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51 St. Louis U. L.J. 369 (2006-2007)
The Present and Future of Government-Funded Reinsurance

handle is hein.journals/stlulj51 and id is 385 raw text is: THE PRESENT AND FUTURE OF GOVERNMENT-FUNDED REINSURANCE JOHN V. JACOBI* INTRODUCTION The structure of health insurance is changing due to concerns over inflation, uninsurance, and medical injuries. This article will briefly discuss the current health insurance reform framework, focusing on one aspect of many insurance reform proposals: government-provided reinsurance. Through reinsurance programs, government can stabilize private insurance markets, reduce premiums, and spread the cost of catastrophic care at a relatively modest price for taxpayers. Reinsurance programs are, therefore, important components of current health finance reform measures and are worthy of discussion. More significantly, considering the place of governmental reinsurance in American health finance suggests a way to break through a barrier that exists in health reform between those who propose (unrealistically?) fundamental reform and those who propose (merely?) incremental reforms. American health coverage has historically been premised on employment- based insurance. Employment-based insurance is eroding, however. The causes are contested, but globalization and changing employment structures appear to be the major culprits. The extent to which the erosion is irreversible is also contested, although I will argue here that employer-based coverage will inevitably continue to shrink absent some major structural changes. I also argue that the structure of reinsurance programs is a guide to the changes that could respond to the erosion of the employment-based insurance system. The insight driving this argument is that both government-focused reinsurance programs and market-focused consumer-driven health care programs share a vision of catastrophic care as a social, rather than an individual responsibility. That is, both programs see the risk of catastrophic health costs as amenable to broad pooling in a way that more routine health costs need not be. * Dorothea Dix Professor of Health Law & Policy, Seton Hall Law School. Thanks to the participants in From Risk to Ruin: Shifting the Cost of Health Care to Consumers at Saint Louis University School of Law. Thanks also to Tara Swenson (Seton Hall Law School, 2007) for her excellent research assistance. 369

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