#Subrogation (Part 3 in the #Healthcare Series)

When purchasing insurance (renters, auto, etc.), I always advise people to stick with companies incorporated in Washington State. When asked why, I simply point out that Washington law provides a lot of protections for insureds, but federal judges applying Washington law are not as pro-consumer as State Court judges. Plus, practicing in state courts is *way* easier. Of course, the reason why it matters: if there is complete diversity of the parties (ie: no Plaintiff is from the same state as any Defendant), and the case value exceeds $75,000, the insurer can just remove the case to federal court. 

That's not to say folks should expect that their insurer is going to screw them over, or necessarily violate the Insurance Fair Conduct Act, the Consumer Protection Act, or require an insured to sue for benefits guaranteed by the contract (thanks largely to a fee shift mechanism in Olympic Steamship), but if they do - I like to be prepared. 

I bring this up because as the health care debate rages on, too often we forget that it isn't just about health insurance, Medicare, and Medicaid. Other pieces to the health care puzzle include things like no-fault med-pay insurance, Personal Injury Protection, liability insurance, workers' compensation, and so on and so on. On top of that, with 50 states, we have 50 different sets of regulations around minimum coverages, subrogation, and types of coverages. 

For instance: in Florida, car insurance liability minimums are $10,000.00, with $10,000.00 in med-pay coverage. The way it works: if you get hit by a car, your PIP pays up to $10k, and then the insurers negotiate reimbursement on the back end. Your entitled to receive up to $10k (or more, depending on the actual limits) for general damages and medical bills not covered under the first $10k. 

In Nevada, the State Supreme Court has ruled that, as a matter of public policy, first-party insurers cannot subrogate against tort claims - the idea being that people pay for their insurance, they shouldn't have to pay them back when they use it. 

Federally, there is all sorts of case law on ERISA self-insured plans, and the right of recovery through equitable subrogation and contract interpretation, as well as some cases on Federal Employee Plans that are winding through the courts. Medicare itself has its own set of guidelines regarding tort claims and reimbursement. 

Some states have workers' compensation that is all on the private market. In Washington, we have a publicly funded model (Labor & Industries) to cover medical expenses incurred due to on the job injuries, with a self-funding option (Boeing uses that) that still requires adherence to state statutes for recovery. Victim medical support payments are run through this department. 

I feel like I'm jumping ahead of myself a bit - some of y'all might be thinking "what the hell is 'subrogation'???" So a quick primer: the theory behind subrogation is that person x causes damages to person y. Company z pays person x for expenses right now. When person y, or their insurer, pays person x for all damages, person x has to pay company z back. Depending on what state you're in, and what insurance you're dealing with, there may also be a requirement for a pro-rata contribution for attorney fees and costs associated with recovery. This is the area of law that I enjoy far too much. 

So how does this apply to healthcare? Because of the hodgepodge of systems across the United States (as noted above). 

But let's look at Canada - in British Columbia, residents are entitled to the single-payer health plan, governed at the provincial level by British Columbia Ministry of Health. For auto insurance, folks get coverage through Insurance Corporation of British Columbia, a quasi-governmental corporation. Workers' Compensation is handled by WorkSafe BC - another quasi-governmental organization. 

So this raises a question: should we consider government corporate options for other insurances that participate in the healthcare market with a single-payer system? 

Thinking about how insurance works for things such as auto and workers' comp - instead of just a tax that gets spread equitably, rates are set based on performance and safety. If a company has a lot of injuries, their rates are increased. If a driver keeps running into other cars, that person's rates are increased. This makes sense given the nature of these types of insurance compared to the market more generally. 

How a single-payer system overlaps with this is also a question to consider. Since everyone is paying taxes, is it fair to then make them pay back for claims paid that would otherwise be covered by a third-party insurer? Should there also be a federal government mandate that workers' compensation be run through state corporations, no longer allowing private, for-profit companies to be involved in this aspect of healthcare? And while we're talking insurance - why not look at creating a government insurance corporation for auto and home insurance? 

There is also the consideration for who manages the programs. When we look to Canada, management is left to the provinces. However, with 50 different states and 50 different sets of regulations and case law, there is a question about how much authority on implementation should be given to the states. Looking at other programs where that split has happened - notably the TANF block grant program, and how states like Michigan use funds that are supposed to be for needy families to fund crisis pregnancy centers and college scholarships. Putting too much faith in states for something as important as healthcare can reap awful effects. 

Overall, this is a small consideration in the bigger picture. But given my line of work, it's one I can't help but think about. Not just because of subrogation, but more generally the profit-motive behind insurance for health care as applied to injured workers or covered by no-fault med-pay policies. This also brings an argument that supports more state control of a federal program - but requires limitations so as to ensure states don't mess it up. Considering the success of the partnership between the federal government and states on Medicaid, I think it can be done. Maybe Medicare For All isn't the right call; maybe it's Medicaid For All (with requirement that abortion services be covered). 

Ultimately, it's another part of the mammoth issue that is health care and reform in the United State. Next up - I'm going to take a look at education, education financing, and how it plays a key role in all of this.