December 23, 2009

Quote of the Day

Duquesne Light carries extra weight here because health-insurance industries are far from natural monopolies, so that regulating their rates calls for an extra dollop of judicial scrutiny. At this point, the Reid bill is on a collision course with the Constitution. I take it for granted that, constitutionally, the federal government could not just require all private health insurers to liquidate tomorrow, without compensation. -- Richard Epstein
Health Care Posted by John Kranz at December 23, 2009 10:53 AM

Sigh, I've had the pleasure of meeting Epstein (and having a chance to talk about a paper of his that I discovered preceded an idea I had) and know he's brilliant, but he's so naive here, and also wrong.

Fine, so the federal government will compensate insurers (rather, their owners) for being driven out of business. How will that be done? The people, whether through taxation or the Federal Reserve monetizing more debt. This isn't, as Lenin said, capitalists selling the rope that will be used to hang them. This is Nazis making us dig our own graves.

It's such a lose-lose situation that the best we could hope for is that insurance company owners will be paid out based on crashed stock prices. That means, on top of all the destroyed wealth, our taxes will not have to increase as much, or the Fed won't print as many new dollars, to compensate us for any shares we might own. Lots of people, via 401Ks and regular mutual fund holdings, have shares of publicly traded insurance companies that they don't know about.

Now, Epstein mentions "the constitutional guarantee that all regulated industries have to a reasonable, risk-adjusted, rate of return on their invested capital." And where is that? None of that phrasing exists in the Constitution. The only argument toward such a notion is merely interpretation, based on the takings and equal protections clauses.

Posted by: Perry Eidelbus at December 23, 2009 2:08 PM

I did not read Epstein's position as being as benign toward this as you saw it. I will go through it again.

What interested me was the backdrop of precedent for such a takeover and how the current Health Care Bill seems far outside it.

Posted by: jk at December 23, 2009 2:19 PM

I submit, for your approval, the closing line as an alternate QOTD:

The Supreme Court should apply the constitutional brakes to this foolhardy scheme if Congress doesn't come to its senses first.

Posted by: jk at December 23, 2009 2:21 PM

I wasn't thinking he was "benign," just naive in the part about, "constitutionally, the federal government could not just require all private health insurers to liquidate tomorrow, without compensation." Even if that happened, what's the actual consequence? The people have to pony up the money.

I like your closing better, but I don't trust Kennedy to, you know, follow the document he's sworn to uphold. Remember his vote on the Kelo case? Yes, it's called a "decision," but it was still a vote like any other.

Posted by: Perry Eidelbus at December 23, 2009 4:02 PM | What do you think? [4]