Federalism and Health Care Reform

It seems appropriate at the beginning of this new year to talk about the new healthcare legislation.

One judge has found a crucial piece of the statute – the requirement that individuals buy health care – unconstitutional. It will surely go to the United States Supreme Court which may be very receptive to the attack. The Rehnquist and Roberts Courts have used federalism to narrow national power wherever it conflicted with the justices’ ideologies. The Court even found federal civil rights acts regulated states unconstitutionally, though the Fourteenth Amendment was primarily aimed at state misbehavior. Federalism proved to be a convenient way for the justices to overrule things they don’t like.

The court earlier fought national power during the Roosevelt Administration, overturning several pieces of New Deal legislation on the ground that they exceeded the powers of Congress. But the Roosevelt Administration was looking for a way to pass legislation on unemployment and old age insurance. Secretary of Labor Francis Perkins visited the wife of then Justice Harlan Fiske Stone. When he walked in and asked how Perkins was, she told him her problem. Stone responded by pointing to “the taxing power.” Perkins then told the Administration that legislation “should be justified as an exercise of congressional power under the taxing and spending clause” which says “The Congress shall have the power … To lay and collect taxes … to pay the debts and provide for the common defence and general welfare of the United States.”

And so since the 1930s many major pieces of national legislation were based on the taxing and spending power. Social Security was written as spending clause legislation, tied to wages. Aid to the needy, emergency relief, unemployment compensation and many other pieces of legislation have been written in the form of national financial support for contracts with the states to accomplish specified statutory purposes in mutually acceptable ways.

So could the healthcare legislation have been designed in a way which allowed the states options about how to accomplish the generic national objective of expanding health care for all? The actual design of healthcare legislation follows the outline of a plan adopted in Massachusetts. But other states have addressed the issues in different ways. Allowing a degree of federal diversity might not have resulted in as good a medical plan, or it might have resulted in some very positive experimentation. Either way, it might have a better chance of surviving review in the United States Supreme Court. Or the federal government could have provided a tax credit for purchase of compliant health plans – virtually indistinguishable from the actual legislation but for the language used.

If the Supreme Court overturns the legislation it will be too late for the Democrats to try to change it. If the Supreme Court sustains the legislation, the Republicans may be unable to change it. So there may be grounds for some sort of deal between the parties that would substitute a system of state options or tax credits and therefore have a better chance of succeeding when this program goes in front of Roberts Court judges all too ready to substitute their personal views for constitutional law.

So, with hope, here’s wishing you all a very happy New Year.

— This commentary was broadcast on WAMC Northeast Report, January 4, 2011.

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