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UC Law Constitutional Quarterly

Abstract

At least two of the competing health care reform proposals rely on price controls to help contain costs. Opponents of health care price regulation argue that the adequacy of regulated prices must be judged under the "reasonable return" standard applicable to public utility ratemaking under the Takings Clause.

This Article argues that the "reasonable return" standard should not be applied to price regulation in the health care sector. The "property" interests at stake in health care price regulation are economically indistinguishable from the interests in "economic liberty" formerly protected under economic substantive due process analysis. As a result, the Court cannot subject broad-based economic regulation to intrusive takings scrutiny without undermining the modem understanding that the legislature is the ultimate arbiter of the wisdom and fairness of economic regulation. In the case of broad-based legislation that "balances the benefits and burdens of economic life", pluralist models of the legislative process suggest that economic interests of health care providers are likely to be adequately protected. Even if there were less room for optimism about the protection of health care providers' economic interests, however, courts are ill-equipped to sort out the net economic effects of government intervention on provider interests. The ad hoc balancing test typically employed in regulatory takings cases reflects these fundamental tensions and, not surprisingly, suggests that a takings challenge to health care price controls would likely fail.

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