The Benefits of Opt-In Federalism

IntroductionFew national debates have rivaled the intensity of those regarding the Patient Protection and Affordable Care Act ("ACA").1 It is not difficult to see why. Sickness spares no one. Nor, some fear, does the federal government. The ACA involves both.Lines in the sand have been drawn over the ACA's constitutionality.2 Prominent law professors and dozens of state attorneys general are on one side; equally prominent law professors, as well as the Obama administration, are on the other.3 Given the split among federal judges to have considered the question, most cannot help but wonder on which side Justice Anthony Kennedy will fall.4 The resolution of these constitutional battles will be of unquestionable historic importance.The constitutional dispute is part of a larger argument that is perhaps America's oldest: what is the proper role of the federal government?5 In these debates, the federal government is often cast as either a tyrant or a savior.6 Much of the current thinking about the ACA proceeds along these lines.7 Vet there is a third role for the federal government: enabler.Imagine if the federal government deployed its power to increase the ability of individuals and states to choose law. That is precisely what the ACA in part contemplates. Using a legal structure this Article de- scribes as "opt-in federalism," the ACA permits individuals to choose, in some respects, whether to be governed by federal or state rules.8 Few if any observers are acknowledging or seriously examining this important development. This Article does both, and in closing considers the intriguing possibility that opt-in federalism will also be of use in addressing the country's other multi-trillion-dollar question of "benefits," namely, how to provide retirement income in an aging America.9The Article proceeds as follows:Benefit law can be intimidating in its complexity and detail. Necessary to any disciplined discussion is an organizing theory that aids clear thinking about benefit mechanisms and the legal rules governing them. Part I offers a general theory of benefits that explains, broadly, the role of individuals, government, and law in providing health care and retirement income.10This Article identifies and explains three different models for providing citizens with health care and retirement benefits: the individual reliance model, the multilateral bargain model, and the public entitlement model.* 11 The oldest and simplest model, the individual model, relies on the individual's saved or current personal resources to address retirement or heath care needs.12 The second model, the multilateral model, relies on enforceable bargains between two or more players to supply the beneficiary with retirement and health benefits.13 The third model, the public model, provides retirement and health care pursuant to entitlement promises made by the government as sovereign.14 Most societies rely on some combination of the three, including the United States.This conceptual scheme weaves together long-running threads of benefit theory and tracks implicit fault lines in national benefit debates. And the instrumental value of the taxonomy is significant. It clarifies at what level a particular benefit debate is occurring and appropriately frames legal and policy discussions. For example, my theory makes clear that the ACA is a legislative endorsement of the bargain model in the health benefit context.15 That Congress should have instead chosen an entitlement model is one type of criticism; that the ACA does a poor job of improving health bargains is quite another. One can, and some do, believe the former is true but not the latter. Moreover, as the theory explains, that Congress has embraced the bargain model means that particular care must be given to the selection of legal rules governing the bargain players.Part II draws upon my theory of benefits to explain important features of the pre-ACA benefit landscape in the United States. …