The New York Times:
In a foreboding ruling for the Obama administration, a federal judge in Florida decreed Thursday that a legal challenge to the new health care law by officials from 20 states could move forward and warned that he would have to be persuaded that its keystone provision — a requirement that most Americans obtain insurance — is constitutional.
Earlier this week, a Michigan judge seemed to move in the opposite direction.
Caveat to the following discussion: I’m not a lawyer, though I play one on the internet.
The contitutional question turns on the Commerce Clause, which only allows the federal government to regulate interstate commerce. It can’t regulate commerce within a state. And till Obamacare, it has never required commerce to take place – in other words, it has never forced people to engage in commerce. Requiring someone to buy insurance does creates the precedent.
So the latest decision is interesting on a couple of levels.
First, insurers should really favor the requirement that everyone get insurance. It increases market penetration.
In addition, it combats adverse selection. If insurers cannot turn down risks – true under Obamacare after 2014 – but customers aren’t forced to buy, then customers can wait till they’re sick to get insurance. So here, insurers should be opposed to the conservative interpretation of the Commerce Clause.
Second, it’s ironic that the argument against said requirement is based on the Commerce Clause. For about 125 years, the Commerce Clause was interpreted so that insurance was not considered interstate commerce. That idea was overturned in 1944 with the South-East Underwriters decision. By that time, an intricate system of state regulation had built up, so Congress quickly passed the McCarron-Ferguson Act. That shifted insurance regulation back to the states but also allowed insurers to share actuarial-style data to develop rates efficiently. In South-East Underwriters, insurers favored the conservative interpretation of the Commerce Clause. And of course, Obamacare supporters opposed McCarran-Ferguson because it allowed insurers to slip past federal anti-trust laws.
So, to quote Mark Twain, “The past does not repeat itself, but it rhymes.”
(h/t SamJFriedman via twitter)