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The Reid Bill: coercive and unconstitutional

December 22nd, 2009 - 9:35 am

The boldface is mine. Pour yourself some eggnog, and don’t stint on the brandy. Then look at this:

Furthermore, on the supply side of the market, all health-insurance companies will find themselves in an impossible dilemma. If they decide to offer their health-insurance plans outside the State Exchanges, they will be unable to compete for the subsidized consumers who are only able to spend their tax dollars within the framework of the State Exchanges. Their position will be worse because they shall continue to be subject to all present mandates and regulations that have an impact on their business. Insurers outside the Exchanges also face the likely prospect that they will still be further taxed and regulated to help finance the intolerable burdens that arise under the subsidized insurance supplied within the State Exchange system.

This level of systemic coercion frames the debate about the constitutionality of the Reid Bill. Those parties that do not wish to suffer the Bill’s regulations in order to gain access to a subsidized consumer base are not free to compete in an unregulated market. Direct federal and state government regulation remains a fixed feature of their life. Government regulators at the state and federal levels have both the power and the motive to hit non-Exchange health insurance issuers with a range of taxes and regulations that could quickly make their economic position intolerable.

The twin burdens of Professor Epstein’s essay are to show 1) the coercive nature of what he calls “the Reid bill” that is on the cusp of being passed by the Senate and 2) to show why, as a point of law, several aspects of the bill raise serious questions about its Constitutionality. I think Professor Epstein makes a powerful case, though I have my doubts about whether a Constitutional challenge would be successful. Still, it is worth understanding the case and it is worth reminding ourselves why the Constitution is important. The Constitution was framed in order to enshrine certain rights and to protect people from capricious interference from the state. The larger question we face, larger even than the fate of this obscene piece of legislation, is to what extent the state still respects the provisions of the Constitution that its servants have sworn to uphold. Richard Epstein has outlined a devastating case. What happens next?

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