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The United States does not have a system for compensating the victims of illness and injury; it has a set of different institutions that provide compensation. We rely on both tort law and giant programs of public and private insurance to compensate the victims of illness and injury. These institutions perform related functions, but the relationships among them are far from coherent. Indeed, the institutions sometimes work at cross-purposes, compensating some victims excessively and others not at all.

The absence of a coherent system of compensation is reflected even in suggested reforms of existing institutions. Proposals to reform tort law often do not recognize the role played by public and private insurance programs in compensating for health care expenses and lost income, even though insurance programs dwarf tort law as a system of reimbursement. Similarly, those who offer proposals for altered private or public insurance protection – and many put changes in the nation's system of health insurance at the top of the domestic agenda – usually ignore the connections between a family's insurance protection (whether provided by government, by an employer, or by first-party purchase) and the ill or injured victim's claims against a tortfeasor. Moreover, insurance reform proposals often ignore a fundamental insight of modern tort theory: when a system provides compensation for expenses not previously reimbursed, the entire cost of this new compensation is not an added social cost. The added cost of a new program may, in the broader social context, merely be shifted from victims or another program. The blindnesses of these proposals to their institutional "neighbors" are easy to explain. Because of academic and practice specialization, many of the persons most knowledgeable and creative about tort law know little about private and social insurance, while insurance and social-welfare experts often know little about tort law.


Insurance Law | Law | Torts