Tuesday, March 23, 2010

The New Health Care Law and Federalism

Its almost ironic. Over the past week, leading up to to Sunday, the House of Representatives was debating the details of the new Health Care Act, which passed (barely!) on Sunday. At the same time, I was working with my daughter Cassi as she was studying about the Constitution at school.

In particular, Cassi was participating in a program called "We the People," where students were placed on debate-style teams and assigned a general topic. They would then appear as a panel before judges, and quizzed on their ability to discuss the topic as it related to the Constitution.

Cassi's topic was about how specific constitutional passages have affected the institutions of American Government -- basically, she needed to discuss the concept how the federal government's power to govern has evolved, and how the interpretation of the Constitution has affected specific aspects of government. Not an easy task, to be sure.

In an effort to help Cassi understand these concepts, I tried to bring her back to basic concepts -- Constitutional Law 101, so to speak. The kind of things that the Founding Fathers debated when the Constitution was ratified. The kinds of things that still form the basis for understanding how Federal Government works.

The United States is a "Federal" system. That is, there are two systems of government co-existing over the people of the United States -- the national government, based in Washington, D.C., and the government of each individual state. The overriding, basic understanding of the power of the Federal government, as expressed by the Founding Fathers (e.g. in the Federalist Papers), and by the interpretations of the Constitution by the U.S. Supreme Court is one of LIMITED, ENUMERATED POWERS. The Federal power is LIMITED, in that the three branches of the Federal government are only allowed to assert those powers specifically granted to them in the Constitution. Federal Power is ENUMERATED, as the powers granted to the national government are specifically listed in the Constitution. For example, most of the powers granted to Congress are listed in Article I, Section 8, and include things like the power to tax, borrow money, regulate commerce, declare war, etc.

Contrast this with the Constitutional understanding of the power of the states' governments. Case law interpreting the Constitution defines State power as "inherent." That is to say, State government would have power and exist even if there was no Federal Constitution, and the State's power is general and not subject to limitation except for specific limitation by the Federal Constitution. This "inherent" authority includes a general "police power," which Courts have defined as the power to protect the health, safety, and general welfare of the citizens of that State. Thus, an action by a State government is presumed valid under federal law unless it violates some specific limitation imposed on States by the Constitution.

I tried to explain to Cassi that in theory, State power is much broader than Federal power. States have inherent authority to act in any rational way to protect the health, safety and general welfare of their citizens. In contrast, the Federal government action must fall within one of the enumerated powers of the Constitution. Federal Courts have traditionally held that this means that there is no general Federal "police power." The Federal government technically has no right to regulate the health, safety or general welfare of the people. Each act of Federal legislation or regulation must come from a specific, enumerated power listed in the Constitution (e.g. commerce power, taxing power, spending power etc.). In addition, the Bill of Rights (which was enacted as an effort to further limit Federal Power at the time the Constitution was ratified in 1789) specifically provides in the 10th Amendment that powers not specifically given to the federal government belong to the States.

Please note, however, that I said these concepts exist "in theory." This is because the enumerated powers for Congress in Article I, Section 8 includes the power to "make all laws which shall be necessary and proper for carrying into execution the foregoing powers vested by this Constitution in the Government of the Untied States." This so-called "necessary and proper" clause has been used by Federal courts to define and shape certain specific "implied powers" of the federal government. Federal legislation and regulation only needs to be rationally related to a constitutionally specified objective, and it will be deemed valid as an extension of the "enumerated powers." For example, this doctrine was defined in the case of McCullough v. Maryland back in 1819, where the establishment of a national bank via federal legislation was upheld. While getting into the banking business is not one of the enumerated powers, the Court determined that chartering a national bank was a rational and valid extension of the power to regulate commerce and raise revenue. Historically, then, when the Courts have interpreted federal legislation, they have usually deferred to Congressional power by connecting legislative purpose to the enumerated powers via the "necessary and proper" clause.

The same is true of the 10th Amendment. Only in rare occasions have the Courts invalidated Federal legislation on the grounds that it is interfering with powers that belong specifically to the States. There was a time in the early 20th century when the Supreme Court might have struck down legislation that interfered with a State's internal police power (e.g. wage and hour laws were once viewed this way), this has been engulfed by "necessary and proper." In addition, the Court has also viewed the concept that procedural safeguards built into the federal system (things like equal representation in the Senate, and state control over the structures of federal elections) mean that the structure of the federal system is designed to protect State interests.

As I looked at some of the details of the new Health Care Act, it all fit into these concepts of federalism. . . and made me think that Congress and the President may have given us legislation that has overstepped the boundaries of federal authority.

Two things in the new law look to me like they are at least arguably unconstitutional.

One is the concept that everyone will be required to purchase health insurance. The other is making the State governments liable for many of the financial and insurance related liabilities built into the plan.

I can see a valid argument being made that requiring all citizens to purchase health insurance as falling outside of the enumerated powers. Some people will argue that this is no different than being forced to have auto insurance, or paying for Medicare or Medicaid. But it is. First off, required auto insurance only kicks in if you drive a car and have a drivers' license. Thus, its rationally connected to the use of an auto and driving on the roads. Plus, its a STATE requirement. State governments have a general police power -- the feds do not. If I am forced to buy health insurance, but never need to go see a doctor, well, it would be like requiring people who don't have drivers' licenses to buy auto insurance. Thus, there is arguably no rational relation to one of the enumerated powers.

The comparison to Medicare and Medicaid, or Social Security, even, does not work as well. These serve, in essence, as taxes. The Federal government has determined that these concepts and services are necessary (and they arguably fit into the enumerated powers, or at least have been determined to be so by the Courts), and that through the taxing power, they need to be funded. I may not like this as a citizen, but I can't object, because these regulations pass Constitutional muster as a valid extension of the taxing power. But requiring me to purchase insurance is different. Its not a tax. Its a contractual relationship. Also, there will come a time when I will reach an age when I automatically qualify for the benefits of the aforementioned programs funded by taxes. I may never come to use the insurance policy. Again, there is not the same rational relationship to a constitutional objective.

In addition, the provisions of the law that require certain state action and responsibility could run afoul of the 10th Amendment. In several recent cases, the Supreme Court has held that Congress cannot require States to enact a certain statute, or regulate in a specific manner. Congress does not have the power to "commandeer the legislative process of the States by directly compelling them to enact and enforce a federal regulatory program." (New York v. U.S., 505 U.S. 144 (1992).

It does seem ironic. Simple, basic principles of Constitutional law -- principles high school students are learning about as a foundation to understand how our government works. These simple principles could be used to unravel the new Health Care system. There are already talks of legal actions to thwart the enactment of the law. At least 30 states are planning on enacting their own legislation to oppose certain aspects of the law. We could see McCullough v. Maryland revisited in a modern setting, but with a different result.

While I sympathize with the concept of reforming our health care system, the over-broad concept the Obama administration has taken has given its opponents the tools to take it down, and possibly turn back the clock to a time when Federal power was much less extensive. The most comprehensive federal entitlement program in history, including social security, could be brought down or significantly limited -- because the Obama administration insisted this had to be the way to do it, a less extensive overhaul would not work.

This almost arrogant commitment to a liberal ideology that does not mesh with most of America could be a disaster. The question is -- will the voters respond? Will the courts act in a way like I have outlined here? Time will tell. But it is ironic -- the nature of our Federal system, which was designed to limit federal power, may actually work the way its was designed. And Cassi and her high school classmates may get a civics lesson that is up front and real.

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