Despite excitement on the left about a move to universal health care and on the right about a more state-driven model, major policy changes in a time of divided government are not imminent.  Yet the recent repeal of the individual mandate penalty imperils the current regime.  The Affordable Care Act guarantees coverage to those with pre-existing conditions and prohibits insurers from charging them more than healthy people. But the mandate was supposed to draw cheaper and healthier people into the risk pools to balance out costs. With the mandate penalty zeroed out, healthy people can simply wait to buy insurance until they get sick. Insurers are left to cover an increasingly sicker, more expensive population and will respond by raising premiums—when premiums for many are already prohibitively high. The ACA model requires that healthy people purchase insurance; now there is less to prompt them to do so.   

Epstein’s article draws on private law to solve the problem.  It looks to both neoclassical economic theory and principles of behavioral economics to better understand what motivates (and deters) the purchase of health insurance.  It then explores economic incentives and “nudges” that encourage healthy individuals to sign up for policies without forcing them to do so.  It suggests co-opting practices previously deployed for nefarious purposes to prompt behavior that policy now seeks, such as offering low introductory rates, long-term contracts, and limited exit rights.  Other options include insurers selling return of premium-style policies or policies with a generosity frame, simplifying plan offerings, or automatically enrolling the uninsured with a right to opt-out. These solutions—many of which would not require congressional action—hold the promise of lowering premiums without removing choice or requiring substantial government action.

RSVP: egonzalez9@luc.edu

2019-20 Faculty Speaker Series

The Faculty Speaker Series at Loyola University Chicago School of Law brings distinguished legal scholars to campus to discuss current and emerging issues of law related to their areas of interest and expertise. All presentations will be held at the Corboy Law Center, 25 E. Pearson Street, Chicago.