Obamacare and the Competing Conceptions of Insurance

Kenneth Abraham, Four Conceptions of Insurance, ___ U. Pa. L. Rev. ___ (forthcoming 2013), available at SSRN.

In the highly contentious debates over the Patient Protection and Affordable Care Act (ACA or “Obamacare”), different conceptions of health insurance vied for supremacy. But the struggle occurred silently. The debaters never explicitly acknowledged—and may not have completely understood—that the foundation of their disagreement might be their underlying sense of what health insurance is and ought to be. Ken Abraham has ably shone a light on this silent struggle in his recent article, Four Conceptions of Insurance.

Abraham lays out and critiques four views of insurance: as contract, public utility, product, and regulator. In the end, his conclusion is simple. All four visions have some explanatory power for the content of modern insurance law, which necessarily means that none of the four visions is fully descriptive of modern practice. Modern law sometimes treats insurance as contract, sometimes as public utility, sometimes as product, and sometimes as regulator. But one’s preferred conception of insurance has much to do with one’s preferences as to what the law should be. When law treats insurance as a contract, those who see insurance as akin to a public utility are quite unhappy.

Although Abraham’s project is not to explain the health insurance debates at the center of Obamacare’s tortured history, his careful exploration of the four conceptions of insurance does just that. To a large extent, the Obama Administration and its supporters saw health insurance as a mixture of public utility and regulator—a service to which everyone should have access (like electricity and water) and a service that should be bound to basic public notions of nondiscrimination, due process, and communitarian equality (like a government). The ACA’s market reforms and individual mandate both seek to implement this very public vision of insurance.

The Tea Party and its supporters, by contrast, saw health insurance as a contract-based private product—and one that ought to be voluntary, transparent, and fairly priced. Their litigation strategy quite obviously reflected that vision, arguing that the federal government should not be allowed to force people to buy a private product or to enter a private contract. Understanding what’s at stake in this fundamental disagreement—the assumptions that underlie the competing conceptions and the conclusions that arise from them—will be crucial as we move forward in implementing the ACA. Indeed, given that Tea Party sympathizers retain significant power through state governments to implement their own visions of Obamacare, the conflict between the federal government’s utility-regulator conception of insurance and the Tea Party’s contract-product conception will undoubtedly continue to rage, whether we acknowledge it or not.

For scholars of health law and health care policy, I highly recommend Abraham’s article. Although it is not without its flaws, it usefully disaggregates a set of contradictory assumptions underlying modern health care debates, demonstrating how and why the conflicts matter to the evolution of the law. As Obamacare moves forward in history, these contradictory assumptions will continue to clash in important ways. And Abraham’s taxonomy will be useful.