By Christina S. Ho
This past year has sensitized us politically to government’s affirmative obligations, especially the duty to backstop health catastrophes in order to dampen the risks that ordinary people must bear.
Our government bails out large risks in so many other arenas. Yet we too often fail to backstop the most human risk of all — our vulnerability to suffering and death.
Throngs of scholars have described our deep tradition of government-sponsored risk mitigation to nurture favored private activities and expectations, and relieve those favored actors from catastrophes beyond what they could be expected to plan for. I have characterized this distinctive political role figuratively as one of “government as reinsurer.”
The federal government provides standard reinsurance for private crop insurers, virtually full risk-assumption for private flood insurance, guarantees for employer pension benefits, robust backstops for bank liquidity risks, FHA mortgage insurance and a federal secondary market to absorb the risks of housing finance.
In these arenas and more, statistically correlated or high-magnitude catastrophic losses are shed onto the state in order to smooth out and shore up the underlying private risk market. We have yet to commit similarly in the health care domain.