This month, the Goldwater Institute's own Nick Dranias participated in a panel hosted by the Federalist Society with Prof. Peter Appel, a University of Georgia law professor, and Dean Reuter of the Federalist Society.
The City of Tombstone is squaring off against the U.S. Forest Service over water rights in a fight to rescue “The Town Too Tough to Die.” Citing the Wilderness Act, the Forest Service is refusing to allow the city to repair its waterlines to mountain springs it has owned for nearly seventy years – and which date back to the 1880s. This refusal is threatening residents, private property and public safety with the risk of a total loss of fire protection and safe drinking water.
The Goldwater Institute is representing the City of Tombstone because the 10th Amendment protects states and their subdivisions from federal regulations that prevent them from using and enjoying their property in order to fulfill the essential functions of protecting public health and safety.
You can listen to the panel here.
Read more about the case here.
The following was co-authored with Michael Cannon, Director of Health Policy Studies at the Cato Institute.
Ohio Reps. Ron Young (R-Leroy Twp.) and Andy Thompson (R-Marietta) and Missouri Sen. John Lamping (R-St. Louis County) have introduced legislation – we call it the Health Care Freedom Act 2.0 – that would suspend the licenses of insurance carriers who accept federal subsidies through one of the Patient Protection and Affordable Care Act’s health insurance Exchanges. At first glance, that might seem to conflict with or otherwise be preempted by the PPACA. Neither is the case. Instead, the HCFA 2.0 would require the IRS to implement the PPACA as Congress intended.
Here’s why. Under the PPACA, if an employer doesn’t purchase a government-prescribed level of health benefits, some of its workers may become eligible to purchase subsidized coverage through a health insurance “exchange.” When the IRS issues the subsidy to an insurance company on behalf of one of those workers, that payment triggers penalties against the employer. Firms with 100 employees could face penalties as high as $140,000.
Congress authorized those subsides, and therefore those penalties, only in states that establish a health insurance Exchange. If a state defers that task to the federal government, as 33 states including Missouri and Ohio have done, the PPACA clearly provides that there can be no subsidies and therefore no penalties against employers. The IRS has nevertheless announced it will implement those subsidies and penalties in the 33 states that have refused to establish Exchanges. Applying those measures in non-establishing states violates the clear language of the PPACA and congressional intent. See Jonathan H. Adler and Michael F. Cannon, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” Health Matrix: Journal of Law-Medicine 23 (2013): 119-195.
Whether legal or illegal, those penalties also violate the freedoms protected by the Health Care Freedom Amendment to Ohio’s Constitution, and Missouri’s original Health Care Freedom Act, which voters in each state ratified by overwhelming majorities. The Ohio (HB 91) and Missouri (SB 473) bills would protect employers and workers from those penalties, and thereby uphold the freedoms enshrined in Missouri statute and Ohio’s Constitution, by suspending the licenses of insurance carriers that accept those subsidies.
The question arises whether the PPACA would preempt such a law. It does not. The HCFA 2.0 neither conflicts with federal law, nor attempts to nullify federal law, nor is preempted by federal law.
The HCFA 2.0 concerns a field of law – insurance licensure – that has traditionally been a province of the states under their police powers. In preemption cases, courts “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Wyeth v. Levine, 129 S. Ct. 1187, 1194-95 (2009). Courts then must determine whether the state law in question is nevertheless trumped by express or implied federal preemption.
The PPACA does not expressly preempt state powers to determine the conditions for licensure. On the contrary, it expressly reaffirms those powers. Section 1321(d) provides that the Act preempts only those state laws “that . . . prevent the application of the provisions of this title.” 42 USC § 18041(d). At the same time, the PPACA requires that in order to sell through an Exchange, health insurance issuers must be “licensed and in good standing to offer health insurance coverage in each State in which such issuer offers health insurance coverage under this title.” 42 USC § 18021(a)(1)(C)(1). This requirement shows the PPACA does not preempt states’ powers to determine the conditions for licensure. Quite the contrary: the Act’s nod to state licensure shows that the states’ exercise of those powers does not “prevent the application of the provisions of this title.”
Nor does the PPACA imply preemption of the HCFA 2.0’s use of those powers. The Supreme Court recently observed that “[i]mplied preemption analysis does not justify a ‘free-wheeling judicial inquiry into whether a state statute is in tension with federal objectives.’” Instead, the Court’s “precedents ‘establish that a high threshold must be met if a state law is to be pre-empted for conflicting with the purposes of a federal Act.’” Chamber of Commerce of the United States v. Whiting, 131 S. Ct. 1968, 1985 (2011).
First, that high threshold cannot be met here, because the HCFA 2.0 effectuates, rather than conflicts with, Congress’s purpose. The PPACA clearly provides, and Congress clearly intended, that the above-mentioned subsidies and employer taxes would take effect only in states that establish an Exchange. The HCFA 2.0 would prevent the IRS from applying, in Missouri and Ohio, subsidies and taxes that Congress did not want the IRS to apply in states like Missouri and Ohio. The bill is thus consistent with Congress’ purpose, and therefore not preempted by the PPACA.
Second, the PPACA in no way whatsoever mandates that these subsidies must exist in every state. The Act specifically guarantees, “No individual, company, business, nonprofit entity, or health insurance issuer offering group or individual health insurance coverage shall be required to participate in any Federal health insurance program created under this Act . . . or in any Federal health insurance program expanded by this Act . . . and there shall be no penalty or fine imposed upon any such issuer for choosing not to participate in such programs.” 42 U.S.C. § 18115. Individuals, employers, and health insurance issuers are free to refuse these and other subsidies, just as states retain the power to block them if they violate public policy of the state. The Supreme Court has held that states may adopt safeguards for individual liberty that exceed federal protections. PruneYard Shopping Center v. Robins, 447 U.S. 74, 83 (1980). Ohio’s Health Care Freedom Amendment and Missouri’s existing Health Care Freedom Act are two such safeguards.
Third, like physician assisted suicide in Oregon, which the Supreme Court ruled could not be preempted by federal law, the power of states to determine the conditions of licensure for insurance carriers cannot be displaced by implied preemption without “effect[ing] a radical shift of authority from the States to the Federal Government to define general standards of medical practice in every locality.” Gonzales v. Oregon, 546 U.S. 243, 275 (2006).
As noted above, the HCFA 2.0 is not preempted by the PPACA precisely because it would require the IRS to apply the PPACA as written. The most interesting aspect of the debate over this legislation is that ObamaCare supporters do not want the PPACA to be implemented as written. What does that tell us?
Cross-posted at the Cato Institute’s blog.
For over a year and a half, the historic town of Tombstone, Ariz., has been in a stand-off with the U.S. Forest Service over the restoration of its municipal water system in the Huachuca Mountains.
It all started when the Forest Service refused to allow the city to restore its water supply after it was destroyed by flooding caused by the Monument Fire’s denuding of the Coronado National Forest. Disregarding a State of Emergency declared by Governor Brewer which authorized immediate repairs, the Forest Service instead wrapped the town in red tape. Before allowing the restoration work to go forward, it required multiple interagency and interdepartmental consultations. Eventually the Forest Service approved partial repairs to two of the city’s 25 springheads.
Today, only three springheads are delivering water to Tombstone from the Huachuca Mountains. The city’s water supply is nearly as precarious as it was after the Monument Fire. While the Forest Service mulls over authorizing additional repairs, the fire-prone, desert-parched city’s existence hangs in the balance.
To vindicate Tombstone’s right to exist, the Goldwater Institute has asked the U.S. Supreme Court to hear the case. We are also requesting permission to allow Tombstone to immediately continue its restoration work.
Fortunately, Tombstone is not standing alone before the U.S. Supreme Court. On April 1st, amicus briefs supporting Tombstone were filed by a coalition of 13 counties in Arizona and New Mexico, and five leading national and western state think tanks, including the Cato Institute, the Rio Grande Foundation, the Montana Policy Institute, the Idaho Freedom Foundation, and the Grassroot Institute of Hawaii. A veritable posse has joined the fight for Tombstone’s right to exist—and not a moment too soon; the Supreme Court conferences on April 12 to determine whether to take the case.
Today, 17 states and the District of Columbia allow children to use scholarships to choose between public and private schools, regardless of what public school their zip code assigns them to. Twenty years ago, only one state offered parents this freedom: Wisconsin.
Since 2000, the number of children using a scholarship to attend a private school has increased 748 percent according to the Alliance for School Choice’s 2012-13 Yearbook. You read that right: 748 percent. Nearly 250,000 children attend private schools around the country using an education savings account, voucher, or tax credit scholarship.
How did we go from zero children free to choose their school to 250,000 in 18 different parts of the country?
The answer: Choice works. A study of the voucher program in Milwaukee, Wisconsin, found that enrolling in the voucher program “increases the likelihood of a student graduating from high school, enrolling in a four-year college, and persisting in college by 4-7 percentage points.”
A similar program in Washington, D.C. “significantly improved students' chances of graduating from high school.”
Milwaukee’s program was the first of its kind, anywhere. Now, the program has expanded to children in Racine, along with 16 other states and D.C. that have voucher or tax credit scholarship systems. Washington, D.C.’s scholarships are also the first of their kind—a federally-funded private school tuition voucher program for elementary and high school students. The success of these programs helped inspire other states to give parents the same freedom and it is revolutionizing education all over the country.
Milwaukee and Washington, D.C.’s programs were both a “first” and had requirements that researchers from a university or research institution evaluate the programs. The positive results for children in these programs inspired lawmakers around the country who then gave more children the chance at a great education.
Arizona’s education savings accounts are also the first of their kind, so it’s only reasonable that legislators ask researchers to conduct a similar evaluation on the program’s effectiveness. What better way to convince parents and lawmakers that education savings accounts can give every child the chance at a great education than to show how well they work?
Alliance for School Choice: 2012-13 School Choice Yearbook
University of Arkansas Department of Education Reform/School Choice Demonstration Project: The Comprehensive Longitudinal Evaluation of the Milwaukee Parental Choice Program: Summary of Final Reports
U.S. Department of Education’s National Center for Education Evaluation and Regional Assistance: Evaluation of the Impact of the DC Opportunity Scholarship Program: Final Report
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