John Robert’s decision that Congress had the right to penalize individuals who choose not to obtain health insurance was viewed with dismay by many who felt the program to be a classic example of federal government overreach. Overshadowed was the potentially profound impact of the second part of the Supreme Court’s ruling: that Congress has no authority to order the states to regulate according to its instructions; that States must have a genuine choice whether to accept or reject any federal government offer. Now that Washington could no longer threaten to cut off all Medicaid funding to states that did not go along with the increased coverage offered under Obamacare, some five states have announced their intention to say thanks but no thanks. Some 25 additional states are reportedly leaning in this direction.
The impact of the Supreme Court’s decision goes well beyond Obamacare. The drafters of the Constitution took care to limit the federal government’s powers vis-à-vis the states: Washington was given the power to tax, borrow and spend, and control over interstate commerce. All other powers were to reside with the states. Beginning with Roosevelt’s New Deal and continuing with Johnson’s Great Society, Washington has used its taxing and spending powers to promote the ”general welfare” in road building, education, housing, unemployment benefits, and a wide range of social ‘safety net’ programs. This has been true under both Republican and Democratic Administrations. Constitutionally, states have the right to refuse these programs, but historically they have been enticed by Federal carrots -the funding that comes with the program—and threatened by the stick - loosing federal funds in other areas.
As the federal government’s footprint in state finances grew ever larger – some fifty percent of North Carolina’s revenues now come from Washington- Congress has become bolder in levying detailed instructions on how a state should or should not act. In some cases these mandates were unfunded: states either accepted new intrusions and their costs or risk losing substantial Federal funds.
The Bush Administration’s bipartisan legislation, No Child Left behind (NCLB), is the classic case: without sufficient federal funding states were required to follow detailed instructions in school accountability and to implement parental choice to opt out of poor-performing schools. Failure to do so would lead to a loss in all educational assistance from the Federal government, largely Title One funds to help the disadvantaged student populations. If the recent Supreme Court ruling had been in effect in 2001, it seems clear that many states would have opted out of NCLB. Even with all educational funding to their states at risk, some fifteen states reportedly were considering opting out of the program by 2005.
The Supreme Court decision has effectively taken away the government’s stick when it comes to achieving state compliance to federal programs and policies enacted to promote the general welfare. State acquiesce to environmental regulations has been achieved, in part, by the threatened loss of highway funding. One wonders if states will now feel free to opt out of new, and tighter, clean air act standards.
The long term effects of the Supreme Court ruling are problematical. It will take some time, and probably additional Supreme Court cases, before the acceptable degree of Federal government coercion is determined. In the interim one can expect state governments, emboldened by the ability to say ‘no’ to Obamacare, to decline to continue to participate in other federal ‘offerings’. The federal government, for its part, will be far more attentive to state concerns when drafting legislation and far more likely to be forthcoming with the funding levels required to gain state acceptance. One can expect to see significant differences among states in the acceptance and application of federal programs. Such differences, I believe, are entirely consistent with the framers, which sought to limit the role of the federal government by giving all unspecified powers to state governments.
Although one may believe that a check on the federal government’s often abusive use of its spending powers is long overdue, one cannot help but wonder about the downside risks of greater state autonomy. Will it matter if some states abide by federal educational guidelines while others do not? If North Carolina agrees to Obamacare’s Medicaid expansion while Virginia and South Carolina do not, will the state see a population gain from people seeking medical coverage? If North Carolina continues to follow clean air act stipulations, while Virginia does not, will North Carolina see some of its industry leaving for less restrictive pastures? This country began as nation of states that collectively decided to cede certain powers to a national authority. It has evolved into a nation with increasingly centralized power. In deciding on the Constitutionality of Obamacare, the Supreme Court has opened the door for a significant reversal of this dynamic. One can only stay tuned to see how it plays out.
