In some earlier posts I went over the constitutional grounds for State nullification of the Affordable Care Act (aka ObamaCare) and why I think rejection of the exchanges is not the best way to accomplish it. But there is a little more to this line of reasoning that I want to share.

The problem of just rejecting the ObamaCare exchanges is that the law provides for the Federal Government to implement exchanges on behalf of States that do not comply. The recent decision by the Supreme Court that construed the individual mandate as a valid exercise of the power to tax only complicates matters because it also said that the same is not a valid exercise of the commerce clause.

If we’re to suppose that the exchanges are the mechanism by which to determine liability for the tax, in addition to the mechanism by which to enforce other market regulation, the Supreme Court decision allows the Federal government to set up the exchange on behalf of the States under the Necessary and Proper Clause; but not as an exercise of the power to regulate commerce. It is very shady constitutional construction by the Supreme Court that leaves a reasonable amount of question as to whether the exchange could be utilized to also regulate the insurance markets, like enforce basic coverage requirements or corner the insurance market onto the exchanges – as these are not an exercise of the power to tax, but rather a usurpation of State police power to regulate intrastate markets that goes way beyond the necessities of collecting revenue. Either way, the best that can be hoped for is that average citizens will be hit with only the tax penalties under the law in States that decline to operate an exchange.  But I would not rely on what the Supreme Court has said about the individual mandate to stop the Obama Administration from implementing ObamaCare full throttle in the case that it sets up exchanges on behalf of States that default by not cooperating.

It is much easier to prevent the Federal Government from starting to do something than it is to stop it from doing something; and so the current wave of rejection of ObamaCare should be followed through with additional challenges regarding the extent of the meaning of the decision by the Supreme Court as it pertains to the 10th Amendment. The alternative suggestion I have is that the States do their own exchanges that allow collection of the tax penalties while utilizing them to carry out free market reform of the insurance markets within their borders.

From what I can tell, the conventional wisdom of not cooperating in setting up the exchanges is that it will put stresses on holes in the ACA and force reopening of the law in order to plug them. I’ve heard it said that ObamaCare will “unravel” under its own weight in the absence of State cooperation because there isn’t the money or competence on the part of the Federal Government to run the exchanges. All I can say is good luck with that – it means that any gain by not cooperating is only temporary at best. If I were a citizen in any State refusing an exchange, I would want to know what the long run plan is to prevent ObamaCare from ever becoming a reality within the ability of a State to do so; because the Feds will eventually solve all of the logistical problems involved with lack of cooperation leading to a legal premise that the Government can do whatever it wants to anyone it wants without question, which is of far greater impact the meaning of federalism than just ObamaCare itself.

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