While private, commercial insurance remains a critical element of this
system, it is now subject to extensive regulations intended to achieve the
ACA’s dual goals of comprehensive coverage and affordability.4 Health
insurers who sell policies in the individual and small group markets,
including through health insurance exchanges or marketplaces, must
comply with ACA requirements for issuance, renewal, coverage, and
actuarial value for a significant segment of the health insurance market.5
This shift in the nature of health insurance creates some challenges for
the law governing the interpretation of health insurance policies. Insurance
policies are typically viewed as a specific category of contract, such that
traditional rules of contract construction apply to ascertain the meaning of
an insurance policy.6 A substantial body of scholarship has refined these
rules to fit the particular quirks of insurance, especially covered benefits
and exclusions in standard form insurance policies.7 Yet, considerable
debate remains over which rules are justified and which should apply in
which circumstances.8 Many rules of construction do not seamlessly fit
health insurance policies.9 Health insurance itself has long been a bit of an
4. See Starr, supra note 3 (The ACA “seeks the more limited goal of making health care
and health insurance ‘affordable.’”). Health insurance, whether public or private, finances
most health care services in the United States. National Health Expenditures by Type of
Service and Source of Funds, Calendar Years 1960-2013, Ctrs. for Medicare & Medicaid
Servs., http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/ NationalHealthAccountsHistorical.html (follow the
hyperlink labeled “National Health Expenditures by type of service and source of funds, CY
1960-2013”) (last modified Dec. 9, 2014, 6:26 AM).
5. See, e.g., 42 U.S. C. A. § 300gg- 1 (West, WestlawNext through P.L. 113-296,
excluding P.L. 113-235, 113-287, and 113-291) (guaranteed issuance of insurance); §
300gg-11 (no lifetime or annual limits); § 300gg-14 (extension of dependent coverage); see
also 45 C.F.R. Pt. 153 (2014) (provisions for risk adjustments, risk corridors, and
reinsurance); Pt. 156 (requirements for offering qualified health plans on exchanges); Pt. 158
(medical loss ratio requirements).
6. Kenneth S. Abraham, Four Conceptions of Insurance, 161 U. Pa. L. Rev. 653, 657-
58 (2013) [hereinafter Abraham, Four Conceptions of Insurance]. See generally Susan
Randall, Freedom of Contract in Insurance, 14 Conn. Ins. L.J. 107, 107-35 (2008).
7. See Robert H. Jerry, II & Douglas R. Richmond, Understanding Insurance Law 125-
64 (5th ed. 2012); see also Kenneth S. Abraham, Distributing Risk: Insurance, Legal Theory,
And Public Policy 118-119, 175-87 (1986) [hereinafter ABRAHAM, DISTRIBUTING RISK]
(discussing reformation of contracts, breaches of contract, and measures of damages). See
generally Kenneth S. Abraham, A Theory of Insurance Policy Interpretation, 95 Mich. L.
Rev. 531 (1996) [hereinafter Abraham, Policy Interpretation]; James M. Fischer, Why Are
Insurance Contracts Subject to Special Rules of Interpretation?: Text Versus Context, 24
Ariz. St. L.J. 995 (1992); Spencer L. Kimball, The Purpose of Insurance Regulation: A
Preliminary Inquiry in the Theory of Insurance Law, 45 Minn. L. Rev. 471 (1961).
8. See Jeffrey W. Stempel et al., Principles of Insurance Law 103-38 (4th ed. 2012)
(discussing the legal system and methods by which it assesses insurance policies and
9. See infra Parts IV-V.