Abstract

http://ssrn.com/abstract=1527128
 
 

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Impermissible Ratemaking in Health-Insurance Reform: Why the Reid Bill is Unconstitutional


Richard A. Epstein


New York University School of Law; Stanford University - Hoover Institution on War, Revolution and Peace; University of Chicago - Law School

December 18, 2009

U of Chicago Law & Economics, Olin Working Paper No. 506
U of Chicago, Public Law Working Paper No. 288

Abstract:     
One of the most neglected features in the debate over HR-SA 3590, the Reid Bill, is the level of systematic coercion that it places on health insurance issuers, especially in the individual and small group market. This paper concludes that the combined impact of these restrictions severely compromises the likelihood that these health insurers can remain in business under legislation that eliminates virtually all underwriting discretion in the selection of covered parties and the rates that they charge, imposes minimum restrictions on the services that they supply, and imposes heavy global mandates on the administrative costs that they must bear. This extensive level of regulation rests on the flawed premise that price controls can achieve efficiencies that are not otherwise attainable in markets. The full weight of the Reid Bill is tantamount to treating these insurers as public utilities, who should, but do not receive anything close to, the constitutionally mandated, risk-adjusted rate of return.

Number of Pages in PDF File: 25

Keywords: healthcare, health care, health reform, Reid bill, unconstitutional, health insurance

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Date posted: December 22, 2009 ; Last revised: December 30, 2009

Suggested Citation

Epstein, Richard A., Impermissible Ratemaking in Health-Insurance Reform: Why the Reid Bill is Unconstitutional (December 18, 2009). U of Chicago Law & Economics, Olin Working Paper No. 506; U of Chicago, Public Law Working Paper No. 288. Available at SSRN: http://ssrn.com/abstract=1527128 or http://dx.doi.org/10.2139/ssrn.1527128

Contact Information

Richard A. Epstein (Contact Author)
New York University School of Law ( email )
40 Washington Square South
New York, NY 10012
United States
(212) 992-8858 (Phone)
(212) 995-4894 (Fax)
Stanford University - Hoover Institution on War, Revolution and Peace
Stanford, CA 94305-6010
United States
University of Chicago - Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9563 (Phone)
773-702-0730 (Fax)
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