Health Care

For the past several months, I have blogged quite a bit about the left’s foreshadowing of a “Constitutional Moment” in the event the Supreme Court accepts a challenge to the constitutionality of President Obama’s (now likely defeated) health care reform.

The argument goes something like this. A very popular President is putting forward an ambitious agenda that is supported by the Congress, and the Supreme Court, which is out of step with the rest of the Country, resists these efforts.

I contend, however, that the real “Constitutional Moment” was the special election last night in Massachusetts. For the first time in decades, a Republican beat a Democrat for a Senate seat in Massachusetts. And not just any Senate seat; Ted Kennedy’s seat. If anything, this election represents a reflection of the People that this is change they do not want.

Let’s see how the other branches, including the Court, reacts to the constitutional moment.

Prediction: If Scott Brown Wins, Expect Calls from the Left to Amend Senate Rules to Eliminate 60 Vote Requirement

Jan 19th

Posted by Josh Blackman in Health Care

If Scott Brown wins, and based on the latest polls, that seems like a pretty good shot, expect the Left to seek to amend Senate rules to eliminate the 60 vote majority in order to pass this huge bill. There may be more talk of constitutional moments. Or perhaps just talk of need to amend parliamentarian rules to enable the Democrats to effectively govern. No matter how you slice it, the Left will not let this health care reform fail. Especially at this late stage, when they are so close.

Challenging ObamaCare in Court and Judicial Activism v. Judicial Engagement

Jan 6th

Posted by Josh Blackman in Health Care

7 comments

From the Hill, Republicans see courts as last line of defense vs. Democrats’ agenda (H/T @IJ)

Republicans and allied groups say they will spend millions to oppose healthcare reform and other Democratic initiatives in the courts, which they see as a last line of defense against President Barack Obama’s agenda.

Republicans claim that healthcare reform is subject to challenge on various constitutional grounds, and conservative activists say they are willing to raise millions to wage that battle.

In Congress, Republican Sens. Orrin Hatch (Utah) and John Ensign (Nev.) have led arguments against the constitutionality of the Democratic healthcare reform proposal.

Aint it funny how Republicans want the Courts to challenge the elected branches when liberals are in charge, but want the Court to be a mere rubber stamp when it threatens a conservative agenda? This brings into focus, clearly the debate between judicial activism (a term I loathe because it has no real meaning) and judicial engagement.

The Court should consider the Constitutionality of Laws passed by both sides of the aisle. Be consistent.

It bothers me to no end that we have to rely on 5 Justices to ensure the Constitution is respected, as the President and Congress stopped caring about the rule of law and enumerated powers, long ago. But seeing that Article I and Article II went galt, so to speak, it is up to Article III to vindicate the Constitution. I’m not too optimistic.

Mark Tushnet’s Recipe for a Constitutional Moment, and more on Obamacare and the Supreme Court

Jan 4th

Posted by Josh Blackman in Health Care

While I am at sea, JoshBlackman.com does not rest.

I previously blogged about Sandy Levinson, and his argument about any opposition to Obamacare yielding a Constitutional Moment.

At Balkinzation, Mark Tushnet continues to draw parallels between the current Obama Administration and the FDR Administraiton during the Court Packing days.

As Sandy Levinson’s posts (including the most recent) have suggested, when we think about the current administration and the Supreme Court, our thoughts almost inevitably turn to the mid-1930s. It’s easy to push the parallels between the Roosevelt and Obama administrations too hard, but some parallelism does seem to be there: taking office mid-crisis, offering ambitious policy proposals with some prospect of success in Congress, and — importantly here — facing a Supreme Court staffed by justices whose ideological formations (or “judicial philosophies,” if you like) contain important elements that could be used to put into constitutional peril some aspects of the administration’s policy proposals. (Here too we shouldn’t exaggerate. The Court in the mid-1930s endorsed an expansive, Hamiltonian interpretation of the general welfare clause, thereby putting its stamp of constitutional approval on the Roosevelt administration’s Keynesian spending programs. The full story is, as they always are, even more complicated.)

The pivotal actor at the Supreme Court during the constitutional confrontations in the mid-1930s was Justice Owen Roberts. Early in the Roosevelt administration Justice Roberts generally cast his votes with the Court’s judicial conservatives. During the 1936 Term he cast his votes with its liberals. After that he reverted to form, as an important recent paper shows. In 1936 Justice Roberts faced and made a choice. It would be nice if we could preserve the parallelism by saying that in the 2010s (Chief) Justice Roberts will have to face and make some choices. More likely, though less symmetrical, Justice Kennedy will be in the first Justice Roberts’ position.

So here is the Tushnet recipe for a Constitutional Moment:

President takes office in the middle of a crisis (Check for FDR and BHO)
President proposes ambitious proposals that enjoy modest chance of success in Congress (Check for FDR and BHO)
Majority of Supreme Court disagrees with the President and opposes these ambitious proposals (Check for FDR, and ?uncertain for BHO)

This seems to be a pretty weak checklist for determining when the President can challenge SCOTUS, much like FDR did during the new deal. A common argument in favor of Constitutional moments is that the majority of the populace support it (as the people, allegedly, did during the New Deal). As commenter Soren noted in a previous post, this bill isn’t even popular, and most Americans oppose it. So, default to something that is kinda popular in the Congress.

In my opinion, a much more likely, is that the majority of the Supreme Court, even Nino, will likely uphold the acts Obama is proposing. Save for Clarence, the mandate will be upheld.

But the fact that Balkinzation is abuzz over this means the left is seriously, seriously worried. Which, gives me much more solace and hope that we can make change we can believe in. Si se puede.

Levinson Confirms My Prediction. Obamacare, Constitutional Moments, and the Supreme Court

Jan 3rd

Posted by Josh Blackman in Health Care

3 comments

A while back I predicted that if the Supreme Court strikes down any portion of the Democrat’s individual healthcare mandate, halting the greatest piece of landmark legislation since the Civil Rights Act of 1964, the left would herald a “Constitutional Moment.”

Mark Tushnet fell right into my prediction.

Now Sandy Levinson has joined the fray in his recent post, predicting the aftermath of Randy Barnett v. Catherine Seblius:

It really does boil down to whether the Conservative Majority would dare to strike down the most important domestic social policy legislation in the past forty years, which, like the Civil Rights Act of 1964, would have passed only after vicious filibusters. But let’s assume they do. Then what?
…
So, possibility one is that Barack Obama, the former University of Chicago professor, says “I really regret that the Court came to the decision it did, but we are a country that believes in ‘the rule of law,’ which means that five justices get the final say on what the Constitution means, whatever the rest of us think of their decision. So, until those in the majority have the courtesy to resign or die–and assuming that the Republicans will allow me to place justices more sympathetic to my own constitutional vision on the Court–I will just have to accept the fact that health reform is off the table, given that no other bill is likely to survive the Senate (which, incidentally, is also intellectually indefensible, but that’s as irrelevant as what I think of the Supreme Court’s decision). The Constitution is indeed whatever the Supreme Court says it is, so let’s move on….”

But there are, of course, other possibilities. Perhaps the President would summon up the emotional energy to denounce the decision and to suggest that there is no reason that the country must be in thrall to a group of five “willful men” (since I assume that Ginsburg and Sotomayor will be in dissent against any such decision), anymore, incidentally, than we should continue to be in thrall to an almost terminally dysfunctional Senate. Therefore, he will devote his energies and political skills to a debate about structural fundamentals, beginning with the Supreme Court–should it be packed, should it require a supermajority to invalidate federal legislation, etc.) and moving on to the Senate. Indeed, he will suggest that the use of the veto power on policy (instead of constitutional) grounds is itself an affront to 21st century democracy, so that he would himself be willing to support that diminution in presidential power as part of a grand bargain by which the Senate is transformed into an institution that makes sense for our present world. This is obviously unlikely, but if one is looking for silver linings in a Supreme Court invalidation of the legislation, this would certainly be it for me.

I agree with Levinson, and am certain SCOTUS does not have 5 votes to strike down something this massively popular. But, I am almost intrigued to see the academic and political fallout of this happens. This will be Lochner and Schecter Poultry all over again.

By the way, I am currently blogging from the Royal Caribbean Majesty of the Sea, somewhere outside the port of Nassau, Bahamas. Wireless internet in my state room is $.42/minute, and well worth it.

I’ll be back on Monday.

My Prediction Came True. Obamacare, Constitutional Moments, and the Supreme Court

Dec 24th

Posted by Josh Blackman in Health Care

Yesterday I made a bold prediction that if the Supreme Court struck down portions of ObamaCare as unconstitutional, the Progressives would herald a Constitutional Moment, as if they were facing the Supreme Court in 1936.(See here)

At Balkinization, Mark Tushnet just proved my point.

On the merits of the challenge (to the Constitutionality of the health care bill), I’m skeptical, but I want to raise a point related to earlier postings about constitutional moments. My skepticism is a predictive one, which seems to me quite widely shared. One would be reasonably confident that under constitutional law as articulated by the Supreme Court up to late 2009 the Nebraska Compromise “is” constitutionally permissible. But, of course, there are — there always are — arguments from within existing constitutional law supporting the opposite conclusion. And it’s always within the power of five members of the Supreme Court to adopt what they believe to be the correct interpretation of the Constitution even if that interpretation is different from, or in tension with, the tenor of the rest of constitutional doctrine. I think the way to think about the predictive question is this: We should be thinking about the question, Do five members of the present Supreme Court want to place themselves in the position of the Supreme Court majority as it was in 1935-37? If they do, the ticking of the clock of constitutional moments might get a bit louder.

I hate when it I’m right

The Health Care bill transforms government unlike any other “landmark legislation” since the New Deal. Since the Supreme Court abdicated its Constitutional role in West Coast, the Justices have not been willing to stand up for the encroachment of the feds. Save Justice Thomas, I don’t think any of the 9 have the moxy to stand up to healthcare. So I don’t think Tushnet has much to worry about. But he did issue a shot across the bow at 1 First St NE.

Prediction: If SCOTUS Strikes Down Obamacare, Left Will Herald Constitutional Moment

Dec 23rd

Posted by Josh Blackman in Constitution in 2020

6 comments

I doubt the Supreme Court will strike down Obamacare on Epstein’s taking argument, states challenging the so-called “Nebraska Compromise” may have some luck.

But, this 23rd day of December, 2009, I am making a prediction.

If the recalcitrant Supreme Court actually strikes down any portion of ObamaCare, we will see a political backlash against the Supreme Court unlike anything we’ve seen since FDR’s court packing scheme.

This landmark legislation, which blows away Title VII, the ADA, and the Social Security Act, in its scope and power, will constitute the next constitutional moment.

The Constitution in 2020 movement realizes the futility of relying on the Supreme Court to protect their preferred rights, and aim to shift the constitutional obligation to the Legislature, and to the people.

Jack Balkin and Sandy Levinson have already blogged about a constitutional moment, with respect to Nelson and Lieberman. Just wait till SCOTUS tells POTUS nope. Expect to see call for term limits for SCOTUS and other measures to take power away from these unelected oracles of the law.

Epstein on why ObamaCare is Unconstitutional, and Why I’m Don’t Have “Hope”

Dec 23rd

Posted by Josh Blackman in Health Care

Take a look at Richard Epstein’s Op-Ed in WSJ on why Obamacare is Unconstitutional. Any fans of Epstein should not be surprised his analysis revolves around – wait for it – the Takings Clause!

To control against the risk of confiscatory rates, the Supreme Court also required the state regulator to allow each firm to obtain a market rate of return on its invested capital, taking into account the inherent riskiness of the venture. The orthodox legal approach was summed up in Justice William Rehnquist’s unanimous 1989 decision in Duquesne Light v. Barasch. Duquesne Light allowed the state regulators a wide choice of methods so long as the “bottom line” secured the appropriate rate of return. There’s no need to discuss the fine points here, because not one syllable in the Reid bill is dedicated to securing that constitutionally guaranteed minimum rate of return.

Duquesne Light carries extra weight here because health-insurance industries are far from natural monopolies, so that regulating their rates calls for an extra dollop of judicial scrutiny. At this point, the Reid bill is on a collision course with the Constitution. I take it for granted that, constitutionally, the federal government could not just require all private health insurers to liquidate tomorrow, without compensation.

What’s done here is a close second. The inexorable squeeze between the constricted revenue sources allowable that insurers get under the Reid bill and the extensive and uncertain new legal obligations it imposes is likely to result in a massive cash-flow crunch that will drive the firms in the individual and small-group health insurance markets into speedy bankruptcy. The Supreme Court should apply the constitutional brakes to this foolhardy scheme if Congress doesn’t come to its senses first.

As much as I love Epstein’s argument, the Supreme Court will never stop this debacle. And it bothers me to no end that I have to hope 5 justices can save our liberty, when all our other branches have failed us. I said the same thing before Heller was decided. Our freedom should not depend on what side of the bed AMK woke up on.

I am not sure what obligation the Executive and Legislative branch have to assess the constitutionality of their actions, but today, both Republicans and Democrats, have entirely abdicated that responsibility. Epic Fail.

Balkin Opens Pandora’s Box: Health Care, Constitutional Moments, the Constitution in 2020, and Privileges or Immunities

Dec 17th

Posted by Josh Blackman in Health Care

At Balkinzation, Jack Balkin has a very interesting post about Constitutional Moments and Health Care.

Balkin argues that President Obama is faced with a Constitutional Moment because several moderate Republicans and moderate Democrats are blocking passage of his health care bill. 50 votes isn’t enough according to modern Senate procedures. In reality, the Senate needs 60 votes.

We are at such a moment now. The political impasse is over health care reform. The institution is the United States Senate. The question is whether the Democratic Party led by Barack Obama, will threaten unconventional adaptation so that the Senate (in this case, a small number of moderate Democratic Senators) will back down and allow passage of health care reform by a simple majority, creating a new precedent for Senate practices. If Obama does not make this threat credibly, opponents of reform will succeed and the Senate– and particularly the power of the Republican minority and Blue Dog Democrats in the Senate– will become more powerful than ever. It is, in other words, a match to the death between Obama’s promise of a new politics and the existing forms of politics.

Faced with such a Constitutional moment, what is President Obama to do?

Thus, time is of the essence. Obama must win big or he will surely lose bigger. It is time, in short, for unconventional adaptation. Obama and the Congressional Leadership have been pushed against the wall. They must win now or be decimated politically . . . It is precisely these desperate circumstances that lead to unconventional adaptations in American politics. If Obama can route around the 60 vote requirement through unconventional adaptation, and pass health care reform, he can go to the American public for ratification of his actions in the 2010 and 2012 elections. If he cannot do this, then he puts himself at the mercy of Joe Lieberman and Ben Nelson, which means a very watered down bill that may not pass because of opposition from his left.

While this unconventional adaptation would not truly be of a Constitutional nature, as the 60-vote requirement is a matter of procedure and not Constitutionally required, Balkin’s invocation of a “Constitutional Moment” in the health care debate falls into line with a prediction that Ilya Shapiro and I made in our article, Opening Pandora’s Box? Privileges or Immunities, The Constitution in 2020, and Properly Incorporating the Second Amendment. We just uploaded a revised version to SSRN reflecting Balkin’s blog post. From page 51:

In contrast to the historical approach that this article advances, the landmark legislation/constitutional moment theory no longer restricts the Court to canonical texts like the Declaration of Independence or Blackstone’s Commentaries, but leads it to consider acts Congress passes to establish new privileges or immunities. Would there be a constitutional right to Social Security, to food stamps, to subsidized housing, to Medicaid—to health insurance (whether or not a “public option” ever passes)? Professor Balkin would say yes—and even considers the potential passing of President Obama’s health care bill, over the opposition of stalwart moderate Democrats and virtually all Republicans, a “constitutional moment” forcing the president and the Senate to engage in an “unconventional adaptation of American politics.” Health care reform is precisely the type of landmark legislation that would create constitutional rights under The Constitution in 2020.

According to Ackerman and Balkin’s work, when Congress passes significant pieces of legislation, such as health care reform, this can generate a Constitutional moment. In our article, we contend that when such a moment occurs according to Balkin’s work, Congress essentially creates, or “instantiates” this right as a privilege or immunity of national citizenship. Once a right is protected as a constitutional right, it is permanently entrenched, and cannot be abrogated by future legislatures.

By not rooting the rights protected under the Privileges or Immunities Clause in our nation’s history and traditions, the Court can consider constitutional moments, national consensus, and social movements as signs that society recognizes new rights. This post presages Balkin’s future arguments if the Supreme Court fails to properly interpret the Privileges or Immunities clause in McDonald v. Chicago. If a public option passes, it will be of such monumental status that a right to health care will be considered a privilege or immunity of national citizenship, and thus a constitutional right. Pandora’s Box is no longer sealed.

Are Individual Health Care Mandates Unconstitutional as a Direct Taxes without Apportionment Under Art I. Sec. 9?

Nov 19th

Posted by Josh Blackman in Health Care

Jonathan Adler at Volokh thinks it may be:

As I understand the current proposals, the individual mandate would operate as follows: A tax would be imposed on all individuals, and the tax would be offset by a credit for those who purchase or are otherwise covered by qualifying plans. The constitutional problem would arise if this tax is considered a “direct tax.” Why? Because Article I, section 9 provides: “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” “So if mandate is imposed through the tax code, and the provision operates as a “capitation” or “other Direct tax,” it would have to be apportioned.

Do the respective individual mandate provisions constitute direct taxes? I’m not sure. “Indirect” or so-called event taxes are not subject to apportionment under Article I, section 9, and income taxes were exempted from the apportionment requirement under the 16th Amendment. So the question would be whether any tax imposed on those who fail to purchase qualifying health plans would constitute a “direct” tax, or whether they could be properly characterized as indirect or income taxes. From what I understand, the tax in the House bill is, at least for some individuals, based upon income up to a set threshold. This might be enough to avoid the Article I, section 9 problem

This approach is much smarter than Rivkin’s argument that the Mandates exceeds Congress’s commerce powers. That case is DOA (pun intended). Of course, Pelosi and Reid can simply re-characterize the penalty so it is clearly not a direct tax, and escape the apportionment requirement. But if they fail to do so, totally possible in light of the rapid pace they rahm through this legislation, this could set up a potential facial, or as applied challenge, if enacted.

Note to Conservatives: If ObamaCare is Unconstitutional, so are most Federal Drug Laws

Nov 5th

Posted by Josh Blackman in Health Care

24 comments

It really irks me that Conservatives have suddenly discovered the doctrine of enumerated powers, now that the Federal Government is about to impose a huge Liberal agenda.

The same powers Congress will use to justify Obamacare authorize all federal drug laws.

If you think that health care is not interstate commerce, then growing marijuana plants in your backyard is certainly not interstate commerce. See Gonzales v. Raich.

With the exception of drugs that are actually transported interstate, banning the possession of narcotics is no less “interstate commerce” than mandating health care. State drug laws are constitutionally fine.

Conservatives like drug laws, but are opposed to health care mandates. I would like consistency from the Right, but I doubt it is possible.

FedSoc Debate: Chemerinsky v. Rivkin on Constitutionality of Individual Health Care Mandates

Nov 3rd

Posted by Josh Blackman in Health Care

The Federalist Society is hosting an online debate between Dean Chemerinsky and David Rivkin.

Cheremsinsky’s argument, in a nutshell:

The constitutional objection that I have heard most often is that Congress lacks the authority under Article I of the Constitution to do this. But such a mandate clearly falls within the scope of Congress’s authority to regulate commerce among the states.

Over many cases, the Supreme Court has held that Congress can regulate economic activities that taken cumulatively across the country have a substantial effect on interstate commerce. Purchasing health insurance is an economic transaction. Taken cumulatively those who do this, or who don’t do it, have a substantial effect on interstate commerce.

Rivkin counters:

There is no doubt that Congress can regulate an entire array of economic activities, large and small, inter- and intra-state. Thus, for example, there is no problem, Constitution-wise with having Congress regulate health care insurance purchase transactions. The problem with an individual insurance purchase mandate, however, is that it does not regulate any transactions at all. It regulates human beings, simply because they exist, and orders them to engage in certain types of economic transactions.

The cases cited by Professor Chemerinsky – Wickard v. Filburn and Gonzales v. Raich – do not support his position. In both of these cases, Congress sought to regulate individuals engaged in traditional agricultural/economic activities, growing wheat and marijuana. The fact that they did so for personal consumption did not detract from the underlying economic nature of these activities, especially since Congress sought to regulate them as a part of a comprehensive inter-state regulatory scheme.

Rivkin’s argument is a stretch, though it is a bit refined from some of his previous arguments. Ann Althouse made a similar point. It is more likely will find that mandating a person to do something is different from regulating how a person does something. There is a distinction, but it may be without a difference.

Chereminsky Finally Found Portion of Obamacare Unconstitutional; Christian healing sessions violates 1st Am.

Nov 3rd

Posted by Josh Blackman in Health Care

For months, Dean Chemerinsky has been leading the fight, arguing that Obamacare is constitutional under the Commerce Power and the Spending Clause. But, he has finally found a provision he thinks is unconstitutional.

Backed by some of the most powerful members of the Senate, a little-noticed provision in the healthcare overhaul bill would require insurers to consider covering Christian Science prayer treatments as medical expenses.

The measure would put Christian Science prayer treatments — which substitute for or supplement medical treatments — on the same footing as clinical medicine. While not mentioning the church by name, it would prohibit discrimination against “religious and spiritual healthcare.”

Erwin Chemerinsky, dean of the UC Irvine School of Law, said the provision raised serious questions about government support of religion.

“I think when Congress mandates that health companies provide coverage for prayer, it has the effect of the government advancing religion,” he said.

Admittedly, establishment clause jurisprudence is an absolute mess. But, I doubt anyone would be able to find standing to challenge this. Even if standing was found, this is a really weak case for an establishment clause violation. Now this kind seems a bit opportunistic. The entire bill is constitutional, except for a tiny provision that gives churches some money for healing rituals.

Althouse on ObamaCare. State Mandated Car Insurance is Different From Federally Mandated Health Insuance

Nov 2nd

Posted by Josh Blackman in Health Care

Very worthwhile Ann Althouse Post on the constitutionality of mandating people buy health care. (H/T Instapundit)

While Raich allowed Congress to regulate market activity, what about market inactivity; that is, a person NOT buying health care:

Moreover, the Commerce Clause question is quite a bit more complicated that Dean Chemerinsky makes it sound. The marijuana growers were engaging in an activity — making a product for which there is a big, regulated market. In this new case, we’d have Congress regulating people for their inaction. What other case is like that? Congress can “regulate activities that substantially affect interstate commerce”? Where’s the activity? It’s inactivity! And Supreme Court cases have limited Congress’s power where the activity in question is noncommercial. Isn’t the failure to buy insurance noncommercial?

People frequently equate health care mandates to car insurance mandates. That is, almost every state requires a person to buy auto insurance, or pay into some uninsured motorists fund. David Savage does so in this LA Times Op-ED.

But, the pivotal difference is that the states are requiring this, and not the federal government. Contrary to the protestations of many, the states have a general police power. The federal government doesn’t. While the states routinely make people do stuff, the federal government cannot compel people to do stuff.

As Roger Pilon puts, it “What next? Can Congress order you to buy spinach?”

Though, the feds frequently compel business to do stuff, but that’s a discussion for another day. When I raise this argument to most, I get glazed eyes. I’m glad Althouse is bringing this point to the mainstream.

See my previous coverage of Obamacare here, here, here, and here.

Tyler Cowan NYT: How an Insurance Mandate Could Leave Many Worse Off

Oct 25th

Posted by Josh Blackman in Health Care

From Todays NYT, Tyler Cowan writes a fantastic piece about how insurance mandates may make society worse off. (H/T Volokh). I echo Professor Adler, and encourage everyone to read this article in its entirety. Cowan is one of the top economists around, and he hits the nail right on the head.

Americans seem to like the idea of broadening health insurance coverage, but they may not want to be forced to buy it. With health care costs high and rising, such government mandates would make many people worse off. . . .

Defenders of a broad health insurance mandate argue that it will lower average costs in the health care market. The claim is that many of the uninsured are young, healthy or both, and that bringing them into the insurance pool might lower average premiums by spreading risk across low-cost groups. Yet Massachusetts has had a health insurance mandate for several years and this cost-saving mechanism does not appear to be kicking in.

At this point, it seems more plausible that the cost of health insurance will keep rising, just as the costs of health care services have continued to climb. The upshot is that the burdens of mandatory purchase, the subsidy costs and the associated implicit marginal tax rates will all increase, eventually to the point of unsustainability. . . .

We’re often told that America should copy the health care institutions of Western Europe. Yet we’re failing to copy the single most important lesson from those systems — namely, to put cost control first. Instead, we’re putting our foot on the gas pedal and ratcheting up the fiscal pressures on the system, in the hope that someday, somehow, it will all work out.

As it stands, we’re on the verge of enacting a policy that is due to explode, penalizing many of the very people that it was ostensibly designed to help.

And there are serious potential John Galt problems with Obamacare:

To ease the burdens of the insurance mandate, the reform proposals call for varying levels of subsidy. In some versions, such as the current Senate bill, subsidies are handed out to families with incomes as high as $88,000 a year. How long will it be before just about everyone wants further assistance, and this new form of entitlement spending spins out of control? It’s possible to lower insurance subsidies, but then the insurance mandate would impose a bigger burden on the people we are trying to help.

A subtler problem is what economists call “implicit marginal tax rates.”

The fiscal reality is that not all income groups can receive equal subsidies; as a family earns more, its subsidy would probably decrease, eventually falling to zero. But then we are taking money away from the poor as they climb into higher income categories. This is a disincentive to earn more, and the strength of the disincentive increases with our initial generosity. For many people, the health insurance aid would phase out when food stamps, housing vouchers and the earned income tax credit also end and the personal income tax kicks in.

This structure of incentives would likely discourage many parents from earning a better life for their children. Congress could tweak the subsidies so they don’t phase out so quickly, but then we’re back to very high fiscal costs and subsidies for many families in the higher income classes.

And I love the graphic the NYT inserted:

Video: Richard Epstein Debate on Obamacare. Epstein FTW!

Oct 24th

Posted by Josh Blackman in Health Care

I love Richard Epstein. He seems to know everything about everything. Here, he proves his mettle with a debate with Judith Feder on nationalized health care.

Via the UChicago Faculty Blog, H/T Andrew L. on Facebook:

While agreeing with Feder that the system needed drastic fixes, Epstein differed stridently on what was required. Arguing that “cartel-like restrictions,” mandates, and subsidies in government programs like Medicare had caused healthcare’s woes, Epstein said that the current model of a system like Medicare was not tenable when extended to the broader population: “If all you’re going to try to do is to give everybody the same level of protection that you give to current Medicare recipients, you’ll not be able to finance it with any of the devices that she’s talking about.”

One of the primary problems, Epstein said, was that potential competitors to existing insurance firms lack free entry into local markets, resulting in insurance monopolies. He argued that Obama should pass legislation to correct a “deeply anticompetitive system,” but predicted that the administration would instead “buy off all the interest groups with corrupt bargains” and introduce taxation and cross-subsidy programs that “will bankrupt the nation.” The public health plan option, Epstein continued, would be run by a “bunch of blithering incompetents…. What you’re watching here is a grotesque concatenation of every bad left-wing liberal policy in the last 40 years, and the time has come to stop it.” Epstein prescribed instead a series of “mid-level rationalizations” involving medical malpractice and price restriction issues, as well as the application of contract law.

Bravo Professor Epstein!

[youtube=http://www.youtube.com/watch?v=vIfsGL_2Zo8&feature=player_embedded]

Just Searched the new Senate Health Care Bill, No Reference Made to “Interstate Commerce”

Oct 21st

Posted by Josh Blackman in Health Care