Enough about the Constitution: How States Can Regulate Health Insurance under the ACA

Abstract:     
Last term, the United States Supreme Court upheld the constitutionality of the Affordable Care Act in a landmark decision. It is a forceful reminder that America’s oldest question — how power should be shared between federal and state sovereigns — retains powerful political salience. Critics have reflexively attacked the decision as an assault on states’ rights, while supporters have celebrated the result. Regrettably, insufficient attention has been paid to how, in actuality, health care regulatory authority has been and will be divided between federal and state governments. In this Article, we fill that gap. To do so, we apply “federalism-in-fact,” a theory that seeks to measure the real-world, as opposed to theoretical, apportionment of power between sovereigns. We conclude that the Affordable Care Act has in important ways increased states’ power to regulate private health insurance when viewed in proper contrast to the previously exclusive ERISA regulatory regime. In addition, we offer recommendations on how states can use their freedom under the Affordable Care Act to grow their regulatory markets, and we explain why collateral forces are likely to increase state regulatory power even if states do nothing.

Keywords: ACA, Obamacare, federalism, insurance, ERISA, regulation

Accepted Paper Series