Health Insurance, Risk, and Responsibility after the Patient Protection and Affordable Care Act

47 Pages Posted: 13 Feb 2011 Last revised: 12 Sep 2011

Tom Baker

University of Pennsylvania Law School

Date Written: September 12, 2011

Abstract

This essay explores the new social contract of healthcare solidarity through private ownership, markets, choice, and individual responsibility embodied in the Patient Protection and Affordable Care Act. This essay first explains the four main health care risk distribution institutions affected by the Act – Medicare, Medicaid, the individual and small employer market, and the large group market – with an emphasis on how the Act changes those institutions and how they are financed. The essay then describes the “fair share” approach to health care financing embodied in the Act. This approach largely rejects the actuarial fairness vision of what constitutes a fair share while pointing toward a new responsibility to be as healthy as you can. This new responsibility reflects the influence of health economics and health ethics, and it is part of the embrace of risk first described in the insurance as governance literature. There are challenges to achieving the solidarity through individual responsibility envisioned in the Act – most significantly ”risk classification by design” and non-compliance with the mandates – but the Act contains regulatory tools that the states, the new Exchanges, and the Department of Health and Human Services can use to address these challenges.

Keywords: Health law, health care, insurance, insurance law, Patient Protection and Affordable Care Act

JEL Classification: H51, I12, I18

Suggested Citation

Baker, Tom, Health Insurance, Risk, and Responsibility after the Patient Protection and Affordable Care Act (September 12, 2011). University of Pennsylvania Law Review, Vol. 159, pp. 1577, 2011; U of Penn, Inst for Law & Econ Research Paper No. 11-03. Available at SSRN: https://ssrn.com/abstract=1759366

Tom Baker (Contact Author)

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-2185 (Phone)

HOME PAGE: http://www.law.upenn.edu/cf/faculty/thbaker/

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