The Constitution and Health-Care Reform: Vague at Best

Judge Andrew Napolitano blasted a constitutional expose across the op-ed pages of the Wall Street Journal this morning, citing Supreme Court precedent which he believes has the effect of rendering unconstitutional any Congressional effort to legislate health care reform. Ultimately, the Judge failed to shed much of any light on how the Supreme Court might approach such an issue.

Napolitano takes the Commerce Clause route, which is to say that he questions the relationship between health insurance regulation and interstate commerce. On one hand, the Judge makes sense; all 50 states have established some sort of Insurance Commission and tasked it with the regulation of that State's particular insurance industry. Furthermore, the nature of competition within the health insurance industry is that it's fought on a state-by-state basis. The Judge's argument is flawed, I believe, in the assumption that "health insurance", as a commodity, does not already trade across state lines. For instance, the entire theory behind Medicaid is that the Government has an interest in providing health insurance to those who lack the means of affording it in the private marketplace. If private health insurance were priced around $20/month for a family of four, it would eliminate the need for government based systems.

Aside from my basic theoretical objections to the Judge's argument, I was a little disappointed with the sole Supreme Court precedent he used to justify his position. United States v. Lopez - the Judge's only supporting citation - dealt with the furthest outer-limits of the commerce clause. Basically, Lopez told Congress that it couldn't pass "no guns in school zones" Acts because they had nothing to do with the sale of goods and services across state lines. This was the first instance in several decades that the Supreme Court had reigned in Congress' broad interpretation of interstate commerce; however the facts of that case in no way resemble the facts in a hypothetical Constitutional challenge to a federal health insurance regulation.

In fact, I Shephardized the Lopez case just to see whether it was even still valid case law; in doing so, I came across Gonzales v Raich, a case that upheld the Government's right to enforce the Controlled Substances Act in the face of a Commerce Clause challenge. I found the following Supreme Court language particularly relevant to the question of health care regulation:

"The Supreme Court has never required Congress to legislate with scientific exactitude. When Congress decides that the total incidence of a practice poses a threat to a national market, it may regulate the entire class. In this vein, the Supreme Court has reiterated that when a general regulatory statute bears a substantial relation to Commerce, the de minimis character of individual instances arising under that statute is of no consequence"

With the absence of any Supreme Court precedent bearing similar facts, the outcome of a Constitutional showdown over health care reform remains debatable. The facts however, would seem to indicate that health insurance regulation would likely withstand a Commerce Clause challenge. Sphere: Related Content

California Can Not Print Money

Well, technically the State of California does have the ability to print money. To do so however, would seem to directly contradict Article 1, Section 10 of the United States Constitution. The most inconvenient paragraph of Section 10, at least insofar as California is concerned, states the following:

"Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility."

Sure, we understand that certain bits of this paragraph appear slightly outmoded. For instance, the stipulations regarding payments in gold and silver have been ignored for some time now. However, we think there is a pretty strong consensus that a State is forbidden from issuing its own currency, in an official capacity, and replacing the dollar as the chosen means by which commerce is to be conducted. Surprisingly, this is a path that California appears on the brink of heading down. Some readers may ask "Who said anything about California coining its own money?". Well, clearly the State has chosen an alternate set of terminology by which to describe it's actions.

That California is in a state of fiscal disarray shouldn't be news to anyone by now - short sighted tax policy (property tax freeze), profligate spending, serving as one of the epicenters of the housing collapse and a gridlocked State legislature have all but assured an inevitable day of reckoning for the State. Also well publicized is the fact that California may run out of cash by the end of July, at which point the State will proceed to issue IOU's to those it does business with. (S&P eloquently referred to the IOU's as "registered warrants" in its justification for placing California's general obligation debt on CreditWatch negative.) We would argue that these IOU's are tantamount to coining money; after all, a dollar bill itself is no more than an IOU from the federal government. We doubt however that this distinction will ever be brought to light, as recent events (think Chrysler) would seem to suggest that financial distress is ample justification for a government to trample across years of legal precedent.

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The First Bank of the United States

As pivotal decisions regarding the fate of a growing number of Industries are frequently being made from the oval office and floor of the Senate, one might immediately perceive the title of this post as an allusion towards the current de-facto nationalization of the American Banking System. Our intention however, is to discuss the First Bank of the United States and the spirited debate which preceded its charter in 1791.

In the aftermath of the Revolutionary War, the United States found itself victorious yet heavily indebted.  To aggravate matters, the former colonies lacked any sort of organized currency, instead relying on a patchwork system of bartering, localized currencies, and foreign coinage that had found its way into circulation. To counter these headwinds, the first Treasury Secretary of the United States, Alexander Hamilton, proposed the creation of a National Bank. This seemingly logical and necessary proposal was met with some resistance, particularly from Thomas Jefferson, who criticized the creation of a national bank on Constitutional grounds. 

Hamilton believed that the Federal Government had the ability to "make all laws which shall be necessary and proper"(US Constitution) in order for the Government to carry out those powers that had been specifically granted to the Federal Government by the Constitution. Jefferson however, held the view that the Federal Government possesses only those powers Specifically Enumerated in the Constitution. Obviously, this Constitutional debate is still occurring today, and because new eras inevitably give rise to new issues, we expect that the debate will never be definitively settled. Instead of arguing in favor of either man's position, we would merely like to provide two excerpts from Thomas Jefferson's statement of opposition to the creation of a national bank. Somehow, Jefferson's statements have managed to remain relevant to modern discourse, despite the fact that they were written over two hundred years ago.

I consider the foundation of the Constitution as laid on this ground: That " all powers not delegated to the United States, by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people." (XIIth amendment.)To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.

-Thomas Jefferson

Can it be thought that the Constitution intended that for a shade or two of convenience, more or less, Congress should be authorized to break down the most ancient and fundamental laws of the several States;...Nothing but a necessity invincible by any other means, can justify such a prostitution of laws, which constitute the pillars of our whole system of jurisprudence.

-Thomas Jefferson

In the end, Hamilton's line of reasoning won the day, and in 1791 Congress chartered the First Bank of the United States. The repetitous nature of History is strange indeed.

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