Tuesday, December 30, 2008
Rick Hills started an interesting discussion at PrawfsBlawg on ERISA preemption of state and local "fair share" laws. In general, these laws require employers to provide medical coverage for their employees, or to pay a tax (that goes into, e.g., a state health insurance fund). In effect, employers gain a tax credit for providing health insurance to their employees.
Employers have claimed that ERISA preempts these efforts, because, in the language of ERISA preemption, they "relate to" employers' ERISA plans. Circuit have split on this argument: The Fourth Circuit ruled that ERISA preempts, while the Ninth Circuit ruled that it doesn't.
Hills's post and comments go beyond the narrow constitutional preemption arguments, though, and touch upon broader federalism and policy concerns. Hills:
But here is where I am a die-hard lover of federalism: As dumb as employer mandates are, centralizing debate over health care through a broad construction of ERISA preemption is even dumber. Such centralization is an outrage against the democratic process both locally (by suppressing the efforts of those zany San Franciscans) and nationally (by letting Congress off the hook of confronting the relationship between health care and employment). San Francisco hurts no one but itself and its own residents by burdening business and driving away capital to the 'burbs. The claim that national businesses will suffer some external cost outside San Francisco from disuniform regulation is patently baloney: Any business that operates in any city already must uncontroversially incur the costs of researching and complying with local zoning codes, local taxes and fees, local building codes, local safety regulations, etc. The marginal cost of insuring that one's local branch complies with the local complying health care law is close to zero.
For another policy take, see Fisk and Oswalt's Preemption and Civic Democracy in the Battle over Wal-Mart in the Minn. L. Rev. and on ssrn.
Here's an area that begs for the kind of broader analysis that Hills, Fisk, Oswalt, and others bring. With the failure of the federal government to lead on national health care, state and local governments have sought to fill the void, responding to the increasingly desperate needs of their citizens. But they're (at least potentially) constrained by federal ERISA preemption. In short, the federal government refuses itself to step up and address the health care crisis, and also curtails state and local efforts to solve the problem.
This problem is rich with preemption, federalism, distributional, and governance issues, and it makes a great case-study in some of the practical problems with constitutional preemption.