Pondering the effects of federal law on health insurance market

There’s been much debate about what the federal health overhaul law will do for individuals. A professor at Rutgers School of Law-Camden, however, wants to start more discussion about the law’s effect on the health insurance market.

Torts and insurance expert Adam Scales says the nation’s notion of health coverage is evolving.

“It’s still striking how quickly insurance went from being a matter of private contract to some thing else,” Scales said. “Call it a right, call it a fungible product that is supplied by insurers but whose terms, whose quality, whose pricing is so comprehensively regulated that we just shouldn’t think of this as a purely private transaction.”

Americans now widely accept the idea that firms across the industry will offer a more standardized package of benefits in an increasingly government-controlled market, Scales said. That is, if the health law rules become reality.

“Insurance policies are extremely complicated under the best of circumstances, and insurers will be less able to ‘compete’ by essentially selling less valuable insurance and relying on consumers not to understand that,” Scales said. “Hopefully they will compete a little more on price, their ability to deliver a quality service. And they’ll compete a little bit less on either selecting just those customers they want to serve or designing their policies in ways that leave customers worse off.”

Scales, who compares the coming health insurance market with the utility industry, wonders if that model leaves enough room for innovation.