Sunday, September 13, 2009

Health Care Reform, the 10th Amendment, and the "Political" Safeguards of Federalism


I note that Minnesota Governor Tim Pawlenty has just been forced to walk back his argument that President Obama's health care proposals might violate the 10th Amendment. In one sense, that's entirely correct. Nothing Obama is proposing violates the Constitution according to existing law.

In another sense, though, Pawlenty is perfectly within his rights to argue that new government programs he doesn't like violate constitutional principles of federalism. If the safeguards of federalism are political, as we have been repeatedly told in the post-New Deal era, then it can't be inappropriate for defenders of state interests to object to new federal programs on the grounds that they improperly shift the balance between the federal government and the states. Otherwise there would be no sense in saying that there are political safeguards. There would be no safeguards at all.

This *is* a constitutional argument; it's just not one that courts will decide. It will be decided in the political process. If enough people feel that this is an area that the federal government should not enter (or should not increase its existing presence), they or their representatives will vote the proposal down. Pawlenty makes precisely this move in his remarks on ABC. He argues that it's a political issue and that people should put political pressure on Congress to reject Obama's reforms.
Well, George, in the legal sense, I think the courts have addressed these Tenth Amendment issues, but more in the political sense, in the common sense arena, we need to have a clear understanding of what the federal government does well and what should be reserved to the states.

What Pawlenty does not say here (thankfully) is that he is invoking nullification--the right to refuse to enforce federal laws within his state. He also does not say (as Texas Governor Rick Perry has hinted) that he has the right to secede if he doesn't get what he wants. Both of those are extreme arguments that governors should not be making.

Having come to Pawlenty's defense, I want to make four additional points which cut his arguments on the merits. First, the federal government has been involved in health care and health care insurance regulation for a very long time. It has regulated health care provision, it has regulated health insurance, it has provided federal subsidies to purchase private insurance, it has provided its own health care insurance, and it has even directly provided health care itself, for example, to members of the military and their families. It's not clear at all why the new proposals to reform the provision of health insurance take us in places the federal government has never gone before. If this is a change, it is a matter of degree, not of kind.

Second, the fact that Pawlenty has a perfect right to argue that health care reform improperly upsets the balance of federal and state responsibilities doesn't mean that he is correct when he says this. In fact, health care insurance, which requires very large risk pools, is a pretty good bet for a federal solution. Even a public option, which might compete with private insurers to drive down costs, may be more effective if it is done nationally rather than state by state.

Third, federal regulations of insurance (for example preventing denial of coverage for preexisting conditions) solve important collective action problems among the states. If states impose too many requirements on insurance companies, they may cut back or stop underwriting in that state. A federal solution allows regulations to protect the interests of consumers that some states would be unable or unwilling to attempt.

Which leads me to my fourth point: I tend to think that the federalism objection to heath care reform is a bit of a makeweight. The real objection appears to be not to a change in the federal-state balance but an opposition to government regulation per se. Indeed, part of the objection is not that the federal government can't do as good a job as the states can; rather it is that the federal government, because it prevents health care insurers from taking their business elsewhere to unregulated states, and because it may enjoy economies of scale in enforcement, may be able to regulate insurance companies more powerfully and effectively than individual states can.

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