preemption

Ohio, Missouri Introduce the Health Care Freedom Act 2.0

Ohio Reps. Ron Young (R-Leroy Twp.) and Andy Thompson (R-Marietta), and Missouri Sen. John Lamping (R-St. Louis County), have introduced legislation—we call it the Health Care Freedom Act 2.0—that would suspend the licenses of insurance carriers who accept federal subsidies through one of the Patient Protection and Affordable Care Act’s (PPACA) health insurance Exchanges. At first glance, that might seem to conflict with or otherwise be preempted by the PPACA. Neither is the case. Instead, the HCFA 2.0 would require the IRS to implement the PPACA as Congress intended.

Here’s why. Under the PPACA, if an employer doesn’t purchase a government-prescribed level of health benefits, some of its workers may become eligible to purchase subsidized coverage through a health insurance “exchange.” When the IRS issues the subsidy to an insurance company on behalf of one of those workers, that payment triggers penalties against the employer. Firms with 100 employees could face penalties as high as $140,000.

Congress authorized those subsides, and therefore those penalties, only in states that establish a health insurance Exchange. If a state defers that task to the federal government, as 33 states including Missouri and Ohio have done, the PPACA clearly provides that there can be no subsidies and therefore no penalties against employers. The IRS has nevertheless announced it will implement those subsidies and penalties in the 33 states that have refused to establish Exchanges. Applying those measures in non-establishing states violates the clear language of the PPACA and congressional intent. See Jonathan H. Adler and Michael F. Cannon, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” Health Matrix: Journal of Law-Medicine 23 (2013): 119-195.

Whether legal or illegal, those penalties also violate the freedoms protected by the Health Care Freedom Amendment to Ohio’s Constitution, and Missouri’s original Health Care Freedom Act, which voters in each state ratified by overwhelming majorities. The Ohio (HB 91) and Missouri (SB 473) bills would protect employers and workers from those penalties, and thereby uphold the freedoms enshrined in Missouri statute and Ohio’s Constitution, by suspending the licenses of insurance carriers that accept those subsidies.

The question arises whether the PPACA would preempt such a law. It does not. The HCFA 2.0 neither conflicts with federal law, nor attempts to nullify federal law, nor is preempted by federal law.

The HCFA 2.0 concerns a field of law—insurance licensure—that has traditionally been a province of the states under their police powers. In preemption cases, courts “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Wyeth v. Levine, 129 S. Ct. 1187, 1194-95 (2009). Courts then must determine whether the state law in question is nevertheless trumped by express or implied federal preemption.

Privacy Regulation and Political Economy

Good-hearted people want to cure hunger, ignorance, and other human deficits. Many see the cure in taking from the group of “haves” and giving to the “have-nots.” Along with the injustice of the transfer itself, libertarians like to point out the backward incentives that generous, systematic giving creates. Poverty and ignorance becomes a low-end, but survivable, mode of living. It’s not really a surprise that these problems respond to subsidy by becoming intractable.

Supreme Court Rules That Arbitration Provisions Should Be Enforced

A few readers have now asked me about the “libertarian” reaction to yesterday’s Supreme Court ruling that allows companies to use boilerplate contract provisions that require consumers to arbitrate any disputes individually rather than coming together as a class action for arbitration purposes (let alone being able to bring claims into court).  That is, where an individual claim isn’t worth that much money (about $30 in yesterday’

Another New Supreme Court Term, Another New Justice

Today is the first Monday in October, the traditional start of the Supreme Court term.  While we have yet to see as many blockbuster constitutional cases on the docket as we did last term—which, despite the high profile 5-4 splits in McDonald v. Chicago and Citizens United actually produced fewer dissents than any in recent memory—we do look forward to:

Immigration Law Ruling Half-Right But Crucially Wrong

The ruling demonstrates the problems the federal government creates when it fails to either enforce or reform our immigration laws.  Judge Bolton’s hyper-technical decision – anybody who tells you this case was black-and-white isn’t a serious lawyer – got it half-right: She correctly upheld most of SB 1070 and correctly struck down two sections of SB 1070 (a small part of section 5 and all of section 6), but incorrectly struck down two other sections (2 a

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