Critical Condition

Richard Epstein on the Constitutionality and Economics of Obamacare

I had the priceless opportunity to co-write three amicus briefs for the Supreme Court in the challenge to Obamacare with Professor Richard Epstein, one of the luminaries of the “Chicago school” of law and economics. (The three briefs were on individual mandateseverability; and Medicaid expansion.)

Professor Epstein demonstrates the value of taking both economics and law together in this gem for the Hoover Institution, “Obamacare: An Unconstitutional Misadventure.” Epstein argues that “In the end, Obamacare’s rickety economic structure is intimately connected to its constitutional infirmities.” As always, Epstein starts with the real-world (and often perverse) incentives that the law creates.  

The least risky individuals, therefore, have every incentive to get out of the system, which is regrettably accommodated by the ACA rules that allow people to terminate coverage unilaterally at any time for any reason. A sounder system would have allowed health-insurance carriers to require the insureds to pay a penalty to withdraw from coverage, or to insist that they remain in the plan for some minimum period.

What phone companies can routinely do is thus systematically denied to health-insurance carriers. Viewed in this context, the controversial individual mandate is a desperate measure to use direct government penalties to counteract the unnecessary abuse that the ACA builds in on its ground floor. So one unsound legislative provision counteracts the perverse effects of another unsound provision.

Read the rest here.

Mario Loyola — Contributing editor Mario Loyola is senior fellow and Director of the Center for Competitive Federalism at the Wisconsin Institute for Law and Liberty. He began his career in corporate ...

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