Constitutionality of Health Care Reform

T he p ro p o se d H ealth S e cu rity A ct is w ell w ithin the au th o rity o f C o n g ress under the C om m erce 

C lau se, a n d it does not violate Tenth A m e n d m e n t or o th e r p rinciples o f federalism .

T he p ro p o sal c o n ta in s no unconstitutional ta k in g s o f private pro p erty o r in frin g em en t o f liberty interests.

T he p ro p o se d d e le g atio n o f adm inistrative a u th o rity to the N ational H ealth B oard, and, from it, to state 

a llia n ce s, is not an im p e rm issib le delegation o f legislative authority

O c to b e r 29, 1993

M e m o r a n d u m O p in io n f o r t h e A t t o r n e y G e n e r a l

a n d t h e A s s o c i a t e A t t o r n e y G e n e r a l

The Health Security Act (“Act”) creates for all citizens the security that health 

care coverage will always be available to them. It accomplishes this by building on 

the existing American system for providing health care, which largely operates 

through employers. Much of the system will be administered by the states, which 

will have primary responsibility to ensure that regional health alliances are established, to certify accountable health plans, and to provide mechanisms to resolve 

complaints and disputes.

This legislation is well within the long-recognized authority of the federal government. It is fair to say that, just as the substantive contents of the legislation 

draw on existing models and approaches to health care delivery and financing, the 

structure, processes and mechanisms the legislation uses to accomplish its substantive objectives draw on already existing and validated techniques that the national 

government has employed on numerous other occasions.

Notwithstanding the well-established legitimacy of the means that the Act employs to achieve a public purpose of paramount importance, some special interests 

have such financial stake in the current system that they have strong incentives to 

challenge the Act even on highly implausible grounds, if the consequences of doing so were to alter the ultimate design of the system even slightly in their favor.

Congressman Richard Gephardt has described the Act as the most historic piece 

of social legislation since the Social Security Act of 1935, and in a curious way the 

challenges to the constitutionality of the Health Security Act’s basic structure replay arguments levelled at the Social Security Act and other New Deal legislation 

enacted over fifty years ago. These arguments were considered and dismissed 

then, they remain unsound to this day, and they should not be allowed in any way 

to deflect consideration of the merits of the President’s proposal — nor could they

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succeed against that proposal without threatening to unravel numerous vital statutes 

enacted since the 1930’s.

• The National Government Possesses the Constitutional

Authority to Undertake National Health Care Reform.

The most fundamental constitutional challenge to national health care reform is 

that it lies beyond the power of Congress and the President to enact. Fortunately, 

the Supreme Court has long since rejected the crabbed view of national legislative 

authority that necessarily lies behind such a challenge.

During the mid-l930’s, when for a brief time the Court invalidated some aspects of the New Deal, a majority of the Justices accepted the argument that Congress lacks the power “to protect the general public interest and the health and 

comfort of the people.”1 That argument was predicated on an exceedingly narrow 

conception of the authority of the federal government to address problems of national dimension under the commerce clause of the Constitution. The Court 

quickly abandoned that attack on the New Deal as inconsistent with the text and 

structure of the Constitution and, indeed, with the Court’s own precedents.2 Noting 

that “there has long been recognition of the authority of Congress to obtain . . . 

social, health or economic advantages from the exercise of constitutional powers,”3 

the Court concluded that Congress’s authority over “commerce among the several 

States” empowers the national government to address all activity, “whatever its 

nature . . . if it exerts a substantial economic effect on interstate commerce.”4 Upholding Congress’s power to regulate the sale and distribution of coal because of 

the impact of that industry on American economic and social life, the Court stated:

If the strategic character of this industry in our economy and the 

chaotic conditions which have prevailed in it do not justify legislation, it is difficult to imagine what would. To invalidate this Act we 

would have to deny the existence of power on the part of Congress 

under the commerce clause to deal directly and specifically with 

those forces which in its judgment should not be permitted to dislo1 C arter v. C airer Coal Co , 298 U S 238, 290 (1936). Justice Cardozo, joined by Justices Brandeis and 

Stone, dissented from the m ajority's denial to Congress o f the pow er to deal with a problem — unrestrained 

com petition in the coal industry — that “choked and burdened'’ com m erce and had produced “bankruptcy 

and waste and ru in " Id at 331 (Cardozo, J , dissenting). Five years later, the Suprem e Court explicitly 

endorsed Justice C ardozo's understanding o f congressional pow er with only one Justice in dissent See

Sunshine A n th n u ite Coal Co v Adkins, 310 U S 3 8 1 ,3 9 5 (1940) The following Term, a unanim ous C ourt 

dism issed the views of the C arter C oal m ajority as inconsistent with sound constitutional principle U nited

States v. D arby, H12 U S. 100, 123 (1941)

2 The C ourt's flirtation with a limited view of national power was brief indeed. Carter Coal was decided 

on May 18, 1936. and effectively repudiated by a trilogy of cases decided on April 12. 1937 See, t #., N LRB

v Jones & Laughhn Steel Corp ,301 U S . I (1937)

3 C loverleaj Butter Co v Patterson, 3 15 U S 148, 163 (1942)

4 W ickardv Filhum , 3 17 U S. Ill, 125 (1942)

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cate an important segment of our economy and to disrupt and burden interstate channels of trade. . . . Congress under the commerce 

clause is not impotent to deal with what it may consider to be dire 

consequences of laissez-faire.5

The American health care industry is one of the largest and fastest growing 

segments of the American economy, and it has the most direct and crucial impact 

on the lives of all Americans. Spiralling health care costs and inequities in the 

provision of health care services have an immediate and massive effect on the national economy and thus upon interstate commerce. As a result Congress unquestionably possesses the power “to deal directly and specifically” with health care in 

order to obtain “social, health [and] economic advantages” for the American people.

• National Health Care Reform Preserves our Federal System.

The President’s health care reform plan will invite state participation in the formulation and administration of national health policy; if an individual state government should choose not to participate, the federal government will administer 

the health care system in that state. This type of cooperative federal-state program 

is now quite common in federal legislation. Examples range from many of the 

major modern environmental laws, including the Clean Air Act, the Clean Water 

Act, and the Resource Conservation and Recovery Act, to much older legislation, 

such as Title IX of the Social Security Act, establishing a system for unemployment compensation. Challenges to such legislation based on constitutional principles of federalism were made during the New Deal, when it was alleged that the 

national reform legislation of that era stripped the states of powers that were reserved to them by the Tenth Amendment. But that argument was wholly without 

merit then, and it remains wholly without merit today.

In rejecting the notion that principles of federalism somehow rendered the old 

age benefits of the Social Security Act of 1935 invalid under the Tenth Amendment, the Supreme Court admonished that “nation-wide calamities] . . . may be 

checked, if Congress so determines, by the resources of the Nation [in order] to 

save men and women from the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey’s end is near.”6 More fundamentally, that same day, the Court also rejected a Tenth Amendment challenge to 

elements of the Social Security Act that created a cooperative plan whereby states 

were free to provide unemployment compensation and thereby trigger benefits under the Act for employers in the state. In so doing, the Court issued a resounding 

declaration that Congress may enact legislation that addresses a “problem . . . na5 Sunshine A nthracite C oal Co. v Adkins, 310 U.S. at 395-96

6 H elvering v. D avis, 301 U.S. 619, 641 (1937)

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tional in area and dimensions” by providing the states with the option to share in 

the solution or not, at the choice of the individual state.7 The Court did not accept 

the claim that a state is “coerced” by Congress when, pursuant to federal legislation 

the state “cho[oses] to have relief administered under laws of her own making, by 

agents of her own selection, instead of under federal laws, administered by federal 

officers.”8 The Court described such legislation as “the creation of a larger freedom, the states and the nation joining in a cooperative endeavor to avert a common 

evil.”9 Similarly, under the President’s health care proposals, states will have the 

option to formulate specific plans for implementing the federally guaranteed package of benefits and to oversee the provision and quality of care to their residents as 

a means of addressing our “common” health care crisis.

* Health Care Reform will Respect the Constitutional

Rights of Individuals.

The President’s plan will guarantee to all Americans an extensive package of 

health care benefits while protecting the individual’s right to make fundamental 

choices about health care. The plan will ensure the availability of health care by 

taking into account the economic needs of providers and freeing them from unnecessary paperwork. At the same time, as the President has stated, an essential principle of national health care reform is the exercise of responsibility by health care 

providers and consumers.

Reports in the media already suggest that opponents of health care reform are 

preparing to object to the plan as an intrusion into the Constitution’s protections of 

liberty or as a “taking” of private property.10 Neither argument can be sustained. 

Indeed, both arguments were pressed unsuccessfully by those who sought to undermine the New Deal.

Almost sixty years ago, the Supreme Court rejected the claim that New Deal-era 

regulation of the economic choices individuals or businesses make is unconstitutional. While the Justices acknowledged that “[u]nder our form of government the 

use of property and the making of contracts are normally matters of private and not 

of public concern,” the Court stated that

Equally fundamental with the private right is that of the public to 

regulate it in the common interest. . . . Thus has this court from the 

early days affirmed that the power to promote the general welfare is 

inherent in government. . . . [N]o exercise of the legislative prerogative to regulate the conduct of the citizen [can be imagined]

7 Stew ard M achine Co. v Davis, 301 U S 548, 586 (1937)

8 Id al 590.

9 Id at 587.

10 See Edw ard Felsenthal, AM A to Fight Limits on D octors’ Fees, W all Si. J., Sept. 9, 1993.

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which will not to some extent abridge his liberty or affect his property. But subject only to constitutional restraint the private right 

must yield to the public need.11

Three years later, the Court explained that the liberty protected by the Constitution 

“is liberty in a social organization which requires the protection of law against the 

evils which menace the health, safety, morals and welfare of the people.”12 Health 

care reform will require responsible participation by providers and consumers alike 

“in the interests of the community.” 13 In doing so the President’s plan preserves 

‘“the balance which our Nation, built upon postulates of respect for the liberty of 

the individual, has struck between that liberty and the demands of organized society.’”14

The contention that health care reform would in some manner effect an unconstitutional “taking” of the property of providers rests on a mistaken equation of the 

Constitution’s requirements with the dictates of a particular economic theory.15 

Health care reform undeniably will have an impact on the business decisions and 

economic interests of providers, and it will require financial contributions and personal accountability on the part of consumers. As such, however, the plan will be 

an “adjustm ent of] the benefits and burdens of economic life to promote the common good”16 rather than a taking of private property.17

11 N ehbia v. N ew York, 291 U S 502, 523-25 (1934) W hile the particular question before the C ourt in 

N ebbia concerned the relationship between individual liberty and the pow er of a state, the Court expressly 

stated that w ithin its sphere C ongress also possesses the “pow er to promote the general w elfare”: “Touching 

the m atters com m itted to it by the Constitution, the United States possesses the pow er ” Id at 524

12 W est C oast H otel Co v Parrish, 300 U S. 379, 391 (1937). As in N ebbia v N ew York, the Justices 

were addressing the m eaning of liberty in the context of a challenge to state legislation but m ade it clear that 

their reasoning applied to the Constitution’s restraints on the federal governm ent as well.

13 W est C oast H otel Co. v Parrish, 300 U .S. at 391

14 P lanned P arenthood v C asev, 505 U.S. 833, 850 (1992) (O ’Connor, Kennedy, & Souter, JJ.) (quoting 

P o e v . VUman, 367 U.S 497, 542 (1961) (H arlan, J., dissenting))

15 W hen a m ajority o f the Supreme C o u rt's m em bers appeared to m ake just such an equation, Justice 

H olm es pointed out the error in their reasoning in a fam ous dissent T he “constitution is not intended to 

em body a particular econom ic theory, w hether o f paternalism and the organic relation o f the citizen to the 

State or o f laissez faire." Lochner v New York, 198 U S 45, 75 (1905) The C ourt cam e to decide that 

Justice H olm es was right and the Lochner m ajority w rong m any decades ago. See Ferguson v Skrupa, 372 

U.S. 726, 729-30 (1963) (citing Justice H olm es’s dissent and noting that ”‘[t]he doctrine that prevailed in 

L ochner . has long since been discarded").

16 Penn C entral Transp Co v New York City’, 438 U.S 1 0 4 ,1 2 4 (1 9 7 8 ) By requiring responsibility on 

the part o f all, the plan clearly avoids econom ic im positions “disproportionately concentrated on a few persons” — the hallm ark o f an unconstitutional taking. Id

17 That health care reform will have differing econom ic impacts on different persons, while obviously 

true, does not m ean that those impacts will be “takings” within the meaning o f the C onstitution 

“G overnm ent hardly could go on if to some extent values incident to property could not be dim inished w ithout paying for every such change in the general la w ” P ennsylvania C oal Co v M ahon, 260 U S. 393, 413 

(1922) See also U nited States v. Sperrv C orp , 493 U.S. 52 (1989)

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Constitutionality o f Health Care Reform

• The President and Congress May Establish a National

Health Board and State Health Alliances to Implement

National Health Care Reform.

The health care reform initiative will set up a National Health Board and corresponding state health alliances to implement the plan pursuant to congressionally 

prescribed standards. National level administrative agencies are commonplace 

components of many federal statutes, and are necessary for the sound administration of complicated systems. The devolution of some administrative responsibility 

to states, which then establish health alliances, is vital to the Act’s objective of 

building to the extent possible on the private sector aspects of our current health 

care delivery system.

Once more, the Supreme Court’s New Deal jurisprudence clearly establishes the 

legitimacy of such delegations of administrative authority. The creation of administrative bodies to carry out legislative mandates was a touchstone of New Deal 

reforms. At first, the Court concluded that such schemes constituted impermissible 

delegations of legislative power.18 Quickly and firmly, however, the Court moved 

away from that approach — which was at odds with over a century of the Court’s 

own constitutional interpretations. For example, in sustaining actions taken by an 

official of the Department of Labor pursuant to the Fair Labor Standards Act 

against a delegation doctrine challenge, the Court admonished that the Constitution 

did not “preclude Congress from resorting to the aid of administrative officers or 

boards as fact-finding agencies whose findings, made in conformity to previously 

adopted legislative standards or definitions of Congressional policy, have been 

made prerequisite to the operation of its statutory command.”19 Similarly, in rejecting a delegation doctrine challenge to actions of the Secretary of Agriculture 

under the Tobacco Inspection Act of 1935, the Court observed that the statute set 

forth Congress’s “policy for the establishment of standards .... [T]he provision 

that the Secretary shall make the necessary investigations to that end and fix the 

standards according to kind and quality is plainly appropriate and conforms to familiar legislative practice.”20 Relying on a constitutional precedent from the early 

days of the nation, the Court stated that

[w]e have always recognized that legislation must often be adapted 

to conditions involving details with which it is impracticable for the 

legislature to deal directly .... In such cases, “a general provision 

may be made, and power given to those who are to act under such 

general provisions to fill up the details.”21

18 See Panama Refuting Co. v Ryan, 293 U S 388 ( 1935), Schechter Poultry C orp v. U nited States, 295 

U.S 495 (1935)

19 Opp Cotton Mills, Inc. v Adm inistrator, 3 12 U S. 126, 144 (1941)

20 Currin v. Wallace, 306 U S . I, 16-17 (1939).

21 Id at 15 (quoting Wavman v Southard, 23 U S (10 W heat.) 1, 43 (1825))

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The health care reform initiative is such a case. Simply put, the establishment 

of administrative bodies to implement the plan is entirely consistent with our constitutional tradition.

• Conclusion: The President’s Health Care Reform Plan

is Legislation Based on Well-Established Constitutional Principles.

As President Clinton has observed, finding a solution to the problems with our 

health care system will require a willingness to change, and his reform plan is a 

comprehensive proposal for far-reaching change in both the public and the private 

sectors. It is possible that some confusion concerning the constitutional legitimacy 

of the Health Security Act will arise precisely because it is so comprehensive and 

detailed, and thus necessarily will affect all the major components of our current 

health care delivery system. There may indeed be no historical analogue of a single bill that does so many things at once. Its comprehensiveness, however, should 

not mask the fact that the basic means and mechanisms of the plan rest on longsettled principles of constitutional law, principles that seldom have been challenged since the New Deal and that stem ultimately from the work of the Founders 

of the Republic. The President’s plan, far from being constitutionally questionable, rests on what has rightly been called “the first of the constitutional achievements of the American people . .. the formation of a national government that may 

lawfully deal with all national needs.”22

The Nation’s debate over how best to deal with the great national need for 

health care reform should proceed untrammelled by worries over the national government’s lawful powers that were laid to rest over half a century ago.

WALTER DELLINGER 

Assistant Attorney General

Office o f Legal Counsel

H. JEFFERSON POWELL 

Attorney - Advisor

22 C harles L Black, Jr., The Humane Im agination 120(1986)

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