Not looking good for Obamacare

In a 42-page opinion, Judge Hudson wrote: “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Allowing Congress to exert such authority, he said, “would invite unbridled exercise of federal police powers.”

Compelling vehicle owners to carry accident insurance, as states do, is considered a different matter because the Constitution gives the states broad police powers that have been interpreted to encompass that. Furthermore, there is no statutory requirement that people possess cars, only a requirement that they have insurance as a condition of doing so. By contrast, the plaintiffs in the health care case argue that the new law requires people to obtain health insurance simply because they exist.

If this part fails, then the whole of Obamacare fails.

Leave aside whether you like the plan or not for a moment. Look at the basic economics.

If you have a system where an insurer can exclude pre-existing conditions then you don\’t have to insist that everyone buys health care insurance. Because people who get sick and then try to buy insurance won\’t be able to buy inurance for the thing they\’ve just got sick from.

However, if you do not exclude pre-existing conditions then there will be some number (that number presumably depending upon prices and how secure people like to feel etc) of people who will only buy insurance when they do get sick. Which really isn\’t insurance at all and the entire system will enter a death spiral. As insurers are having to pay for treatments not on the basis of statistical occurence across the population, but on that subset of the people who are already ill and requiring treatment, then prices will have to rise. As they do so the healthy will decide, more and more, to drop insurance coverage and purchase it only when they need expensive treatment.

So, to get around this it\’s necessary to insist that everyone buy insurance. That\’s the only way that you can stop the death spiral.

But, if the Constitution says that you cannot force people to buy the insurance, then you can\’t do that either.

It\’s a hell of a difficulty for Obamacare. If the individual mandate fails then so also must the stopping of the pre-existing condition exemptions.

I will admit that I personally like three entirely different systems. Either something like the Singapore system, with health care savings accounts and the government picking up the costs of chronic or gross illnesses. Or Brad DeLong\’s suggestion of out of pocket expenses up to 10% of annual income, with government again picking up the excess (largely similar ways of doing the same thing) or Arnold Kling\’s preference, of being able to purchase real insurance, catastrophic insurance that is (which would be terribly cheap compared to the current health insurance system), if one wished and not having to purchase insurance that covers everything.

Unfortunately, Obamacare specifically makes that last illegal.

But no mandate and Obamacare fails.

Gonna\’ be interesting watching what the Supremes do, eh?

34 thoughts on “Not looking good for Obamacare”

  1. even if the SC knocks it down,the fix is easy..
    charge everyone a health tax..
    say 10 grand..
    and congress can pass any tax it wants..
    the SC already has passed on that one..
    the feds can also give you a healthcare deduction if you buy from a private company equal to that health tax..

  2. Why on earth didn’t they just write their law the other way round? We’ll tax you and give you (minimal) Federal Health Insurance, but exempt you from the tax if you’ve bought a private policy that covers you adequately.

  3. “Why on earth didn’t they just write their law the other way round? ”
    P’raps because the endgame’s not about healthcare. Don’t really understand US constitutional law but if they get this through what would that set precident for?

  4. pete: “Don’t really understand US constitutional law ”

    Nobody does. Not even the septics themselves.

    It seems to me that resort to the SC on any measure that’s controversial has become the weapon of choice for oddballs and fanatics from all sides of the political spectrum rather than the underpinning of their democracy and basic freedoms.

    Whatever the merits or demerits of Obamacare, to claim that measures to ensure that all Americans have the means to access healthcare whenever they need it regardless of income and circumstances is somehow ‘unconstitutional’ points to a rather selfish and heartless attitude towards your fellow citizens.

    Heaven knows there’s plenty wrong with our NHS (as well as plenty being right) and perhaps we’d be better off with a French, German, Singaporean, Australian or wherever model but is there anybody so fanatical to claim it breaches Magna Carta? Or the Bill of Rights? Or any other aspect of our rag-bag constitution?

  5. GeoffH – as I understand it, the Americans can pass such laws at state levels, if they want to. Or they can amend their constitution to let their federal government mandate individual plans. So why are you going on about selfishness and heartlessness?

  6. TracyW – why on earth should they have to amend their constitution to allow a Federal Healthcare Insurance scheme?

    The whole notion that somehow universal healthcare is ‘unconstitutional’ points to a warped sense of values. Either in the Founding Fathers or in the opponents today.

    Remember, nobody is arguing the merits or otherwise, merely using an appeal to ‘unconstitutionality’ to shut down the debate and any measures.

    That’s why it’s selfish and heartless. If you can’t see that, then I feel sorry for you.

    Tim adds: No, no one is using “unconstitutionality” to insist that there should be no Federal health care. It’s absolutely possible to do this legally in any number of different ways. For example, they could have just said “everyone is eligible for Medicare” and raised taxes to pay for it. No unconstitutionality there at all.

    But they wanted to be clever and they trip[ped up over their own cleverness. The Federal Government does not have the power to insist that you must purchase a commercial product simply as a result of being alive. That’s the unconstitutional bit.

    Not what they’re doing (national health care) but they way they’re doing it (individual mandate).

  7. So, GeoffH, irrespective of what it is going to cost you personally, objecting to a particular way of funding universal healthcare, whether it is efficient or not, is selfish and heartless?

  8. DocBud, You know perfectly well that isn’t the argument.

    Opponents (at least a goodly proportion and the most vocal) of universal healthcare are opposed simply to the principle and not the practice.

    That’s why they appeal to the notion of ‘unconstitutionality’ as a cover for selfishness etc.

  9. @GeoffH: perhaps its because the founding fathers of the USA were just as concerned with protecting the rights of those who would have to pay for the system (those forced to have insurance who currently don’t want it, or have a basic dire emergencies only version) as those who will be taking out of the system?

    Don’t forget the flip side of ‘ensuring all Americans have the means to access healthcare’ is forcing (on pain of fines and presumably imprisonment) some other people to do things they would not freely decide to do.

  10. Geoffh says “DocBud, You know perfectly well that isn’t the argument.”

    On the contrary, that IS the argument. Unless it’s your belief that governments need not follow their own most basic principles.

    You are quite mistaken that “to claim that measures to ensure that all Americans have the means to access healthcare whenever they need it regardless of income and circumstances is somehow ‘unconstitutional’ points to a rather selfish and heartless attitude” Because no one is claiming that – except to create a straw man, for example a straw man of your own liking. Nevertheless, you are mistaken about this.

    The US Congress wrote a bill that transfers the control of 100% of its medical care financing system into federal hands, to solve an undeniable problem – that 15% of its people cannot afford to be insured. Many States came to the conclusion that, in the law it wrote, Congress exceeded its Constitutional authority particularly in the so-called “individual mandate”. The constitutionality of that mandate is an entirely separate argument from the need to finance medical care for 15% of the population But in so its overreaching Congress created this Constitutional issue – an issue that need not and should not exist. Unfortunately it is now the center of the argument, and that is because of the government’s own political incompetence and power-grabbing. And that is a larger issue – unless, that is, it’s your belief that governments need not follow their own most basic principles.

  11. Whether or not you agree with it, the US Constitution forms the basis for the US governemnt in allits branches. There is a recognised way to amend the constitution if need be. If a president, judge or congress can just ignore the constitution because their cause is seen as “right” by some section of society or just by themselves then it doens’t leave the constitution with any value at all, which I suspect most Americans of all political colours would agree was a bad thing

  12. why on earth should they have to amend their constitution to allow a Federal Healthcare Insurance scheme?

    Oh, that one is easy. Rule of Law. To quote from A Man For All Seasons:

    William Roper: So, now you give the Devil the benefit of law!
    Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
    William Roper: Yes, I’d cut down every law in England to do that!
    Sir Thomas More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!

    Remember, nobody is arguing the merits or otherwise,

    Clearly you don’t know many liberatarian Americans.See for example for a case of someone arguing the merits or otherwise, and proposing other options.

    merely using an appeal to ‘unconstitutionality’ to shut down the debate and any measures.

    Ah no. As stated, the US has several options for doing this even if it’s unconstitutional, most obviously by amending the constition.

    That’s why it’s selfish and heartless. If you can’t see that, then I feel sorry for you.

    And if you don’t have the foggiest idea of why I think that the law should be obeyed, then I feel scared of you, even though I’m not an American. And perhaps I should feel scared for you.

  13. Jim and John (are you a double act?),

    When you are both forced into arguing that somehow ‘constitutionality’ overrides the basic civilised concept that ALL citizens (with costs shared by ALL) should have unencumbered access to healthcare when they need it, well, you’ve actually proved my point.

    It can only be selfishness and heartlessness that lies at the root of the idea of protecting the healthy and unwilling to share the burden at the expense of those in dire need of healthcare but without the means to pay for it.

  14. TRacy W.

    Let’s sum up your objections.

    They amount to no more than , “I’m all right Jack, pull up the ladder.”

    And as for quoting ‘Man for All Seasons’.


    You and others can witter on all day about Law, The Constitution etc. and cloak your objections in the uttermost self-righetousness. But when it comes down to it, you’d rather see fellow citizens die and suffer in agony than stump up a penny to help them.

  15. No-one – even in the US – is ‘in dire need of healthcare and unable to pay for it’.

    And characterising all those who object on principle as evil, heartless psychopaths who want to see the sick die in the gutter while they sup champagne is no way to convince anyone that you are arguing from some position of moral authority.

  16. “but exempt you from the tax if you’ve bought a private policy that covers you adequately.”

    Ah, but then people will be able to abandon the failing system and show it for what it really is. No, force everyone to be in, so nobody can be “out”. Think “Berlin Wall”.

  17. GeoffH, what is the point of your line of argument? I can see two reasons for debate, in no particular order they are:
    – to convince others that they are wrong and you are right
    – to learn something more about your own position, be that from hearing the best objections about it, or from trying to explain it as clearly as possible.

    I don’t see how either aim is served by your approach here. Your ignoring of our actual arguments in favour of making up strawmen about our motives is hardly going to convince us to change our minds, and I don’t see how it’s going to lead you to understand your own position any better.

  18. I keep reading this concept that “ALL citizens (with costs shared by ALL) should have unencumbered access to healthcare when they need it” from the bleeding hearts, with variations, as though it were a revealed truth.

    It’s not. It’s not “civilized”, it’s theft.

    I am not prepared to pay for those who mistreat themselves, through bad luck, moral weakness, stupidity or laziness, nor for those whose parents are genetically deficient, nor am I prepared to accept payment for the treatment required by my own defects and deficiencies.

    The grasshoppers always have an infinitude reasons to steal from the ants and the emotional arguments of civilized, heartless, yadda, yadda.

    Don’t all of you thieving lefties also believe in evolution? Sure you do, you’re always on about the hillbilly Americans denying it until the noble lefty lawyer forces them to acknowledge their monkeyhood.

    Then, when the Americans propose to practice evolution in action, and let the weaker citizens die, you’re all up in arms with the usual mewlings.

    Bathos. Pfah.

  19. Yup.

    ’twas as I said. Selfish.

    Tough, if you’re born with say, Cystic Fibrosis, Huntingdon’s Disease, Down’s Syndrome or any one of hundreds of other congenital problems. It’s all to do with YOUR moral failing, stupidity or laziness or that of your parents.

    Go away and die quietly in ditch. Don’t bother me, I need another flat-screen TV more than you need health treatment.

    Tim adds: Geoff, you’re grossly misunderstanding my argument.

    Let’s change it a little bit. And exaggerate it.

    Rape is bad. We could stop rape by castrating every male. Or by locking them all up before they rape someone. Or by shooting everyone looking a bit sexually aggressive. All would sove the problem of rape.

    But to say that castrating, locking up or killing all men is a bad thing to do, even in and of itself, is not to then be found in favour of rape.

    The argument is that giving the Federal Government the power, one which arguably it does not already have (we’ll wait and find out when the Supremes get to it), to force each individual to purchase a private sector service simply by the reason of being alive, is a bad idea.

    To oppose this idea is not then to be insisting that there should be no health care for the poor. It’s just to poose this specific method of getting that health care for the poor.

  20. Tim,

    My comments were addressed to Fred Z and not you.

    But in any event, you and those seeking to use the Constitution are being disingenuous. Whatever they say is not worth taking at face value, since, as Fred has shown, it’s all about ‘Theft’ for them and not the constitutionality.

    The Constitutional angle is merely a smokescreen for their bitter opposition to the very concept of Universal Healthcare. And remember, I said right from the very start it has nothing to do with the merits or demerits of the Obama plan. All that yelling of ‘Socialism’ and ‘Death Panels’ gave the game away.

    Just as support for the principle of Universal Healthcare is not uncritical support for the UK’s NHS as against the other systems that exists in the Western world.

  21. “…but if they get this through what would that set precedent for?”
    Which is a question I asked above & is one I’d be interested in knowing the answer to. As I understand it US law like ours takes notice of precedent & if the Constitution can be bent on this issue what other ‘good’ reasons could follow only objectionable to ‘heartless psychopaths’.

  22. geoffh curiously, after successive ridiculous statements about others’ “intent”, comes up with this correct assertion:

    “To oppose this idea is not then to be insisting that there should be no health care for the poor. It’s just to [oppose] this specific method of getting that health care for the poor.”

    Correct. One hit out of a dozen bad misses perhaps, but still one for you.

    By the way, geoffh, lack of insurance in the States does not mean a person does not have “health care”.

  23. It is not a ‘right’ if a third party can be compelled to pay for it. It is an ‘entitlement’. And those are very different things. You might argue people are entitled to universal healthcare. But they sure as hell don’t have a right to it. You have a right not to be murdered. But you don’t have a right to expect me to pay for a bodyguard for you. We may, as sovereign individuals, charter a government to provide those public services like police that we feel happier funding collectively. But talk of ‘rights’ is a slippery slope.

    As soon as you start deviating from doing what the law says and start insisting that we should do what the law means (in your opinion) then you’re halfway towards the grubby authoritarian fascism-lite of the likes of Richard Murphy and other such unsavoury characters. It’s an elementary (the elementary) principle of US jurisprudence that all law has to be viewed through the lens of Constitutionality, and saying that in this case that is setting the bar too high, out of some supposedly self-evident notion of ‘fairness’, is throwing the baby out with the bathwater.

  24. John Fembup.

    There’s just so many misattributions there, it’s hard to know where to start.

    Let’s go with this one: “To oppose this idea is not then to be insisting that there should be no health care for the poor. It’s just to [oppose] this specific method of getting that health care for the poor.”

    Not my contribution, but let’s deconstruct it.

    Why should healthcare for ‘the poor’ be any different in reach or quality from that for the rest of the US Citizenry?

    Are you really saying that in a modern, so-called civilised society that a patch-up and mend approach is fine for the poor but the rest should have a the very best that money can buy healthcare? Is this the Estée Lauder form of healthcare; ‘Because you’re worth it’?

    And does ‘lack of insurance…..does not have health care’ mean that all can get the ‘right’ quality and quantity of treatment irregardless of circumstances?

    Of course not, or there wouldn’t be any need for either personal health insurance or any sort of reform.

    As for ‘ridiculous assertions about intent’ Fred Z has ‘proved’ them in spades.

  25. geoffh, just more straw-man argument from you: “Are you really saying that in a modern, so-called civilised society that a patch-up and mend approach is fine”

    I don’t say that. I don’t suggest anything like that. Nor does any one else. You say that. And you’ve made it up.

    But I do apologise for mis-attributing to you, someone else’s intelligent comment. My bad.

  26. geoffh is endlessly amusing; here is the latest: “no amount of wriggling ”

    Seems to me it’s you who is wriggling

    That often happens when one prefers to insist on fiction rather than face truths.

    So it’s a waste of time speaking with you even though I’m sure in real life you are a prince (or princess) of a person and all your children are above average. But now I’m bored with you.

  27. @GeoffH: I’m not American so I have no horse in this race. Here in the UK we have no way of opting out of the NHS. We have to pay for it via our general taxation. If we wish to get a better service we have to pay privately out of our taxed incomes. That’s what democratically elected governments can do. Tax their populations and spend the money as they see fit.

    However if President Obama had suggested such a system, what do you think would have been the result? I contend he would not now be President, and he knew that. So the current system was devised. It unfortunately (or fortunately depending on your political viewpoint) appears to be contrary to the US Constitution.

    So if the aims you so nobly espouse (free healthcare for the huddled masses) are to be achieved, re-present them to the electorate in a way that is not unconstitutional.

    Simple. And if you are correct and everyone is in favour of such and obvious ‘good thing’, such a proposal will pass easily.

    Remember the Constitution is there to protect all people not just the ones you approve of.

    Imagine, if you will, an ultra-right wing Republican President, who is so enamoured with the ‘right to bear arms’ that he proposes a State Gun Fund. Everyone will have to pay in to the Fund, and have the right to be given a gun from the fund so those that can’t afford a gun can have one. You might argue (very reasonably) argue that you don’t like guns, you don’t want one, and why should you pay for others to have them for free? And I’m pretty sure the US Constitution would protect your rights if such a thing were proposed.

    But if the Constitution were amended to allow Obamacare, then the National Gun Fund would also not be un-constitutional would it? It would be down to the democratic will of the people, and if enough people voted for it, you might end up paying for Billy-Jo-Jim-Bob’s AK47.

    What price a Constitution then eh?

  28. I am a natural born U.S. citizen who has lived in the United States all of his life. I have been a follower of politics, since I was a young boy.

    A problem with Obamacare or the plan to provide health care to everyone exists. In the United States, we do not have adequate human resources available to staff a healthcare system for everybody. Any health care system mandated by law would drastically reduce the availability of quality care to the people who currently afford it.

    Obamacare was pitched to the voters as something poor people could get for nothing, if the Democrats could control the Congress and the White House. It wasn’t true. Obamacare is not feasible. It cannot happen because the millions of poor people who don’t have insurance would overwhelm the current system. The current health care system can’t get bigger. There are already shortages of trained health care workers in many fields. The U.S. government has been doing everything it can to educate and place more health care workers for the past 40 years, but shortages of workers always exist.

    The population of low income people without insurance is just too large in comparison to the number of individuals who qualify themselves as highly paid health care workers.

  29. On the original article, it’s worth noting:

    1) US judges are not impartial, and are not even *supposed to be considered* impartial. Judge Hudson is a long-time Republican activist appointed to the judiciary by GW Bush.

    2) Two other judges (at the same level as Hudson – this isn’t a reversal of prior decisions) have found that the plan *is* constitutional. They were both appointed by Democrat presidents, although don’t have quite the same political activist track record as Hudson.

    Tim adds: Well, sorta. Federal judges are expected to be impartial on the bench, even if their political leanings might be well known.

    State judges are another matter of course, some states having them running for election.

  30. Jim: no, the whole point of my comment wasn’t that at all. That’s why I mentioned that the other two judges to rule on the case were Democrat appointees, although without the same state-level political record as Hudson. Just, this isn’t a killer knock-out for Obamacare, more what might have been expected.

    The government is trying to bump the Obamacare rulings straight to the Supremes, and may or may not succeed. If it succeeds, I’d put good money on the court passing it.

    If it doesn’t, then all eyes will be on the appeals courts (which, very broadly, are more sensible and less biased than the lower courts). If any appeals court upholds the claims against, then Obama is utterly fucked, no matter what the SC ultimately decides.

  31. Ladies and Gentlemen:

    Thank you for conducting an interesting and, in some ways, illuminating debate. I think that you are all to be commended for having put your minds to this issue and having expressed yourselves in a spirited yet civil manner.

    Most Americans (including every one of my economics students) are not aware of the history of this issue. I like to think that if they were aware of the history, contours of the debate would be very different. It is also true that most Americans have little to no knowledge of the U.S. Constitution. This is not their fault. They have been educated by schools and politicians to believe that the U.S. Government is empowered to do, as Walter Williams likes to put it, “All Things Great and Wonderful.” Even less, then, should those of you who are not Americans to be faulted for what are some pretty wild opinions about the nature of the courts in the U.S.

    The litigation over the constitutionality of certain parts of the Affordable Health Care for America Act has nothing to do with whether or not affordable health care is a good idea, or a desirable outcome, or ought to be a right, etc. It has to do with whether or not this assault upon the final citadel of limited government will be allowed to carry the works. If Congress can force people to buy a given product whether they want it or not (and the automobile insurance analogy is completely inapposite), there is not anything that the federal government cannot do to individuals (that is the Virginia case). If Congress can force expenditures on the states, then there is nothing that the federal government cannot force the states to do and they will cease to exist as a practical matter (that is the Florida case). If the Affordable Health Care for America Act is not unconstitutional, then there is no legal bar to the U.S. Government becoming as totalitarian as it chooses to be.

    There are many reasons why what is termed health insurance has risen in relative price in recent years. It is true that those reasons originated in a policy error made by the federal government in 1942 (in order, by the way, to “fix” the undesirable results of another policy error completely unrelated to health care), but that fact does not imply that the problem can be completely solved at the federal level. Most of the policy factors causing the rise in relative price are matters of state law. The price of comparable policies varies widely from state to state. That is because the insuring clause of every policy is written by the state legislature, and they vary widely from state to state.

    I’m sure that you can guess what happens in the state capitols. The purveyors of every product that is even remotely associated with the condition of the human body or mind goes to the legislature to try to get them to require the communal purchase of their product through the insuring clause of the state mandated insurance policy contract form. Thus, in the state in which I live, I am effectively forced to pay for things that I would never purchase voluntarily, such as baldness cures (If any of these actually worked, selling it would not require the help of the state.) drying out services (I don’t drink and never have.), detoxification services (I don’t take illegal drugs and never have.), and a wide range of personal counseling services. I do not deny that some people might find these things valuable, but I do deny that the risk that I will experience any of these casualties is above zero.

    Nevertheless, I am forced to buy these things indirectly as a condition of having the insurance. No insurance company is allowed, by state law (not federal law) to offer me a policy without these coverages but with a lower premium. This aspect of the problem lies entirely in state law and, I might add, in venality on the part of state legislators. A cynic might suggest that the Affordable Health Care for America Act seeks to transfer the opportunities for venality from the state capitols to Washington, DC.

    It is also noteworthy that if it is so that, as the President has claimed frequently, “As soon as you get sick, they cancel your coverage,” that outcome is a failure of state, not federal, law. The state legislature writes all the relevant clauses of the contract of insurance. If cancelling coverage as soon as you get sick is not a material breach of contract, it is entirely within the power of the state legislature to change the contract that it wrote so as to fix that. The truth is that these horror stories are only half the story. In every one of these cases that I have examined, it turns out that the policy was obtained on the basis of material falsehoods or omissions on the part of the insured that prevented the underwriters from rating the risk. Congress’ solution to this is to make it illegal to rate risks at all. The President and proponents of the Affordable Health Care for America Act in Congress and elsewhere claim that this will result in less expensive insurance.

    Well, every one of those supposedly price reducing measures has already been tried in my state in health insurance, and most of them have already been tried in automobile casualty insurance. In every case, the price has risen, both absolutely and relative to other states that do not have those features in their mandated policies. The proponents of the Affordable Health Care for America Act are either ignorant of the economics of insurance, or counting on the fact that most people are ignorant of the economics of insurance, or both.

    The root of the problem is third party payments. We already have 86% socialized medicine in the U.S. in the sense that $86 of every $100 spent on health care is paid by a party other than the buyer (All true insurance ‘socializes’ casualties among the policy holders.). That is the primary cause of the perception that the price of these services is higher than it would be otherwise. There can be no doubt that a third party payments system raises prices. If you doubt this, think back to your latest visit to an autobody shop as a customer. What is the first question they ask you: Is this an insurance job? If you say that it is, you get a different set of prices.

    The proponents of the Affordable Health Care for America Act propose to solve this problem by making it so that $100 of every $100 spent on health care is paid by a party other than the buyer. The horror stories one hears about NIH stem not from socialization, but from it being socialism run by what is effectively a monopoly. There are more than 2700 firms in the U.S. selling health insurance. If you don’t like the way your private insurer handles your claim, you switch to another insurer in the next policy period, which you can do because the socialism in the U.S. is mostly private and not monopolized; the extent of the socialism is the indirect outcome of federal income tax policy. Where there is only one insurer, though, whether it is the state in the form of NIH or a so-called private monopolist, changing insurance carriers is not possible. Under those circumstances, the monopolist is free to treat you the way any monopolist would; economic theory suggests that all monopolists produce less than the socially optimal amount.

    Even though the third party payments system has become so pervasive and its effects on the price of health care services so firmly entrenched, there are still two things that the federal government can do to cause what is called health insurance to fall in relative price without doing violence to the constitution. They are: (1) repeal those aspects of the federal income tax that allows people to buy health insurance at group rates using pre-tax dollars, and (2) allow people to form groups on any basis they want to make contracts of insurance with insurers in any state (or country, for that matter), which contracts would be enforceable in federal court on the basis of diversity jurisdiction with the law of the insurer’s state as the law of decision. In my opinion, that would restore competition in the health insurance market and would result in the insurers pressuring the state legislatures to reduce the degree of mandated coverage in order to facilitate price competition.

    Passage of such a measure would require Congress to suppress its venal mercantilist urges, and I recognize that that is a lot to ask. Is freedom to be given a chance, or is totalitarianism the only remaining path? I wish I knew. I do know that that is what is stake in federal court.

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