Why ‘Ryancare’ Is Far More Hostile To States Rights Than ‘Obamacare’
Yesterday, House Budget Committee Chair Paul Ryan (R-WI) predicted that the Supreme Court will embrace the meritless claim that the Affordable Care Act violates states rights and “knock down the individual mandate.” Yet, if there is one person who shouldn’t be hiding behind states rights arguments, it is Paul Ryan. The truth is that Ryan’s infamous health plan does far more than simply phase out Medicare, it outright declares war on the states’ ability to protect their citizens from insurance company abuses.One of the centerpieces of Ryan’s plan is an element from the McCain/Palin presidential campaign’s plan that supposedly allows Americans to “purchase health insurance across state lines”:
Currently, individuals and families can purchase health insurance only in the States in which they live, because insurance companies are prohibited from selling polices outside their respective States. Thus the consumer is prevented from purchasing coverage from another State that might offer more suitable, or more affordable, coverage. [...]This sure sounds great! Why shouldn’t you be able to buy a plan from an Arizona insurance company if you happen to live in Ohio? The truth, however, is that the McCain/Palin/Ryan plan’s promise to let people “shop across State lines” is nothing more than a code for completely immunizing the insurance industry from state laws that protect consumers.
Allowing consumers to shop across State lines will balance State regulation of health insurance. Individuals no longer will have to pay for health benefits mandated by their home States that they do not need; they will be able to choose policies from States whose mandates better fit their personal circumstances. States will then have an incentive to balance their insurance mandates against costs to remain competitive with other States.
As Sen. McCain explained during his failed campaign, the McCain/Palin/Ryan plan is modeled after the process banks used to systematically dismantle state laws protecting consumers from excessive interest rates. Once upon a time, banks were governed by something known as “usury laws,” state laws which prohibited lenders from charging excessive interest to homeowners and other borrowers. In 1978, however, the Supreme Court held that banks are only required to follow the usury laws of the state where they are “located,” effectively immunizing banks from the interest rate caps in each of the other 49 states.
The result was a race to the bottom where states competed to enact the least protective usury laws in order to coax the banking industry into relocating within their borders. Eventually, South Dakota “won” this race by repealing its usury laws altogether, and Citibank rewarded South Dakota by moving its lending offices to that state. The rest of the industry soon followed suit, immunizing itself from interest rate caps altogether by locating in places like South Dakota.
So the effect of this chain of events was to completely neutralize states’ ability to regulate interest rates — hardly the kind of states rights result that 10th Amendment absolutists pine for. And the McCain/Palin/Ryan plan would impose the banking model’s approach to state regulation on health insurance regulation. If the Ryan is successful in enacting this plan, a short list of laws that would effectively cease to exist includes:
- Women’s Health: 49 states and the District of Columbia require health plans to cover reconstructive surgery after breast cancer, mammograms, and maternity stays;
- Fair Appeals: 44 states and the District of Columbia allow patients to appeal denials of coverage to an external review board;
- Preexisting Conditions: 38 states and the District of Columbia restrict how far into the past a insurance company can “look-back” to determine whether a patient is disqualified because of a preexisting condition;
- Healthy Children: 31 states require health plans to cover well child care.
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