Testimony

Regarding the Constitutionality and Desirability of North Carolina’s Health Care Freedom Act

Governor Beverly Perdue
State of North Carolina

Dear Gov. Perdue,

I write in response to the letter and accompanying memorandum that Attorney General Roy Cooper sent you on February 23, 2011, concluding that House Bill 2, North Carolina’s version of the Health Care Freedom Act (HCFA), is unconstitutional. I disagree with this conclusion for the reasons spelled out in the letter that Clint Bolick, director of the Goldwater Institute’s Center for Constitutional Studies, has since sent you, and will not repeat that analysis here.

In addition to seconding Mr. Bolick’s apt comments, however, I’d like to share my thoughts on HB 2 and how it relates to the Patient Protection and Affordable Care Act (PPACA, commonly known as “Obamacare”). In my capacity as a senior fellow in constitutional studies at the Cato Institute — a nonpartisan public policy foundation dedicated to advancing individual liberty, free markets, and limited government — I have been speaking and writing about how Obamacare destroys federalism and fundamentally transforms the relationship between citizen and government. I have also been extensively involved with the lawsuits challenging the constitutionality of various parts of the law, including having filed several amicus curiae (“friend of the court”) briefs. Here is what I can tell you about HB 2 in that context:

HB 2 seeks to protect two essential rights. First, it protects a person’s right to participate or not in any health care system and prohibits the government from imposing fines or penalties on that person’s decision. Second, it protects the right of individuals to purchase — and the right of doctors to provide — lawful medical services without government fine or penalty.

No one questions the need for serious health care reform. Regardless of how such reform is fashioned, however, either at the state or federal level, the essential rights protected by HB 2 should be preserved. Indeed, supporters of provisions like HB 2 have a variety of perspectives on the form that health care reform should take, but they agree that no matter what legislation is passed, it should not take from Americans their right to control their own medical affairs. It is that precious right which is at stake here, for in many countries where the government plays a larger role in regulating or providing health insurance — including compelling individuals to join government-approved health plans — health care is rationed and individuals are prevented or discouraged from obtaining otherwise lawful medical services.

Now, as a matter of law, it is well established that the U.S. Constitution provides a baseline for the protection of individual rights, and that states may provide additional protections — and all of them do. For instance, some states provide greater protections of freedom of speech or due process rights.

Thus, while the memorandum from the attorney general’s office correctly noted that there may be some tension between HB 2 and certain parts of Obamacare, that is not the end of the discussion, as Mr. Bolick noted. The Supremacy Clause provides that federal law prevails over conflicting state law only where Congress has acted pursuant to legitimate authority — its enumerated powers — and where it does not impermissibly tread upon state police powers and sovereignty. The various lawsuits challenging the constitutionality of Obamacare assert a number of claims relating to these principles. The Florida-led suit, which now boasts 26 state plaintiffs, is perhaps most famous, but the separate cases brought by Virginia and Oklahoma, respectively, are notable because they are based largely on those states’ HCFAs (the former enacted as state law, the latter as a popularly ratified state constitutional amendment).

As should by now be clear, the state lawsuits, among others, are serious challenges maintained by serious lawyers and public officials. They question an unprecedented assertion of power — literally without legal precedent both in its regulatory scope and its expansion of federal authority — that, if left unchecked, would gravely alter the relationship of the federal government to the states and to the people. Nobody would ever again be able to claim plausibly that the Constitution limits federal power.

The strongest legal argument — implicitly supported by HB 2 — attacks the constitutionality of the individual mandate to buy health insurance. “The government has never required people to buy any good or service as a condition of lawful residence in the United States.” Cong. Budget Office, The Budgetary Treatment of an Individual Mandate to Buy Health Insurance 1 (1994). Nor has it ever said that every man and woman can be fined for declining to participate in the marketplace. And never before have courts had to consider such a breathtaking assertion of raw power under the Commerce Clause. Even at the height of the New Deal, in the infamous case of Wickard v. Filburn, 317 U.S. 11 (1942), the federal government claimed “merely” the power to regulate what farmers grew, not to mandate that people become farmers or require people to buy farm products.

But that should not be surprising, because ours is a government of delegated and enumerated powers and the Constitution does not grant Congress the power to force private commercial transactions. Even if the Supreme Court has broadened the scope of congressional authority under the Commerce Clause — it can now reach local activities that have a substantial effect on interstate commerce — never before has it allowed people to face a civil penalty for not buying a particular product.

Stated another way, every exercise of Congress’s power to regulate interstate commerce has involved some form of action or transaction engaged in by an individual or legal entity. The government’s theory — that the decision not to buy insurance is an economic one that affects interstate commerce in various ways — would, for the first time ever, permit laws commanding people to engage in economic activity.

Under such a reading, Congress would be the sole arbiter of its own powers, the only checks on which would be political. The federal government would have plenary authority to compel activities ranging from eating spinach and joining gyms (in the health care realm) to buying GM cars (as part of an auto bailout). Authority so novel and sweeping would be indistinguishable from a general “police power,” which is irreconcilable with the established principle that Congress has only limited and enumerated powers. As Judge Henry Hudson said in striking down the individual mandate in the Virginia case, “This broad definition of the economic activity subject to congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence.”

But the individual mandate is only the highest-profile tip of an iceberg that, if not avoided, will sink our constitutional vessel. For example, going beyond HB 2 for a moment, it should concern you, as your state’s chief executive, that Obamacare impermissibly coerces states by forcing them to accept a greatly expanded and fundamentally transformed Medicaid program. States such as North Carolina face an all-or-nothing proposition that is effectively a Hobson’s Choice: either accept the new Medicaid regime and suffer devastating consequences to your already-strained budget, or forgo access to many billions of dollars annually which the federal government collects from all taxpayers and then returns only to those states that remain in Medicaid. Neither Obamacare nor any other existing federal statute provides a mechanism for states to withdraw from Medicaid, and no process exists to protect the health and welfare of the poorest residents of states that wish to transition away.

Thus, contrary to the government’s suggestion in the Florida case, opting out of Medicaid is not a viable option by which states can avoid Obamacare’s ruinous effects. Accordingly, the legislation’s impositions on states, including North Carolina, “pass the point at which, ‘pressure turns into compulsion.’” South Dakota v. Dole, 483 U.S. 203, 211 (1987) (quoting Steward Machine Co. v. Davis, 395 U.S. 548, 590 (1937)).

In short, signing HB 2 (or letting it take effect without your signature) would be a step toward protecting both individual liberty and state sovereignty as defined by our Constitution. I would support such a development and also urge you to seriously consider either joining the Florida-led lawsuit or, taking the example of Virginia and Oklahoma, forging ahead on your own. I am happy to answer any further questions you may have and can be reached at (202) 577-1134 or ishapiro [at] cato [dot] org.

Cordially,
Ilya Shapiro