Insurance Law Commons^™

The Cost Of Legal Restrictions On Experience Rating, Levon Barseghyan, Francesca Molinari, Darcy Steeg Morris, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

We investigate the cost of legal restrictions on experience rating in auto and home insurance. The cost is an opportunity cost as experience rating can mitigate the problems associated with unobserved heterogeneity in claim risk, including mispriced coverage and resulting demand distortions. We assess this cost through a counterfactual analysis in which we explore how risk predictions, premiums, and demand in home insurance and two lines of auto insurance would respond to unrestricted multiline experience rating. Using claims data from a large sample of households, we first estimate the variance-covariance matrix of unobserved heterogeneity in claim risk. We then show …

The Kids Are Not Alright: Leveraging Existing Health Law To Attack The Opioid Crisis Upstream, Yael Cannon

Georgetown Law Faculty Publications and Other Works

The opioid crisis is now a nationwide epidemic, ravaging both rural and urban communities. The public health and economic consequences are staggering; recent estimates suggest the epidemic has contracted the U.S. labor market by over one million jobs and cost the nation billions of dollars. To tackle the crisis, scholars and health policy initiatives have focused primarily on downstream solutions designed to help those who are already in the throes of addiction. For example, the major initiative announced by the U.S. Surgeon General promotes the dissemination of naloxone, which helps save lives during opioid overdoses.

This Article argues that the …

Do Credit-Based Insurance Scores Proxy For Income In Predicting Auto Claim Risk?, Darcy Steeg Morris, Daniel Schwarcz, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

Auto insurers often use credit-based insurance scores in their underwriting and rating processes. The practice is controversial—many consumer groups oppose it, and most states regulate it, in part out of concern that insurance scores proxy for policyholder income in predicting claim risk. We offer new evidence on this issue in the context of auto insurance. Prior studies on the subject suffer from the limitation that they rely solely on aggregate measures of income, such as the median income in a policyholder's census tract or zip code. We analyze a panel of households that purchased auto and home policies from a …

Inference Under Stability Of Risk Preferences, Levon Barseghyan, Francesca Molinari, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

We leverage the assumption that preferences are stable across contexts to partially identify and conduct inference on the parameters of a structural model of risky choice. Working with data on households' deductible choices across three lines of insurance coverage and a model that nests expected utility theory plus a range of non-expected utility models, we perform a revealed preference analysis that yields household-specific bounds on the model parameters. We then impose stability and other structural assumptions to tighten the bounds, and we explore what we can learn about households' risk preferences from the intervals defined by the bounds. We further …

Hobby Lobby, Birth Control And Our Ongoing Cultural Wars: Pleasure And Desire In The Crossfires, Robin West

Georgetown Law Faculty Publications and Other Works

Both sides of the birth control debate agree that birth control artificially prevents or interrupts conception, allowing women to control their own fertility and allowing heterosexual men and women to enjoy unconstrained sexual liberty. However, the decision in Hobby Lobby omitted all discussion of this central function of birth control, and contained no mention of arguments for or against birth control that assume it.

This piece examines and criticizes the two major arguments opposing and supporting birth control on this understanding of its function and core social meaning: first the neo-natural lawyers’ argument against birth control advanced in a papal …

Fiscal Federalism As Risk-Sharing: The Insurance Role Of Redistributive Taxation, John R. Brooks

Georgetown Law Faculty Publications and Other Works

In addition to funding government and redistributing income, a redistributive tax-and-transfer system, and a progressive income tax in particular, provides insurance against the risk of uncertain future income. By providing for high taxes for high incomes, and low taxes, exemptions, and transfers for low incomes, a progressive income tax lowers the volatility of potential after-tax income relative to a lump-sum tax. This insurance function is distinct from the redistributive function of the system, since it provides a direct risk-mitigation benefit to the taxpayer himself, rather than simply redistributing income from one taxpayer to another.

This article analyzes the question of …

No Small Feat: Who Won The Health Care Case (And Why Did So Many Law Professors Miss The Boat)?, Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

In this essay, prepared as the basis for the 2013 Dunwody Distinguished Lecture in Law at the Fredric G. Levin College of Law, University of Florida, I describe five aspects of the Supreme Court’s decision in NFIB v. Sebelius that are sometimes overlooked or misunderstood. (1) The Court held that imposing economic mandates on the people was unconstitutional under the Commerce and Necessary and Proper Clauses; (2) Whether viewed from a formalist or realist perspective, Chief Justice Roberts’ reasoning was the holding in the case; (3) The Court did not uphold the constitutionality of the individual insurance mandate under the …

The Gravitational Force Of Originalism, Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

In part I of this essay, prepared for the Fordham conference on “The New Originalism and Constitutional Law,” I describe four aspects of the New Originalism: (1) The New Originalism is about identifying the original public meaning of the Constitution rather than the original framers intent; (2) The interpretive activity of identifying the original public meaning of the text is a purely descriptive empirical inquiry; (3) But there is also a normative tenet of the New Originalism that contends that the original public meaning of the text should be followed; (4) Distinguishing between the activities of interpretation and construction identifies …

Distinguishing Probability Weighting From Risk Misperceptions In Field Data, Levon Barseghyan, Francesca Molinari, Ted O'Donoghue, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

The paper outlines a strategy for distinguishing rank-dependent probability weighting from systematic risk misperceptions in field data. Our strategy relies on singling out a field environment with two key properties: (i) the objects of choice are money lotteries with more than two outcomes and (ii) the ranking of outcomes differs across lotteries. We first present an abstract model of risky choice that elucidates the identification problem and our strategy. The model has numerous applications, including insurance choices and gambling. We then consider the application of insurance deductible choices and illustrate our strategy using simulated data.

Do Damages Caps Reduce Medical Malpractice Insurance Premiums?: A Systematic Review Of Estimates And The Methods Used To Produce Them, Kathryn Zeiler, Lorian E. Hardcastle

Georgetown Law Faculty Publications and Other Works

Despite common claims made in policy debates, the theoretical connection between tort reform and medical malpractice insurance premiums is ambiguous. Simple models suggest reforms such as statutory damages caps reduce premiums. More elaborate models that account for changes in physician behavior suggest caps might increase or have no impact on premiums. A number of empirical studies have been conducted to estimate the impacts of caps on premiums, and several qualitative literature reviews have attempted to draw general conclusions from the literature. No review, however, has offered a comprehensive and systematic analysis of the full set of empirical studies. This chapter …

The Power To Block The Affordable Care Act: What Are The Limits?, John D. Kraemer, Lawrence O. Gostin

Georgetown Law Faculty Publications and Other Works

Though Supreme Court upheld most parts of the Affordable Care Act (ACA), Congress’ goals in enacting it could still be frustrated by non-implementation. During his campaign for president, Governor Romney promised “to issue Obamacare waivers to all fifty states.” While such blanket waivers would likely violate the Constitution’s Take Care Clause, the ACA does permit other waivers. To be lawful, however, they must meet certain requirements designed to enhance access and lower cost. A president who opposes the ACA might be able to limit its implementation by refusing to issue premium subsidies in federally operated insurance exchanges, and this might …

The Nature Of Risk Preferences: Evidence From Insurance Choices, Levon Barseghyan, Francesca Molinari, Joshua C. Teitelbaum, Ted O'Donoghue

Georgetown Law Faculty Publications and Other Works

The authors use data on insurance deductible choices to estimate a structural model of risky choice that incorporates "standard" risk aversion (diminishing marginal utility for wealth) and probability distortions. They find that probability distortions--characterized by substantial overweighting of small probabilities and only mild insensitivity to probability changes--play an important role in explaining the aversion to risk manifested in deductible choices. This finding is robust to allowing for observed and unobserved heterogeneity in preferences. They demonstrate that neither Kőszegi-Rabin loss aversion alone nor Gul disappointment aversion alone can explain our estimated probability distortions, signifying a key role for probability weighting.

Justice Roberts’ America, Robin West

Georgetown Law Faculty Publications and Other Works

Less than a week after the Roberts Court issued its decision in National Federation of Independent Business v Sebelius, Jeffrey Toobin, writing in The New Yorker, compared the first part of Chief Justice John Roberts's opinion, in which he found that the Commerce Clause did not authorize Congress to enact the "individual mandate" section of the Affordable Care Act (ACA) that requires all individuals to buy health insurance, with an Ayn Rand screed, noting that the pivotal sections of the argument were long on libertarian rhetoric but short on citations of authority. Roberts held (although "held" might be …

An O’Neill Institute Briefing Paper: The Supreme Court’S Landmark Decision On The Affordable Care Act: Healthcare Reform’S Ultimate Fate Remains Uncertain, Emily W. Parento, Lawrence O. Gostin

O'Neill Institute Papers

The Supreme Court’s decision on the constitutionality of the Patient Protection and Affordable Care Act (ACA) is a landmark on the path toward ensuring universal access to health care in the United States. In a 5-4 decision written by Chief Justice Roberts, the Court upheld the law in its entirety with the sole exception that Congress may not revoke existing state Medicaid funding to penalize states that decline to participate in the Medicaid expansion under the ACA. In this O’Neill Institute Briefing, we explain and analyze the Court’s decision, focusing on the individual purchase mandate and the Medicaid expansion, while …

Healthcare Reform Hangs In The Balance, Lawrence O. Gostin

O'Neill Institute Papers

In this timely new briefing, Professor Lawrence O. Gostin, University Professor and Faculty Director, O’Neill Institute for National and Global Health Law, Georgetown University writes:

Prior to Tuesday’s arguments, I believed that the Supreme Court would uphold the health insurance purchase mandate by a comfortable margin. But now I believe that health care reform hangs in the balance. Here are the key arguments on which the future of President Obama’s health care reform depends: a greater freedom, cost-shifting, the health care market, acts versus omissions, limiting principles, the population-base approach, and what is necessary and proper. If the Court strikes …

Why The Affordable Care Act's Individual Purchase Mandate Is Both Constitutional And Indispensable To The Public Welfare, Lawrence O. Gostin

O'Neill Institute Papers

Integral to the Affordable Care Act's (ACA’s) conceptual design is the individual purchase mandate, which requires most individuals to pay an annual tax penalty if they do not have health insurance by 2014. Despite the vociferous opposition, the mandate is the most “market-friendly” financing device because it relies on the private sector. Ironically, less market-oriented reforms such as a single-payer system clearly would have been constitutional.

It is common sense for everyone to purchase health insurance and thus gain security against the potentially catastrophic costs of treating a serious illness or injury. However, Congress’ method of ensuring that everyone has …

Affordable Care Act Litigation: The Supreme Court And The Future Of Health Care Reform, Lawrence O. Gostin, Kelli K. Garcia

Georgetown Law Faculty Publications and Other Works

In Florida v. HHS, a lawsuit brought on behalf of 26 states challenging the constitutionality of the Patient Protection and Affordable Care Act (ACA), the Supreme Court will determine the future direction of health care reform in the United States. During the unprecedented 5-1/2 hours of oral arguments, the Court will hear 4 issues: the individual purchase mandate, severability, the Medicaid expansion and the Anti-Injunction Act.

The states challenging the ACA maintain that the purchase mandate uniquely penalizes individuals for failing to purchase insurance. Uninsured individuals, however, rarely do nothing. Instead, they self-insure, rely on family, and cost-shift to …

Health Care And The Illegal Immigrant, Patrick J. Glen

Georgetown Law Faculty Publications and Other Works

The question of whether illegal immigrants should be entitled to some form of health coverage in the United States sits at the uneasy intersection of two contentious debates: health reform and immigration reform. Befitting this place, the rhetoric surrounding the issue has been exponentially heightened by the multiplying effects of combining two vitriolic debates. On one side, it is argued that the United States has a moral obligation to provide health care to all those within its borders needing such assistance. On the other, it is argued with equal force that those illegally present in this country should not be …

Improving The Population’S Health: The Affordable Care Act And The Importance Of Integration, Lorian E. Hardcastle, Katherine L. Record, Peter D. Jacobson, Lawrence O. Gostin

O'Neill Institute Papers

Heath care and public health are typically conceptualized as separate, albeit overlapping, systems. Health care’s goal is the improvement of individual patient outcomes through the provision of medical services. In contrast, public health is devoted to improving health outcomes in the population as a whole through health promotion and disease prevention. Health care services receive the bulk of funding and political support, while public health is chronically starved of resources. In order to reduce morbidity and mortality, policymakers must shift their attention to public health services and to the improved integration of health care and public health. In other words, …

Are Risk Preferences Stable Across Contexts? Evidence From Insurance Data, Levon Barseghyan, Jeffrey Prince, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

Using a unique data set, the authors test whether households' deductible choices in auto and home insurance reflect stable risk preferences. Their test relies on a structural model that assumes households are objective expected utility maximizers and claims are generated by household-coverage specific Poisson processes. They find that the hypothesis of stable risk preferences is rejected by the data. Their analysis suggests that many households exhibit greater risk aversion in their home deductible choices than their auto deductible choices. They find that their results are robust to several alternative modeling assumptions.

So Much For The Commerce Clause Challenge To Individual Mandate Being "Frivolous", Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

Remember when the Commerce Clause challenge to the individual insurance mandate was dismissed by all serious and knowledgeable constitutional law professors and Nancy Pelosi as "frivolous"? Well, as Jonathan notes, the administration is now apparently telling the New York Times that the individual insurance "requirement" and "penalty" is really an exercise of the Tax Power of Congress.

Turning Citizens Into Subjects: Why The Health Insurance Mandate Is Unconstitutional, Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

In 2010 something happened in this country that has never happened before: Congress required that every person enter into a contractual relationship with a private company. While the author realizes that writers make lots of factual claims that readers are wise to be skeptical about, he proves that an economic mandate like this one is unprecedented. If this mandate had ever happened before, everyone reading this passage would know all the contracts the federal government requires them to make, upon pain of a penalty enforced by the Internal Revenue Service (IRS). No reader, however, can recite any such mandate and …

Family Security Insurance: A New Foundation For Economic Security, Workplace Flexibility 2010, Georgetown University Law Center, Berkeley Center On Health, Economic & Family Security, Uc Berkeley School Of Law

Published Reports

A report released by Georgetown Law's Workplace Flexibility 2010 and the Berkeley Center on Health, Economic & Family Security (Berkeley CHEFS) outlining a blueprint for establishing and financing a new national insurance program to provide wage replacement for time off for health and caregiving needs. The report describes the need among working Americans for time off from work to address personal illness, to care for a new child, or to care for a loved one with a serious illness. It argues that the need for time off is no longer an issue for individual families or select industries, but a …

Health Insurance Exchanges: Legal Issues, Timothy S. Jost

O'Neill Institute Papers

Health insurance exchanges (HIE) are entities that organize the market for health insurance by connecting small businesses and individuals into larger pools that spread the risk for insurance companies, while facilitating the availability, choice and purchase of private health insurance for the uninsured. While there are legal issues that warrant consideration under a federal, state, or private exchange framework, those issues are not insurmountable barriers to implementation.

The Role Of Erisa Preemption In Health Reform: Opportunities And Limits, Peter D. Jacobson

O'Neill Institute Papers

The Employee Retirement Income Security Act (ERISA) is a federal law regulating the administration of private employer-sponsored benefits including health benefits (i.e., health insurance offered by an employer). In general, since the federal government has exercised its authority to preempt state regulation of the administration of private employer-sponsored health plans, states are blocked from enforcing laws interfering with ERISA.

As many states pursue health care reform experiments, ERISA preemption becomes relevant as a potential limit on the scope and type of reforms states are able to enact. The dominant trend in ERISA litigation has been to preempt state legislation and …

Insurance Discrimination On The Basis Of Health Status: An Overview Of Discrimination Practices, Federal Law And Federal Reform Options, Sara Rosenbaum

O'Neill Institute Papers

Actuarial underwriting, or discrimination based on an individual’s health status, is a business feature of the voluntary private insurance market. The term “discrimination” in this paper is not intended to convey the concept of unfair treatment, but rather how the insurance industry differentiates among individuals in designing and administering health insurance and employee health benefit products.

Discrimination can occur at the point of enrollment, coverage design, or decisions regarding scope of coverage. Several major federal laws aimed at regulating insurance discrimination based on health status focus at the point of enrollment. However, because of multiple exceptions and loopholes, these laws …

The Purchase Of Insurance Across State Lines In The Individual Insurance Market, Stephanie W. Kanwit

O'Neill Institute Papers

Proposals to allow the purchase of insurance across state lines (PASL) have gained some support in recent years. Health insurers have traditionally been allowed to sell a policy only within the state that approved and regulates that particular policy. PASL would allow insurers to sell a policy approved in one state to people residing in any state.

Any federal legislation to enact PASL in an individual insurance market would have to address two main legal considerations: 1) the McCarran-Ferguson Act, which allows the states to retain their regulatory authority over insurance, and 2) a constitutional prohibition against the commandeering of …

Erisa Misrepresentation And Nondisclosure Claims: Securities Litigation Under The Guise Of Erisa?, Clovis Trevino Bravo

Georgetown Law Student Series

In the wake of recent corporate scandals and dramatic market downturns, many employees whose retirement savings plans were heavily invested in the stock of their employer have seen their account balances substantially depleted. To recover for their losses, plan participants have filed lawsuits under the Employee Retirement Income Security Act (ERISA) alleging that plan fiduciaries made misrepresentations or failed to disclose material information about the suitability of investing in the company stock. These suits are generally derivative or companion cases to securities class actions based on the same allegations of misrepresentations or nondisclosures. Even though there is a significant overlap …

Risk Governance And Deliberative Democracy In Health Care, Nan D. Hunter

Georgetown Law Faculty Publications and Other Works

I argue in this article that the concept of risk-centered governance is the best theoretical paradigm for understanding health law and the health care system. Over the past 20 years, an insurance-inflected discourse has migrated from the purely financial side of the health system into the heart of traditional medicine - the doctor-patient relationship. Rather than focus on doctrinal strands, I argue that scholars should analyze the law of health care as a set of governance practices organized around managing and allocating financial, as well as clinical, risk.

Over the same period, the body of law that structures most private …

H.R. 3355, The Homeowners Defense Act Of 2007: Hearing Before The Subcomm. On Housing And Community Opportunity And The Subcomm. On Capital Markets Of The H. Comm. On Financial Services, 110th Cong., Sept. 6, 2007 (Statement Of John D. Echeverria, Geo. U. L. Center), John D. Echeverria

Testimony Before Congress

No abstract provided.