What
risks should health insurance mitigate? American health scholars,
politicians, and the public at large answer this question ambivalently.
This Article defines three dominant conceptions of health insurance
that weave throughout popular and academic discourse and that echoed
in the 2010 health reform debates. The first conception is that
health insurance should primarily serve to mitigate harms to health.
This “Health Promotion” theory
relies on using health insurance to pay for medical care that most cost-effectively
preserves and improves health. Alternately, health insurance might
primarily mitigate risks to wealth from high medical care costs.
This “Financial Security” theory demands that
health insurance limit financial insecurity from these costs.
Finally, the “Brute Luck” theory, highly sensitive to the possibility
of adverse-incentive effects arising from moral hazard, demands that health
insurance protect primarily against unavoidable or
“chance” health risks that do not arise from individual behavior.
This last theory thus seeks to preserve incentives for
insureds to prevent risk themselves, while
insurance neutralizes harms from random poor health. Each theory
implies distinct principles to guide premium pricing and allocation
of premium dollars toward medical care.
The
new health reform law, the Patient Protection and Affordable Care Act
of 2010 (PPACA), manifests this “conceptual pluralism.”
It evokes all three of these notions of the types of risks Americans
should share—now more collectively post-reform—through insurance.
While the goals of these three theories dovetail at times (e.g., promoting
health will in some cases also reduce medical care costs), at other
times they are at odds. Conceptual pluralism thus complicates
implementation of PPACA as regulators must manage tensions and make
tradeoffs among these goals.