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Richard Epstein: The Reid Bill Is Blatantly Unconstitutional



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At PointOfLaw.com, the distinguished University of Chicago constitutional scholar Richard Epstein provides a painstaking, withering analysis of the healthcare legislation wending its way through the Senate. He concludes that it is clearly unconstitutional. The essay is lengthy and, in places, complex; but it is brilliantly done, accessible, and compelling. [Thanks to Roger Kimball and Glenn Reynolds.]

Most of the constitutional analyses I’ve read, such as this superb one by David Rivkin and Lee Casey, have focused on the limitations on Congress’s power — to wit, that the Commerce Clause does not vest Congress with the authority to coerce Americans to purchase health insurance as a condition of living in our country.  Prof. Epstein’s focus is very different, and a heartening reminder for capitalists in the age of Obama. Drawing on the Bill of Rights protections against takings without just compensation and deprivation of property without due process of law, and on the Supreme Court’s rate-regulation jurisprudence, Epstein concludes that the Constitution assures that “any firm in a regulated market be allowed to recover a risk-adjusted competitive rate of return on its accumulated capital investment.” (Citing the Supreme Court’s decision in Duquesne Light Co. v. Barasch (1988)). Applying these principles, Epstein concludes:

The Reid Bill emphatically fails this test by imposing sharp limitations on the ability of health-insurance companies to raise fees or exclude coverage. Moreover, the Reid Bill forces on these regulated firms onerous new obligations that they will not be able to fund from their various revenue sources. The squeeze between the constricted revenue sources allowable under the Reid Bill and the extensive new legal obligations it imposes is likely to result in massive cash crunch that could drive the firms that serve the individual and small-group health-insurance markets into bankruptcy.

While the insurance companies have been utterly demonized by Democrats in this debate, the fact is that there is a competitive market for healthcare insurance. As Epstein explains, “to justify rate regulation” — which is titanic in the Senate bill — “there needs to be some evidence of the existence of monopoly.” As there is and can be no such evidence, there is no rationale for the bill’s pervasive rate regulation (and for the stifling price-controls that Epstein shows must inevitably result in delayed, reduced, and rationed services).  If this bill were really about controlling costs — rather than controlling lives — Epstein observes that it would be a simple matter to repeal the federal law (the McCarran-Ferguson Act) that “authorizes state barriers to out-of-state competition. That one legislative fix should reduce prices and expand access, but not cost the federal government a dime.”

For what it’s worth, I think it would be worth having a vigorous constitutional argument about capitalism. A free society is only free because its people, rather than its government, are sovereign, and it only needs a Constitution to protect individual liberty from encroachment by the government. As Professor Epstein demonstrates, that is what our Constitution does. But this is the antithesis of President Obama’s vision of a new Constitution (or a new Bill of Rights) that proclaims what government must do for you rather than what it cannot do to you. Alas, as I’ve discussed before, while that sounds admirable it is monstrous, since government has nothing to give — it can do for one only by taking from another. If that is to be our system, we are no longer free.

Healthcare is not and has never been a “right.” Why are we so afraid to say that? When the other side says, “Healthcare is a right,” I want to say, “What healthcare? Abortion? Botox? ‘Preventive’ care?” What other “rights” do you have that I am required to pay for? A house? A job? A day at the beach? Since when? Only in Washington will those questions get you expelled from polite company. The American people are ready to have them asked and to have a real debate about them — not a 2000-page power-grab in the dark of the night before Christmas. 

What you have a right to is no unreasonable government interference with your ability to purchase healthcare in a competitive market — i.e., a fair market in which government polices against fraud and does not skew the playing field by interfering unreasonably with providers and insurers. That’s a valuable right, and it has delivered the greatest healthcare system in human history. We are crazy to damage it more than we already have — and even crazier to allow it to be done on the pretexts the Obama Democrats are offering.



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