Health Care- The JUA and a Dyspeptic Senator

Lately, I have begun to worry that our staid US Senator has lost his conservative bearings as evidenced by his use of scare tactics, selling of untruths at high decibels and by his generally stonewalling health care reform. While prudence might encourage a wide berth around Senator Gregg in his waning days, the topic of health care reform is too important not to make suggestions. With trepidation, I make two points, one here and one in a following post. First, we should learn from our New Hampshire experience with the Joint Underwriter’s Association (“JUA”), a quasi-public medical malpractice insurer that was recently in the news because the State tried to grab the $110 million in reserves that have accrued in the program. Second, in a later post, I suggest that we treat health care as a fundamental right not subject to denial by arbitrary governmental (in)action.

The JUA is a quasi-public insurance option that insures health professionals against malpractice claims in New Hampshire. The JUA was formed in 1978 in response to the difficulties of finding affordable malpractice coverage. The New Hampshire Insurance Department comprehensively regulates the JUA, including the appointment of its governing board of directors. The JUA, at the outset, also benefitted from its initial capital being guaranteed by the other insurers that provided liability coverage in the state. The other liability insurers did not have a choice when they ponied up. As a quasi-public option, the JUA also is not burdened by the profit motive that drives decisions in the for profit insurance business.

In essence, our state legislature created a quasi-public option that benefitted from cheaper capital in exchange for enhanced oversight. They did so to meet the crisis that then existed in the medical malpractice coverage world. The result was that the JUA efficiently provided the insurance coverage that was needed and accumulated $110 million in reserve funds. These reserves are now the subject of intense litigation as the State claims the $110 million to balance its budget while the insured professionals contend the JUA is a kind of mutual insurance company and the reserves should benefit the JUA’s insured members. Regardless of which side wins the litigation (probably the members), the point is that this model which is driven by the goal of providing cost efficient coverage rather than maximizing shareholder profits is a success.

The JUA came into being when Senator Gregg was a senior elected official in our state as an executive councilor. It was in place through all of his years as governor. He should be familiar with the concepts embodied in the formation of JUA. These foundational concepts lead to a few obvious questions with just as obvious answers.

Is there anything to be gained by creating an insurance option with access to lower cost start-up capital?

Might a health care insurer prove less costly if it does not pay the dividends that a CIGNA does but instead acts as a mutual benefit insurer?

Can a public or a quasi-public health insurer operate efficiently with government appointed managers rather than exorbitantly paid CEOs?

The answers to all of these questions argue in favor of a public or quasi-public option based on our own experience with the JUA. Perhaps other questions should be asked and other answers found, but my suspicion is that we have a good case study for discussion right here in New Hampshire and that we would all benefit from examining JUA and . . . Judd Gregg should return to his respected conservative (small “c”) beginnings.