Joint Underwriters Associations: The Simple Answer

I have long been frustrated in listening to the debates regarding a solution to the supposed dilemma regarding health care coverage. Have you ever wondered why other forms of insurance share the same risk exposure to the providers (i.e. flood, automobile, home, medical malpractice, etc.), yet health care coverage is the only form of insurance that has this supposed issue with availability? The difference is that these other forms of insurance are made available despite the risk exposure through Joint Underwriters Associations (JUAs). This is a market based solution that is already being successfully applied in other coverage areas, yet no one (no even those who claim to be in favor of market based solutions) are pushing this issue. I will use automobile insurance as an analogy to make this easily understandable to the average reader.

Let us assume that due to your extraordinary bad driving history, you find it impossible to obtain auto insurance in the regular market. In effect, you are not insurable, or the premium cost to get a policy is not affordable. Rather than have you uninsured, your State Insurance Commissioner has probably created a JUA. This is a collective group of all the insurers who do business in your state. Membership in this group is required if the company is to write policies in your state. You, as a driver who was unable to get insurance, now purchase a policy through the JUA group. Let's say that Insurance Company A has written 25% of all the regular auto policies in your state and Insurance Company B has written 10 % of the policies. Insurance Company A received 25% of the premiums from JUA policy holders and is responsible for 25% of the groups claims. The same is true in proportion for each insurance company in the group. This shared exposure to the unwanted higher risk policies is a cost of doing business, or a type of membership dues for access to the market.

What does this do?
1)It allows the bad risk drivers to obtain insurance at a slightly higher, but attainable, premium rate.
2)It decreases the number of drivers who would otherwise drive up costs for all drivers by choosing to be uninsured.
3)It disperses the risk among the insurance companies in proportion to the amount of business they derive from that state.

Remember, this is ALREADY BEING DONE with other equally risk sensitive policies by the same companies who provide health insurance policies. If this system is adequate to cover the PHYSICIANS' MALPRACTICE POLICIES in this day and age, don't you think it is more than adequate to apply to health care coverage? It does not even have to be administered by the state. A proper self policing association could handle the task (think of how the American Medical Association regulates physicians). Heck, do you think the insurance companies would allow a competitor to cheat this system without blowing the whistle?

But yet we need another trillion dollar expenditure and a soon to be televised town hall pep rally to tell you how "complex" the problem is. Our politicians seem to have a knack for making the easy appear difficult. Will someone in the media, or perhaps at the televised event, PLEASE ask this question?