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The Verdict Is In

Health Insurance As Civil Right

Tony Francis, MD, Orthopaedic Surgery, 01:53PM Jul 24, 2013

There are several ways to view ObamaCare, much depending upon your political standing. It was a noble effort which fell somewhat short of goals. Or President Obama went wobbly in the last moments failing to use the full weight of his office to bring about single payer. Or it is a brilliant plan which will revolutionize health care distribution, squeezing out insurance companies over time. Or the corporate interests took advantage of the situation and the leftist dreamers in the government were handed their heads. In the process, the Congress and President went from left of center architects to become the biggest jobbers and middlemen for the sale and distribution of private health insurance in the history of the world. Take your pick.

Should health insurance be declared a civil right, much akin to other civil rights? An interesting paper published in the University of Illinois Law Review in August, 2012 addressed the issue of declaring access to health insurance to be a fundamental civil right. This could be done either by legislation or by the courts.

Part of the paper serves as a generalized lamentation that Congress did not declare access to insurance to be a fundamental civil right with the passage of ACA in 2010. There was strong pressure from the left to do just such a thing. The debate centered on the recognition that those with the worst health (and hence the greatest need for access to health care) are disadvantaged by traditional insurance. They must pay a higher rate, or can't get insurance at all based on pre-existing conditions. ObamaCare explicitly got rid of such considerations. The intent of the law was to remove all bias and discrimination from access to health insurance. The paper explains that for profit insurance can only exist by making discriminating decisions about who gets health care and what rates they must pay. Is this simply good business practice or frank discrimination? The left would opt for the latter interpretation.

As ACA was written, certain areas of bias were retained. The amount a policy can cost may be based on four variables: geographic location, age, tobacco use and employers can vary the rate up to 30% based on employee participation in wellness programs. Several questions emerge. If most smokers die young, why discourage it as a national goal?

Who uses more health care (and government resources): a 58 year old smoker who drops dead from a heart attack or a 90 year old who has lived the last ten years in an Alzheimer unit?

Is a person who has a job, pays taxes with a BMI of 31 more productive, and more healthy if the BMI is reduced to 29 by participating in an employer health program? Probably not.

As the paper points out, allowing continued discrimination in the access to health care really doesn't solve anything. One wonders why a national standard for pricing insurance was not set. The Plan will cost $ X. Everyone pays the same. Of course, this would not preserve the great bias in what doctors and hospitals on the East and West Coasts can charge. Medicare and insurance reimbursement always have  been two to four times greater in California and New York compared to Kansas. Doctors and hospitals in the expensive states don't want equity with the Midwest. Hence geographic disparity in rates.

Most worrisome is the fact that other discrimination can be added at a later date. After all, why limit it simply to tobacco use and BMI? There are lots of things that people opt to do which create greater risk. People in cities tend to be sicker and use more health care. So that is another factor.

The author of the paper notes that Congress chose to preserve established insurance industry. Here I have a bone to pick. Congress didn't choose to preserve it. They didn't have any choice in the matter. As they say, let no crisis go to waste. Congress created the crisis. The corporate interests of Big Hospital and Big Insurance took complete advantage of it. Once Congress went down this road, there was no choice in the outcome. The paper discusses HIPAA (Health Insurance Portability and Accountability Act) and GINA (Genetic Information Nondiscrimination Act), both of which specifically prohibit discrimination. However, while an insurance company can't discriminate based on genetic predisposition (simply having a questionable or risky gene) it can once the disease manifests.

Finally the paper makes a call for having the courts declare access to health insurance to be a basic civil right. This could be based on "dignity claims" based on due process violations of either the Fifth or Fourteenth Amendments. Good luck with that. I suppose the author is angling for the courts to declare, in a defacto manner, that all for-profit health insurance companies are unconstitutional. She can't bring herself to write the phrase "single payer." But that must be what she desires. That has problems too. The worst is the 9 AM to 430 PM coffee drinking culture it engenders. You aren't going to get doctors who put in 100 hour weeks with single payer. Just the opposite. You get doctors who don't work nights and weekends. And they don't want overachievers in their midst, either. A man abler than his brothers insults them by implication, as Ayn Rand would say. At least it has always been so at any single payer establishment at which I worked.

The author seems to have a muddled view of rights. If we are talking about "moral" rights, then yes, an argument can be made that every human has a right to health care. That involves a kind of "natural law" paradigm which the left eschews. Congress cannot create a "moral" right. It can only create a "legal" right. And of course, the big problem with legal rights is enforcement and application. In the end, it is the same old question: Who is going to pay for it?

From the paper:

In the past, health insurers have used a person‘s health- in the form of pre-existing conditions, current health status, family history, or previous claims—to differentiate between insureds in both pricing and coverage. This differentiation constitutes a key element of the traditional private, for- profit insurance industry: charging insureds rates based on their relative risk and covering conditions based on their potential costs are exactly what allow health insurers to profit. These practices are so endemic to the industry that one author has called risk-based pricing the ―raison d‘être of a health insurance company. However, taken en masse, these policies—either explicitly or implicitly lead to disadvantage based on an individual‘s health status. Advocates of health care reform, therefore, framed them as producing untenable discrimination against the sick.

Defined loosely, insurance is a risk pooling arrangement designed to indemnify the contracting party against a particular kind of loss. Insurers guarantee their insureds against any number of possible harms including death (life insurance), property damage (fire insurance, flood insurance, casualty insurance, renter‘s insurance), injury (disability insurance), and illness (health insurance).

Thus, as part of their services, insurers must set premiums related to their insureds‘ probable risks. Failing to assess risk accurately could lead to adverse selection, which can undermine the insurance structure. Adverse selection occurs because the individuals most likely to seek insurance are also the ones most likely to use it. In other words, the people most interested in procuring insurance are frequently the poorest risks. Likewise, the individuals who pose the best risks may opt out of insurance. If enough low-risk people leave the insurance pool, rates will again go up, driving those in the remaining group with the lower relative risk to leave the market, and so on, until the market collapses. This phenomenon is known as a death spiral.

Adverse selection and death spirals are problems associated with group-based insurance like health insurance, opposed to insurance determined exclusively by experience rating, such as car insurance. These difficulties become possible when information asymmetries exist between the insurer and the insured, particularly, when insureds act based on personal knowledge of their own risks but those risks remain unknown to the insurer. If insurers are aware of all potential risks, they can factor those risks into their underwriting and rating decisions to avoid inflating premiums down the line. Accurate risk assessment can, therefore, safeguard insurers from adverse selection and the resulting death spirals.

Disadvantage in Traditional Health Insurance

With the private, for-profit health-insurance industry, both individual and group health insurers have historically engaged in risk-assessment and other profit-maximizing strategies that systematically disadvantage people with histories of illness and chronic health conditions. Among these traditional insurance practices are heath-status based rating, pre-existing condition exclusions, limited coverage, and considerations of claims history. While risk is distributed differently in the individual and group health-insurance markets, both systems have disadvantaged individuals based on their health status.

In the Individual Market

The individual health-insurance system has consistently preferred those deemed healthy over their riskier counterparts. Consequently, health-insurance companies may reject or offer limited—yet expensive—coverage to individuals who appear too dangerous, diseased, or costly. In the individual market, health insurers have traditionally used health status to disadvantage existing and potential insureds in at least two contexts: eligibility and rating. Firstly, insurers may use health information in making eligibility or underwriting decisions. Underwriting is the process by which insurers evaluate applications for insurance. The process of underwriting involves assessing the applicant‘s potential risk and either (1) assigning her to a particular rating class and offering a corresponding policy or (2) declining to offer a policy.

If a person already has a condition that puts her at a heightened health risk before applying for coverage, a health insurer may choose to deny coverage outright. In addition to denying coverage, health insurers could instead exclude certain preexisting conditions from the proposed coverage. Secondly, health insurers may also engage in health-status based rating. In the individual market, health-status based rating involves an assessment of the individual insured‘s health risks based on her current and past health conditions. Consequently, when health insurers take health status into account when setting premiums, those with higher risks pay higher rates. The individual health-insurance market, therefore, disadvantages people on the basis of their health. Because of these risk-reducing, cost-stabilizing mechanisms, people with severe past or current health problems may have limited or no health insurance and pay heightened premiums for what little coverage they do have. The result is that those most likely to need medical services are also those least likely to be individually insurable.

In the Group Market

Most Americans with health insurance are insured through a group plan. Group health-insurance plans—such as employer-provided health insurance—distribute risk differently than individual policies. Instead of assessing the relative health risks of individual insureds, group health insurers look at the relative risk of the group as a whole. As a result, group plans tend to be more affordable than individual plans because the potential risk is spread over a greater number of policy-holders.

(1) community rating;

(2) community rating by class;

(3) prospective experience rating, and

(4) retrospective experience rating.

Community rating involves generating rates per member, per month based on the aggregate claims history of the community (with adjustments for possible future changes in the administration of the plan). Similarly, community rating by class examines the community‘s aggregate historical claims but in conjunction with certain characteristics of the individual group, such as the age and sex distribution of its members, the kind of industry to which the group belongs, and types of plans available. Thus, community rating by class allows the health insurer more specificity in assessing risk by incorporating more factors into its premium determination.

To start, health insurers openly discriminate on the basis of health status when they impose pre-existing condition exclusions or engage in health-status based rating. Both discriminate. Adopting Antidiscrimination Throughout the recent healthcare debate, proponents of reform effectively adopted the language of antidiscrimination to describe the ways in which private health insurers have systematically disadvantaged individuals on the basis of health status. In fact, this framing was so powerful that both sides of the debate employed antidiscrimination rhetoric, yet in different ways. Advocates of health-care reform framed health insurance practices that disadvantaged people based on health status—not as smart business practices—but as insufferable discrimination. Putting health status on par with race constitutes an important rhetorical move, as race is widely regarded as the most invidious basis for discrimination.


Antidiscrimination often functions as a redistributive or restitutive—principle. Thus, laws designed to promote antidiscrimination norms seek to dismantle existing disparities tied to their associated, protected characteristics. This redistributive impulse is so strong that some antidiscrimination statutes require covered entities to take affirmative steps to ensure meaningful equality for those covered by the law. More commonly, however antidiscrimination laws forbid covered entities from making decisions based on protected traits. This kind of protection is often referred to as adopting a blindness perspective: the covered entity must act as though the protected trait is non-existent, or at least imperceptible. The antidiscrimination provisions found in federal health insurance legislation take this form. They bar health insurers from considering certain enumerated factors in their underwriting and rating decisions.

The Affordable Care Act was not the first time Congress employed an antidiscrimination framework when amending federal health-insurance law. Both the Health Insurance Portability and Accountability Act (HIPAA) and the Genetic Information Nondiscrimination Act (GINA) included limited antidiscrimination provisions. 

Antidiscrimination in HIPAA

HIPAA represents the first instance in which Congress applied an antidiscrimination approach to health insurance legislation. It passed HIPAA in 1996 both to protect individuals who encountered difficulty in accessing health insurance and to improve healthcare delivery generally. Title I governs the availability and range of health-insurance coverage for group and certain individual plans, and Title II requires national standards for healthcare provision, including regulations related to health-information security and privacy.

Antidiscrimination in GINA

Prior to the 2010 health-care reform, the Genetic Information Nondiscrimination Act (GINA) was among the most significant changes to the American health-insurance industry in recent history. In drafting GINA, Congress again used an antidiscrimination framework. GINA outlaws genetic-information discrimination in health insurance138 and employment.

Pursuant to GINA, a health insurer cannot:

(1) use genetic information to determine eligibility, coverage, or premiums;

(2) request or require genetic information or genetic testing;

(3) acquire genetic information for underwriting purposes; or

(4) treat genetic information as a preexisting condition.

Similarly, an employer cannot

(1) hire, fire, classify, or otherwise disadvantage employees on the basis of genetic information; or

(2) request, require, or purchase employees‘ genetic information.

Although GINA restricts health insurers‘ access to certain kinds of useful information, the statute ultimately reaffirms the preference for the healthy over the unhealthy in health insurance. Neither GINA‘s insurance provisions nor its employment protections safeguard individuals from discrimination on the basis of manifested genetically linked health conditions. The Affordable Care Act amends the Public Health Service Act to eliminate preexisting condition exclusions by both group and individual health insurance providers. It provides that a group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage. Thus, as of the legislation‘s effective date in 2014, health insurers will no longer be able to deny coverage—even temporarily—based on an individual‘s history of illness. Likewise, the Affordable Care Act also bans health insurers in the individual and small group markets from setting discriminatory premium rates.

The relevant section limits the information that those health insurers can consider when setting premiums to four criteria: (1) whether the insurance covers an individual or a family; (2) geographic location; (3) age; (4) tobacco use. A. How Antidiscrimination Fails The Affordable Care Act may fail to achieve the goal of ending disadvantage on the basis of health status in health insurance. Like HIPAA and GINA before it, the statute takes a health-status blind approach by barring insurers from explicitly considering health status in their underwriting and rating decisions. Although the law succeeds from an antidifferentiation standpoint, it fails by producing discriminatory outcomes.

Universal Right to Basic Coverage

Yet the failure of the antidiscrimination approach to achieve meaningful equality does not foreclose the opportunity for those disadvantaged to seek redress. Alternate legal paradigms can effectively do the work of antidiscrimination. In particular, claims based in fundamental rights may allow individuals facing disadvantage to challenge discriminatory policies. This doctrinal move has already occurred in the constitutional context. It is likewise applicable to the inequities experienced by the sick in health insurance.

This Article proposes that the symbiosis between equal protection and substantive due process (Fifth and Fourteenth Amendmets) provides a useful analogy for a similar paradigmatic shift within health-insurance legislation. As noted, an antidiscrimination framework—as construed within the Affordable Care Act—seeks to eradicate disadvantage experienced on the basis of health status. Alternatively, a universal right approach to health insurance would maintain that everyone is entitled to a certain basic level of coverage. One model argues that a certain group, unified by a protected characteristic—in this case an unfavorable health status or history—should not experience disadvantage on the basis of that trait. Put differently, the sick should be treated like the non-sick. The other asserts that there are certain fundamental rights—here, that of basic health-insurance coverage—that all people should enjoy. Both paradigms promote norms of fairness and equality, albeit via different strategies. Instead of disadvantage on the basis of health status, the underlying problem of un- and under-insured Americans becomes the absence of sufficient health-insurance coverage for all people. Thus, reforming the health-care reform could have been framed, not as responding to ―discrimination against the sick, but rather as creating a universal right to a particular variety of coverage.

To download the paper:

About This Blog

We will discuss current legal issues related to the practice of medicine.

Disclosure: Tony Francis, MD, JD, has disclosed no relevant financial relationships.

  • Tony Francis

    Graduated with MD degree in 1977, performed residency in Orthopedic Surgery,  Graduated with a JD and LLD in 1987. Graduated with Master of Science in Quantum Mechanics and Computational Chemistry in 1999.

    Director of  "Legal Medicine Research" and writes advisory reports for US Federal Judges. 


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