Regular correspondent B. J. writes:
[You write,] “Senator Snowe voted against interstate commerce in health insurance in 2007.”
We already have this. States have the power to decide whether to discriminate against out-of-state health insurers; there is no federal law that either requires or encourages them to discriminate. Each state is entirely free to open up the health insurance market for its citizens to any health insurer in the country.
Given that each state can (as far as I know) accurately measure the benefits and burdens to its citizens from discriminating, or not, why must they be forbidden by the federal government from doing so? What force is pushing states to discriminate that requires the heavy hand of the federal government to forbid them from doing so?
Interestingly, Enzi also proposes stripping the states of the power to regulate medical malpractice and to shift that power to the Federal Government so that instead of the citizens of each state deciding on their own how to deal with medical malpractice, we all have to do it the way that Pelosi, Reid, Boehner and McConnell think best.
These are not rhetorical questions. Rather, I believe that if you want the Federal Government to impose a national rule, you need to explain why a national rule not only is constitutional, but also is justified. It’s insufficient, in my view, simply to point out that the proposed rule is “good” – I have no doubt that some of the tort-reform ideas and health insurance rules are “good”. But I want to know why the “good” rule needs to be done nationally and cannot be enacted by the people of each state as they see fit, or not.
There is on both sides of the aisle exactly the same arrogant notion about the ability of the Congress to Know What is Best for All of Us regardless of whether we are competent to make these decisions on a state-by-state basis. But it’s unclear to me why I’m supposed to be more confident in a centralized Federal plan sponsored by people with “R”s after their names than one sponsored by people with “D”s after their names.
I’m not against Federal plans – I just want more to be done to support them than convincing me that they’re “good.”
As a practical matter, states are able to exclude out-of-state insurers because Congress lets them. The Supreme Court determined that the federal government, not the states, should regulate insurance as a type of interstate commerce, and Congress then voted to let the states regulate anyway. (It later enacted a substantial exemption to this rule with the ERISA law.) But this leaves three questions: 1) Was the Court right in reading the Constitution to set a default rule that insurance should be regulated nationally rather than state-by-state? 2) Assuming that the Court read the Constitution right, is the Constitution right to leave this issue to Congress? 3) Is the question of whether the states should regulate insurance is legitimately up to Congress, what answer should Congress give?
I’m going to mostly sidestep the first question as both beyond my competence and not directly raised by my correspondent. One point that bears on both 1) and 2) is that fear of states strangling the national economy was a major motivation for the drafting of the Constitution in the first place. States are, in a sense, perfectly competent to judge whether imposing tariffs on one another is a good idea, but the national government rightly prevents them from exercising discretion in the matter. As for 3), I think the bad outcomes of Congress’s current policy–a fragmented market with high costs and excessive state regulation–are more than enough to justify changing course.
Finally, the comparison to tort reform is instructive. Product-liability reform strikes me as a legitimately national issue: Protecting manufacturers from juries based in other states serves the national economy. If states have lousy medical-malpractice laws, on the other hand, they mostly hurt themselves; they don’t discourage interstate commerce. Thus I favor federal tort reform in the product-liability but not the medical-malpractice context. In each of these cases–interstate sales of health insurance, medical malpractice, and product liability–our policy judgment should turn on the conditions for robust competition and a healthy national economy.