Insurance Law Commons^™

Small Change, Big Consequences — Partial Medicaid Expansions Under The Aca, Adrianna Mcintyre, Allan M. Joseph, Nicholas Bagley

Articles

Though congressional efforts to repeal and replace the Affordable Care Act (ACA) seem to have stalled, the Trump administration retains broad executive authority to reshape the health care landscape. Perhaps the most consequential choices that the administration will make pertain to Medicaid, which today covers more than 1 in 5 Americans. Much has been made of proposals to introduce work requirements or cost sharing to the program. But another decision of arguably greater long-term significance has been overlooked: whether to allow “partial expansions” pursuant to a state Medicaid waiver. Arkansas has already submitted a waiver request for a partial expansion, …

Nfib V. Sebelius And The Individual Mandate: Thoughts On The Tax/Regulation Distinction, Kyle D. Logue

Michigan Business & Entrepreneurial Law Review

When Chief Justice John Roberts wrote the opinion of the Court in National Federation of Independent Businesses v. Sebelius (NFIB) explaining the constitutionality of the Affordable Care Act’s (ACA) minimum essential coverage provision (sometimes referred to as the individual mandate), he reasoned that the mandate—or, more precisely, the enforcement provision that accompanied the mandate (the Shared Responsibility Payment or SRP)—could be understood as a tax on the failure to purchase health insurance. According to this view, the enactment of the mandate and its accompanying enforcement provisions fell within Congress’s virtually unlimited power to “lay and collect taxes.” This tax-based interpretation …

The Affordable Care Act, Experience Rating, And The Problem Of Non-Vaccination, Eric Esshaki

University of Michigan Journal of Law Reform Caveat

Polio, the whooping cough, and the mumps, among many other communicable diseases, were once prevalent in communities within the developed world and killed millions of people.1 The advent of vaccinations contained or eradicated several of these diseases.2 However, these diseases still exist in the environment3 and are making a comeback in the United States.4 Their persistence is directly attributable to the rising trend among parents refusing to vaccinate their children.5 One proposed solution to this problem is to hold parents liable in tort when others are harmed by their failure to vaccinate. Another proposed solution argues that parents should pay …

Three Words And The Future Of The Affordable Care Act, Nicholas Bagley

Articles

As an essential part of its effort to achieve near universal coverage, the Affordable Care Act (ACA) extends sizable tax credits to most people who buy insurance on the newly established health care exchanges. Yet several lawsuits have been filed challenging the availability of those tax credits in the thirty-four states that refused to set up their own exchanges. The lawsuits are premised on a strained interpretation of the ACA that, if accepted, would make a hash of other provisions of the statute and undermine its effort to extend coverage to the uninsured. The courts should reject this latest effort …

The Unintended Effects Of Government-Subsidized Weather Insurance, Omri Ben-Shahar, Kyle D. Logue

Articles

Catastrophes from severe weather are perhaps the costliest accidents humanity faces. While we are still a long way from technologies that would abate the destructive force of storms, there is much we can do to reduce their effect. True, we cannot regulate the weather, but through smart governance and correct incentives we can influence human exposure to the risk of bad weather. We may not be able to control wind or storm surge, but we can prompt people to build sturdier homes with stronger roofs far from floodplains. We call these catastrophes "natural disasters," but they are the result of …

No Good Options: Picking Up The Pieces After King V. Burwell, Nicholas Bagley, David K. Jones

Articles

If the Supreme Court rules against the government in King v. Burwell, insurance subsidies available under the Affordable Care Act (ACA) will evaporate in the thirty-four states that have refused to establish their own health-care exchanges. The pain could be felt within weeks. Without subsidies, an estimated eight or nine million people stand to lose their health coverage. Because sicker people will retain coverage at a much higher rate than healthier people, insurance premiums in the individual market will surge by as much as fifty percent. Policymakers will come under intense pressure to mitigate the fallout from a government loss …

Predicting The Fallout From King V. Burwell - Exchanges And The Aca, Nicholas Bagley, David K. Jones, Timothy Stoltzfus Jost

Articles

The U.S. Supreme Court's surprise announcement on November 7 that it would hear King v. Burwell struck fear in the hearts of supporters of the Affordable Cara Act (ACA). At stake is the legality of an Internal Revenue Service (IRS) rule extending tax credits to the 4.5 million people who bought their health plans in the 34 states that declined to establish their own health insurance exchanges under the ACA. The case hinges on enigmatic statutory language that seems to link the amount of tax credits to a health plan purchased "through an Exchange established by the State." According to …

Model-Based Pricing In Hurricane Insurance: A Case Study For Judicial Reform Of The Mccarran-Freguson Act, Benjamin Holland Able

University of Michigan Journal of Law Reform

The McCarran-Ferguson Act (MFA) exempts various aspects of state insurance operations from federal antitrust enforcement. This exemption is a source of longstanding controversy, due in part to its potentially harmful effect on consumers in product pricing. In hurricane insurance, there is a burgeoning debate concerning insurers' use of predictive computer models rather than shared loss data to set premiums for the industry. By using these models in hurricane-prone states, insurers have increased the price of hurricane insurance dramatically. Where these new prediction methods are used, MFA exemption may facilitate supracompetitive pricing in ways its architects could not have foreseen. This …

Essential Health Benefits And The Affordable Care Act: Law And Process, Nicholas Bagley, Helen Levy

Law & Economics Working Papers

Beginning in 2014, the Affordable Care Act (ACA) will require private insurance plans sold in the individual and small-group markets to cover a roster of “essential health benefits.” Precisely which benefits should count as essential, however, was left to the discretion of the Department of Health and Human Services (HHS). The matter was both important and controversial. HHS nonetheless announced its policy on essential health benefits by posting on its website a 13-page bulletin stating that it would allow each state to define essential benefits for itself by choosing a “benchmark” plan modeled on existing plans in the state. On …

Access To Medicaid: Recognizing Rights To Ensure Access To Care And Services, Colleen Nicholson

University of Michigan Journal of Law Reform Caveat

The Supreme Court has defined Medicaid as “a cooperative federal-state program through which the Federal Government provides financial assistance to States so that they may furnish medical care to needy individuals.” In June 2012, the Court found the Patient Protection and Affordable Care Act’s (PPACA) Medicaid expansion unconstitutional. The Court took issue with the threat to withhold all of a state’s Medicaid funding if they did not comply with the expansion, finding it coercive and a fundamental shift in the Medicaid paradigm. However, Medicaid in its current form may not always be effective at providing beneficiaries with timely access to …

Re-Thinking Health Insurance, Hans Biebl

University of Michigan Journal of Law Reform Caveat

In May 2009, while promoting the legislation that would become the Patient Protection and Affordable Care Act (PPACA), President Obama said that rising health care costs threatened the balance sheets of both the federal government and private enterprise. He noted that any increase in health care spending consumes funds that “companies could be using to innovate and to grow, making it harder for them to compete around the world.” Despite the rancorous debate that surrounded this health care legislation and which culminated with the Supreme Court’s decision in National Federation of Independent Businesses, the PPACA was not a radical piece …

Reconstructing The Individual Mandate As An Escrow Account, Gregg D. Polsky

Michigan Law Review First Impressions

The recent health care reform law's most controversial provision is the individual mandate, which imposes a fine on individuals who fail to obtain a minimum level of health insurance coverage. Many object to this policy, arguing that the government shouldn't force individuals to purchase health insurance. Others believe that the mandate is a necessary component to health care reform. What has been missed in the discussion is that Congress could restructure the individual mandate to avoid the requirement that individuals purchase health insurance while still fulfilling its principal function. The principal purpose of the mandate is not to require individuals …

(Debate) Medicare: Did The Devil Make Us Do It?, D. A. Hyman, Jill R. Horwitz

Articles

In this lively and creative debate, Professors David Hyman and Jill Horwitz argue about the virtues and vices of the federal Medicare program. As some predict a bleak future for the American’s government’s ability (or inability) to continue paying for Medicare as the population ages, this debate shows that there is genuine disagreement about the severity of the problem. In his Opening Statement, Professor Hyman offers a satirical letter to the Devil from one of his demonic servants, describes the Medicare program through the lens of the seven deadly sins. Arguing that Medicare’s faults are represented in each sin, the …

Clearing The Way For An Effective Federal-State Partnership In Health Reform, Eleanor D. Kinney

University of Michigan Journal of Law Reform

At century's end, states have assumed a very different role in the design, implementation, and operation of health service programs than they did twenty-five years ago. In the current volatile political atmosphere particularly at the federal level, states have taken up the mantle of healthcare reform in the final years of the 1990s. Yet there remain problems and difficulties with the current federal-state relationship in health reform. The critical question is whether states can successfully accomplish genuine reform given its politically charged, complex and costly nature. This question takes on particular significance for the most important reform-expanding coverage to the …

Drive-Through Deliveries: In Support Of Federal Legislation To Mandate Insurer Coverage Of Medically Sound Minimum Lengths Of Postpanum Stays For Mothers And Newborns, Freeman L. Farrow

University of Michigan Journal of Law Reform

President Clinton signed the Newborns' and Mothers' Health Protection Act of 1996 into law on September 26, 1996. The Act requires insurers that provide maternity benefits to cover medically sound minimum lengths of inpatient, postpartum stays according to the joint guidelines of the American Academy of Pediatrics and the American College of Obstetrics and Gynecology. This Note discusses the historical context in which the necessity for passage of protective legislation arose, the interplay between state and federal statutes that created the need for federal legislation to provide desired protections for postpartum patients and examines the provisions of the Act. This …

Procedural Reform In The Unemployment Insurance System, Marla D. Clark, Jesse S. Reyes

University of Michigan Journal of Law Reform

In the 1990s, we have witnessed a political movement toward smaller governament and reduced federal funding for social benefits programs. At the same time, evidence suggests that the unemployment insurance (UI) system as it works today still may not benefit all of its intended recipients. The need for improved UI services and the scarcity of resources available to meet this need create a tension between political pressures and constitutional considerations of fairness and due process. While constitutional considerations always override political pressures, the real issue is where to strike the appropriate balance between fundamental fairness and economic reality.

Clarifying Conditions For Nonmonetary Eligibility In The Unemployment Insurance System, Amy B. Chasanov

University of Michigan Journal of Law Reform

This Article explores the nonmonetary eligibility requirements that unemployed individuals must meet in order to receive Unemployment Insurance (UI) benefits. These eligibility criteria, which are decided by the states, vary significantly. Because states often have relatively vague statutes regarding their specific nonmonetary eligibility criteria, state rules, regulations, and case law interpret these statutes and better define the criteria. The author discusses the results of a recent survey of UI nonmonetary eligibility criteria which provides information on the status of criteria across the nation than has been available previously. The author concludes that policy reform in this area should be focused …

Corporate Indemnification Of Directors And Officers: Time For A Reappraisal, K.G. Jan Pillai, Craig Tractenberg

University of Michigan Journal of Law Reform

This Article evaluates the benefits and burdens of shifting litigation risk from management to the enterprise. The Article begins by considering the nature of the legal risks confronting the corporate executive, and the principles of common law that developed to counter those risks. The Article proceeds to assess the two statutory responses to threats of personal liability against the corporate executive: indemnification statutes, and director and officer insurance. Finally, after comparing the effective absolute immunity available to corporate executives with the qualified immunity enjoyed by high-level government officials, the Article concludes that indemnification practices have overinsulated the corporate officer from …

The Nonprofit Health Care Corporation Reform Act Of 1980, David L. Hollister, Patience A. Drake

University of Michigan Journal of Law Reform

In recent years, Blue Cross/Blue Shield has been the subject of considerable controversy. Its critics charge the non-profit, tax-exempt corporation with being unduly secretive, arrogantly unresponsive to consumer interest and not vigorous in its cost containment efforts. These criticisms, along with a variety of other factors, led to the legislative reform I am here to talk to you about this evening.

Regulation Through The Looking Glass: Hospitals, Blue Cross, And Certificate-Of-Need, Sallyanne Payton, Rhoda M. Powsner

Michigan Law Review

A clear focus on the commitment of the public health and hospital establishments to the large teaching hospital and their belief in rationalizing the health care system through community-based planning allows us to understand the ideas and institutions that have produced our present system of hospital regulation. It can also help us to understand the structure and behavior of the hospital industry and can illuminate current controversies over health care policy.

What follows is a narrative account of the development of regional planning and certificate-of-need legislation. As part of that story, we trace the evolution of the Blue Cross, explain …

No-Fault Auto Reparation In Florida: An Empirical Examination Of Some Of Its Effects, Joseph W. Little

University of Michigan Journal of Law Reform

This article discusses certain aspects of reparations systems that can be described by statistical parameters, but it does not attempt to evaluate whether or not pervasive sociological changes may result from legal modifications of the concept of fault. It may be that any erosion of fault as a legal concept will result in a decline in individual responsibility. The fact that some members of the bar and some members of the medical profession allegedly regularly engage in conspiracies to defeat the $1,000 medical expense threshold of the Florida statute could be cited as evidence of such deterioration. Nevertheless, this writer …

The Expanding Jurisdiction Of The Securities And Exchange Commission: Variable Annuities And Bank Collective Investment Funds, John W. Erickson

Michigan Law Review

The Securities and Exchange Commission is presently attempting to assert jurisdiction over certain aspects of two industries traditionally exempt from federal securities regulation-insurance and banking. The SEC claims that two recently developed investment vehicles-variable annuities in the insurance field and pooled funds of managing agency accounts in the banking field-are virtually the same as mutual funds, which are subject to SEC regulation under the Investment Company Act of 1940. (A mutual fund is essentially a fund (usually in corporate form), the participants' contributions to which are collectively invested in a portfolio of securities, each participation representing a pro rata interest …

Private Insurance As A Solution To The Driver-Guest Dilemm, Harvey R. Friedman

Michigan Law Review

The duty of the driver of an automobile to his nonpaying passenger, and liability arising from the breach of that duty, has long presented a troublesome area of litigation for the courts and the parties involved. Application of standards unsuited for the peculiar risks of automotive transportation has produced inadequate compensation in some cases and excessive recoveries in others. Meanwhile, trial calendars are overcrowded with personal injury litigation, and insurance companies must bear the awards of sympathetic juries and those resulting from collusion between passenger and driver. The over-all expense of this method of determination of liability, far too little …

Insurance - Rate Regulation - Competitors' Standing To Seek Administrative Review Of Rate Filings, Joel N. Simon S. Ed.

Michigan Law Review

The purpose of this comment is to explore, in the light of the All-Industry pattern of regulation and the applicable public policy considerations, the right of rating bureaus and their members to such standing at the administrative level.

Insurance - Motor Vehicle Accident Indemnification Corporation Law - Compensation Assured For Innocent Automobile Accident Victims, Bartlett A. Jackson

Michigan Law Review

A 1958 New York statute requires the organization of an Indemnification Corporation by companies selling automobile liability insurance within the state. The corporation will assess members in order to establish a fund which will be used to reimburse persons who are injured in a motor vehicle accident and are unable to collect from the person causing the injury. In order to qualify, the injured party must not be covered by a policy of automobile insurance nor may he own an uninsured motor vehicle. He must secure a judgment against the financially irresponsible driver and petition the court to order the …

Atomic Energy - Indemnity Legislation - Anderson Amendments To The Atomic Energy Act Of 1954, Dudley H. Chapman S.Ed.

Michigan Law Review

The Anderson Amendments were enacted to encourage private industry to enter the atomic energy field by removing the risk of excessive liability for a major nuclear reactor disaster. Such a disaster could result in liability far in excess of available insurance coverage. The solution provided by the new legislation has three aspects: (1) After private financial protection, geared to the amount of available insurance, is obtained by a person licensed by the Atomic Energy Commission, (2) the Commission will execute an agreement to indemnify (not insure) the licensee and "any other person who may be liable for public liability" to …

The Adequacy Of State Insurance Rate Regulation: The Mccarran-Ferguson Act In Historical Perspective, Spencer L. Kimball, Ronald N. Boyce

Michigan Law Review

Any substantial inquiry into the functioning of the insurance commissioner in American society poses the question, at the threshold of the inquiry, whether state regulatory power over the insurance business is likely to continue, or whether insurance will fall increasingly under the aegis of the federal government. This article seeks to ascertain the minimum conditions for the permanent preservation of state regulatory power over the insurance business, and to determine whether they are now satisfied. These conditions may be summarily stated: the Congress of the United States has shown its willingness to apply federal antitrust and marketing legislation to the …

Federal Procedure-Removal Jurisdiction-Meaning Of "Separate And Independent'' As Used In The United States Judicial Code, Paul Harrison S. Ed.

Michigan Law Review

The respondent suffered a loss by fire, and being uncertain as to which party was liable to compensate for this loss, joined the petitioner and two others as defendants in a suit asking for alternative relief. The petitioner and one of the defendants were insurance corporations with residence outside the state, while the third defendant's residence was the same as that of the respondent. The corporate defendants secured removal of the case to the federal court, and on a trial of the issues, a judgment was rendered for the respondent against the petitioner in the amount of the insurance claimed …

Judgments - Declaratory Judgments - Scope Of The Federal Act, Michigan Law Review

Michigan Law Review

After the insured had made formal claims for total disability benefits for four years without bringing action to enforce them, the insurer, having at all times denied the total disability of the insured, brought suit in a federal district court for a declaration that it was not liable for the benefits claimed and that the policies had lapsed for non-payment of premiums. The district court granted a motion to dismiss because the insurer failed to present a "controversy" within the Federal Constitution and the Declaratory Judgments Act and because the insurer had no "rights or other legal relations" to be …