Publication Date
2-10-2023
Abstract
One long-overlooked government function is the provision of reinsurance to insurers and other private entities to help absorb catastrophic costs when losses exceed what those institutions could be expected to bear. Yet the U.S. government fails to reinsure the health plans of ordinary Americans, a step that would shield them from outlier health events. Consider, by contrast, the longstanding federal guarantee to banks and depositors against unusual liquidity risk. The lack of an explicit state-sponsored backstop for health risk is often taken to reflect a national aversion to entitlements. This Article challenges that premise by calling attention to the many other realms in which the government provides robust material guarantees against catastrophic risk, if not to the individual beneficiary, then to the primary private insurer or financier who provides access to those goods or services. Federal reinsurance stabilizes the public’s access to benefits that we collectively deem vital, including not just banking, but also housing, agricultural commodities, higher education, and pensions. These commitments suggest not a reluctance but instead a well-established American belief in the concept of “the government as reinsurer of last resort.” In this light, the nation’s failure to provide state-sponsored reinsurance for health care is an unwarranted neglect of the state’s power and obligation to absorb high-magnitude losses, smoothing out and shoring up the underlying private risk market when it comes to people’s health. Given all the areas in which government reinsurance is already a fact of life, health care risks should at least be on equal footing.
First Page
39
Recommended Citation
Christina S. Ho, With Liberty and Reinsurance for All: The Deep Case for a Government Backstop in Health Care, 100 DENV. L. REV. 39 (2022).