1 (2005):89136.Google Scholar
2017 KFF Employer Health Benefits Survey, available at <https://www.kff.org/report-section/ehbs-2017-section-10-plan-funding/#figure101> (last visited October 24, 2018).+(last+visited+October+24,+2018).>Google Scholar
Aetna Insurance, for example, has a multi-year reinsurance contract with Vitality ReIX to provide coverage for its large group coverage if losses exceed what it expects. See Aetna, Press Release, Aetna Announces Transaction with Vitality Re IX (January 29, 2018), available at <https://news.aetna.com/news-releases/aetna-announces-transaction-with-vitality-re-ix/> (last visited October 26, 2018). Excess Medical Reinsurance, also purchased by health insurers, functions more like stop loss insurance, providing coverage for catastrophic claims, typically those that exceed $1 million. For a more detailed discussion of these products, see D. Hoffer and M. Troutman, “Managing Catastrophe — Managed Care Reinsurance Market Trends and Catastrophic Medical Claims Developments,” Contingencies, March/April 2018, available at <http://contingencies.org/managing-catastrophe-managed-care-reinsurance-market-trends-catastrophic-medical-claims-developments/> (last visited October 26, 2018).+(last+visited+October+26,+2018).+Excess+Medical+Reinsurance,+also+purchased+by+health+insurers,+functions+more+like+stop+loss+insurance,+providing+coverage+for+catastrophic+claims,+typically+those+that+exceed+$1+million.+For+a+more+detailed+discussion+of+these+products,+see+D.+Hoffer+and+M.+Troutman,+“Managing+Catastrophe+—+Managed+Care+Reinsurance+Market+Trends+and+Catastrophic+Medical+Claims+Developments,”+Contingencies,+March/April+2018,+available+at++(last+visited+October+26,+2018).>Google Scholar
This is a lower deductible than the national average, but is used for simplicity. See, for example, KFF, 2017 Employer Health Benefits Survey: Employee Cost Sharing (Sept. 19, 2018), available at <https://www.kff.org/report-section/ehbs-2017-summary-of-findings/> (last visited October 26, 2018), finding that the average deductible for a single insured in employer-sponsored plans is $1505.+(last+visited+October+26,+2018),+finding+that+the+average+deductible+for+a+single+insured+in+employer-sponsored+plans+is+$1505.>Google Scholar
These claims are increasing, however. In California, there was one child who apparently cost the state Medicaid program $21 million, Karlamangla, S., “One child, a $21-million medical bill: How a tiny number of patients poses a huge challenge for Medi-Cal,” Los Angeles Times, July 16, 2017, available at <http://www.latimes.com/politics/la-me-21-million-patient-20170716-story.html> (last visited October 26, 2018). Of particular interest here, Wellmark Blue Cross in Iowa disclosed paying $1 million a month for a young boy with hemophilia complications in 2017 and used that case as a reason to exit the marketplace, though it was highly unlikely the company did not have a reinsurance policy that would pay for his care. See T. Leys, “Iowa Teen's $1 Million-Per-Month Illness No Longer a Secret,” USA Today, May 31, 2017, available at <https://www.usatoday.com/story/news/nation-now/2017/06/01/iowa-teens-1-million-per-month-illness-no-longer-secret/360919001/> (last visited October 26, 2018). (last visited October 26, 2018).' href=https://scholar.google.com/scholar?q=These+claims+are+increasing,+however.+In+California,+there+was+one+child+who+apparently+cost+the+state+Medicaid+program+$21+million,+Karlamangla,+S.,+“One+child,+a+$21-million+medical+bill:+How+a+tiny+number+of+patients+poses+a+huge+challenge+for+Medi-Cal,”+Los+Angeles+Times,+July+16,+2017,+available+at++(last+visited+October+26,+2018).+Of+particular+interest+here,+Wellmark+Blue+Cross+in+Iowa+disclosed+paying+$1+million+a+month+for+a+young+boy+with+hemophilia+complications+in+2017+and+used+that+case+as+a+reason+to+exit+the+marketplace,+though+it+was+highly+unlikely+the+company+did+not+have+a+reinsurance+policy+that+would+pay+for+his+care.+See+T.+Leys,+“Iowa+Teen's+$1+Million-Per-Month+Illness+No+Longer+a+Secret,”+USA+Today,+May+31,+2017,+available+at++(last+visited+October+26,+2018).>Google Scholar
H.B. 552, 2015 Session (Md. 2015), available at <http://mgaleg.maryland.gov/2015RS/fnotes/bil_0002/hb0552.pdf> (last visited October 26, 2018).+(last+visited+October+26,+2018).>Google Scholar
Stop Loss Insurance Model Act, available at <https://www.naic.org/store/free/MDL-92.pdf> (last visited October 26, 2018). There are other important issues with low attachment point stop loss insurance because purchasers can use this type of insurance to avoid having insurance companies comply with state capitalization requirements and other consumer protections, but that is outside the scope of this article.+(last+visited+October+26,+2018).+There+are+other+important+issues+with+low+attachment+point+stop+loss+insurance+because+purchasers+can+use+this+type+of+insurance+to+avoid+having+insurance+companies+comply+with+state+capitalization+requirements+and+other+consumer+protections,+but+that+is+outside+the+scope+of+this+article.>Google Scholar
Khoja, M. and Milliman, J. Qin, White Paper, 2016 Employer Stop-Loss Market: A Milliman Survey (June 2017): 2, available at <http://us.milliman.com/uploadedFiles/insight/2017/Employer-Stop-Loss-Survey.pdf> (last visited October 26, 2018).+(last+visited+October+26,+2018).>Google Scholar
It should be stressed here that these plans are commonplace. BCS Insurance, for example, has stop loss plans tailored to Blue Cross Blue Shield insurance companies and advertises stop loss attachment for claims as low as $25,000. See BCS Insurance Company, Medical Stop Loss, available at <http://bcsins.com/medical-stop-loss.html> (last visited October 26, 2018). It also promotes its reinsurance plans in part by arguing that reinsuring a number of plans will “creat[e]… economies of scale that generate increased actuarial credibility[.]” See BCS Insurance Company, Excess Reinsurance, available at <http://bcsins.com/excess-reinsurance.html> (last visited October 26, 2018).+(last+visited+October+26,+2018).+It+also+promotes+its+reinsurance+plans+in+part+by+arguing+that+reinsuring+a+number+of+plans+will+“creat[e]…+economies+of+scale+that+generate+increased+actuarial+credibility[.]”+See+BCS+Insurance+Company,+Excess+Reinsurance,+available+at++(last+visited+October+26,+2018).>Google Scholar
Patient Protection and Affordable Care Act, 42 U.S.C. § 18001 (2010).Google Scholar
Bipartisan Health Care Stabilization Act of 2018, Congressional Budget Office Cost Estimate, March 19, 2018.Google Scholar