Federalism and Healthcare in the U.S

This is an essay I wrote last year for university which I’ve had a look through on how federalism has impact on the implementation of healthcare bills in the US.

Federalism and the Patient Protection Affordable Care Act. 

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Federalism is the bedrock of the American political system as outlined in the Constitution and a means to protect individual rights. A federal system of government is one in which power exercisable by the government is divided between a national government and state governments (Zimmerman, 2008). Federalism is intended to bridge the gap between a confederacy and a unitary system, though as such, complexities inevitably arise with issues of intergovernmental relations and of course brings the disadvantages of both systems along with the benefits (Zimmerman, 2008). Any challenges to the United States’ federal political system, including either level of government overstepping its boundaries, are treated as infringements of the Constitution. As such, the issue of any federal administration of healthcare is a problematic topic. This was demonstrated in the controversy which dominated discussion of Obama’s Patient Protection and Affordable Care Act introduced (PPACA) in 2010. The divisive nature of healthcare reform in the USA was so intense that total government shutdown occurred in 2013, with the possibility of debt default avoided only at the very last minute (Cohen et al., 2013). Evidence shows that the American public believes that the healthcare system is in need of reform and supports government involvement, though to what extent is a constant hot topic (Leitch, 2012). This essay will outline the main points of contention of the PPACA with regards to federalism and focus on the implications of the Supreme Court rulings on the possible future effects of the legislation. The PPACA was intended to provide all Americans with “access to quality, affordable health care and will create the transformation within the health care system necessary to contain costs” (Senate Democrats, 2010). Verilli, Obama’ solicitor, went so far as to link the notion of federal healthcare provision with individual liberty as a necessity (Huffman, 2012).  Though, as predicted, the act proved to be exceedingly divisive. With many viewing the PPACA as an example of the federal government overreaching its granted powers. Béland and Waddan (2012) for example see the act as considerably increasing federal influence for three primary reasons. Firstly, the PPACA solidifies federal influence over health insurance companies in prohibiting them from refusing coverage based on pre-existing medical conditions. Secondly, the imposition of federal fines on uninsured individuals compelling them to take out an insurance policy.  The Individual Mandate aspect of the PPACA was controversial as it stipulated that any individuals who fail to take out an insurance policy by 2014 be forced to pay a penalty (Blue Cross Blue Shield Rhode Island, 2010).  Third are the changes to Medicare and to Medicaid, with changes to cost control measures and increasing the number of covered individuals. The Supreme Court ruling on the National federation of Independent Businesses v. Sebelius highlights these issues, where the Supreme Court was forced to step into decide due to state disagreements. In this case, 26 states brought constitutional challenges to the PPACA (Supreme Court of the United States Blog, 2010), showing the divineness of the healthcare reform proposal. The focus of much media attention was the individual mandate which was framed as posing a threat to individual liberty (Moffit, 2011). The Supreme Court considered Congress’ authority to enforce the Individual mandate through considering its legitimacy through the Taxing Power and the Commerce Clause (Rich et all. 2010). Part of the debate on the Individual Mandate was whether it fell under Congress’ Taxing Power, to “lay and collect taxes.” Here, the Supreme Court had to determine whether the individual mandate counted as a tax or as a penalty on those uninsured as this would dictate the constitutionality of the Individual Mandate. The Supreme Court decision here was notable as it was contrary to the commonly held conception about the individual mandate as a tax, even Obama didn’t consider the individual mandate a tax (Rich et al., 2013). The implications for federalism of this ruling are significant as it places limitations on when a federal imposed penalty can be considered a tax (Rich et al., 2013). Despite the final result of the Court’s decision, the fact the Individual Mandate was constrained through the Taxing Power is notable. Upholding the Individual Mandate as a tax is well within Congress’ powers (despite controversy over the mandate as activity or as inactivity), whereas allowing the individual mandate under the Commerce Clause would have significant implications. Permitting implementation of the mandate under the Commerce Clause would have granted a precedent for the regulation of economic inactivity. That is, allowing Congress to compel individuals to become active by saying failure to engage will result in punishment (Lemper, 2013). This is highly significant as one of many precedents set during the course of the case. However, the truly fractious aspect of the PPACA with regards to state sovereignty was the considerable expansion of Medicare coverage which aimed to reduce the number of uninsured individuals. Under this arrangement,  Medicare coverage was extended to individuals with an income of below 138% of the federal poverty line  which meant that of the first time, it covered childless adults; a drastic change (Senate Democrats, 2010). Significant disparities between states exist with regards to Medicaid coverage, as a result of the federalist system of government. Stemming from reasons including widely diverse political cultures and traditions between states  As such any federal interference into regulation was bound to be explosive and indeed resistance to this aspect of the PPACA was high amongst states from the outset, with many states initially denying this clause of the PPACA completely. All but one of 26 states were traditional Republican states, carrying the more traditionalistic political cultures, according to Elazar’s political cultures model (Zoellick, 2000) The opposing states argued that the provision of expansion was coercive as the PPACA stipulated withdrawal of all federal Medicare funding to states which refused to participate in the Medicare expansion (Scott, 2012). The argument therefore hinges on whether the removal of all current federal funding to Medicare programmes is to be permitted or whether the measure is and abusive of federal government power.  Particular attention to the federal government structure and the Tenth Amendment was thus made  One of the core tenets of federalism is that a federal government is unable to compel states to enforce federal laws or administer federal programmes. Under the Spending Clause, the federal government is able to encourage states to follow federal legislation as a condition of receiving funding, but is unable to use conditional grants in such a way as to coerce states (Lemper, 2013). Another issue of the PPACA was that the ‘maintenance effort’ outlines that state governments would not be permitted to repeal any existing Medicaid (or other healthcare) programmes, or alter eligibility levels, in order to reduce enrolment and state expenditure; moreover prohibiting states from erecting any unnecessary barriers to acquiring coverage such as excessive paperwork (Rich et al, 2013). Medicaid funding accounts for 40% of all federal funds given to states, and 7% of all federal spending, it’s clear why states would object to the loss of the funding (Rich et al, 2013). The Supreme Court ultimately considered the provision in light of the Spending Clause, and found this portion of the legislation unconstitutional and so this portion was invalidated. . This decision was questioned in view of the fact that the Supreme Court had previously upheld the denial of federal highway funding to states in relation to alcohol age limits (South Dakota v. Dole, 1987). When the Court considered the larger amounts of funding that the PPACA would be affecting, however, it decided to stand by its decision. This decision had massive implications for implementation of the PPACA since Medicare expansion was a key part of the act. Furthermore, the implications are wider since a precedent had been set prohibiting Congress from inducing state compliance with federal laws by withdrawing existing funding. The true impact of such a ruling remains to be seen. In this case, it would theoretically be possible for Congress to achieve the same ends through different means e.g. scrapping Medicare and starting a new health insurance programme. However, it allows a future basis to call into question federal attempts to implement funded regulation programmes administered by states (Lemper, 2013).

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To conclude, it appears clear that federalism has had a colossal impact on the implementation of the PPACA. The Supreme Court rulings on the case of National Federation of Independent Business v. Sebelius are hugely important for the relation of federalism and state governments. Lemper (2013) emphasises how one commentator went so far as to say that the Supreme Court ruling on the Spending Clause was the most significant Supreme Court decision to date. Those Supreme Court rulings on aspects on the PPACA have dramatically impacted its implementation and have forced some state cooperation: shifting the nature of healthcare provision in the United States, arguably moving the Medicare and Medicaid programmes to a less cooperative model and to healthcare as more of a legal right. This shift is notable as it is a departure from any historical precedents of healthcare, though not totally novel since there have been discussions of provisions of federal healthcare administration in the past (Huffman, 2012). The landmark piece of legislation demonstrated questions of the appropriateness of federal involvement in state regulation of healthcare, and even in regulation of the insurance market (Rich et al, 2013). It is undeniable that federalism has moulded the PPACA to an even more complex proposal. In navigating the quagmire of state-federal relations, controversies arose and needed to be addressed and concessions had to be made, with Obama even conceding to allow some room for negotiation on the more prickly aspects of the PPACA.

  References Blue Cross Blue Shield Rhode Island. (2010).  Federal healthcare Reform: Patient Protection and Affordable Care Act Individual Mandate and Subsidy . [online] Available: https://www.bcbsri.com/BCBSRIWeb/pdf/Individual_Mandate_Fact_Sheet.pdf [Accessed 24/02/2014] Béland, D; Waddan, A. (2013). Federalism, the Obama Presidency, and the Politics of Health Insurance Reform. [online] Available: http://ideefederale.ca/documents/July_2013.pdf. [accessed 29/02/2014]. Cohen, T; Botelho, G; Yan , H. (2013). Obama Signs Bill to End Partial Shutdown, Stave off Debt Ceiling Crisis. [online] Available: http://edition.cnn.com/2013/10/16/politics/shutdown-showdown/. [accessed 28/02/2013]. Huffman, J. (2012). Obamacare vs. Federalism. [online] Available: http://www.hoover.org/publications/defining-ideas/article/119436. [Accessed: 01/03/2014] Leitch, B. (2012). On the Difficulty of Separating Law and Politics: Federalism and the Affordable Care Act . Law & Contemporary Problems. 75 (3), 203-214. Lemper, T. A. (2013). The supreme struggle: ‘Obamacare’ and the new limits of federal regulation. Business Horizons. 56 (6), 797-805. Moffit, E. R. (2011). Obamacare and the Individual Mandate: Violating Personal Liberty and Federalism. [online] Available: http://www.heritage.org/research/reports/2011/01/obamacare-and-the-individual-mandate-violating-personal-liberty-and-federalism. [accessed 28/02/2013]. National Federation of Independent Businesses v. Sebelius (2012, June 28) 132 S. Ct. 1652. [online] Available: http://www.law.cornell.edu/supremecourt/text/11-393  [accessed: 26/03/2014] Rich, R. F.; Cheung, E; Lurvey, R. (2013). The Patient Protection and Affordable Care Act of 2010: Implemtation Challenges in the Context of Federalism. Journal of Health Care Law & Policy. 16 (1), 77-140. Senate Democrats. (2010). The Patient Protection and Affordable Care Act Detailed Summary. [online] Available: http://www.dpc.senate.gov/healthreformbill/healthbill04.pdf. [accessed 28/03/2014]. Scott, D. (2012). The Affordable Care Act: Implications for Federalism. [online] Available: http://www.governing.com/blogs/fedwatch/gov-the-supreme-court-and-the-affordable-care-act-implications-for-federalism.html. [accessed 25/02/2014]. South Dakota v. Dole. (1987, June 23). 483 U.S  203. [online] Available: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=483&invol=203 [Accessed: 25/02/2014]. Supreme Court of the United States Blog. (2010). National federation of Independent Businesses v. Sebelius. Available: http://www.scotusblog.com/case-files/cases/national-federation-of-independent-business-v-sebelius/. [accessed 24/02/2014]. Zoellick, T (2000). Daniel Elazar, Bogus or Brilliant: A Study of Political Culture Across the American States. Res Public – Journal of Undergraduate Research. 5 (1), 1-10. Zimmerman, F. J (2008).  Contemporary American Federalism: The Growth of National Power. New York: State University of New York Press . pp. 1-14.

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