Wallter Dellinger DOJ Legal Memo on The Constitutionality of Health Care Reform. 1993 Edition

October 11th, 2014

The Clinton Archives treasure troves have revealed a memorandum authored by Acting Assistant Attorney General Walter Dellinger and H. Jefferson Powell to AG Janet Reno concerning the constitutionality of the 1993 Health Security Act (page 3 of pdf, Bates 274). This is a fascinating insight into the pre-Lopez commerce clause jurisprudence.

Dellinger concludes that this law is “well within the long-recognized authority of the federal government.”

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.

But, Dellinger expects legal challenges from “interests groups” with “financial state in the current system”:

Notwithstanding the well-established legitimacy of the means that the Act employs to achieve a public purpose of paramount importance; some interest groups have such financial stake in the current system that they have strong incentives to challenge the Act even on implausible grounds, if the consequences of raising constitutional challenges could be to alter even slightly in their favor the ultimate design of the system.

In an eerie preview of things to come, Walter presages that a challenge to the health law will resemble a repeat of the New Deal litigation:

The Act has been described as the most historic piece of social legislation since· the Social · Security Act of 1936, 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, indeed, could these challenges to the Health Security Act succeed without threatening to unravel numerous vital statutes enacted since the 1930s.)

Written before Lopez, Dellinger explains that the Courts’ “flirtation with a limited view of national power” ended in the 1940s:

For a brief time during the 1930’s, a narrow majority of the Supreme Court invalidated significant aspects of the New Deal. These Justices concluded that Congress lacked the constitutional power “to protect the general public interest and the health and comfort of the people. ” l These decisions were predicated on. an exceedingly narrow conception o f the authority of the national government to address problems of national dimension under the commerce clause of the Constitution. By the early 1940_’s the Supreme Court had rejected that short-lived attack on the New Deal.as inconsistent with the text and structure of the Constitution and, indeed, with the Court’s own precedents.

The Court’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 April12, 1937. See,~. NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937).

Why is the Act constitutional? Because commerce.

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

Dellinger posits that any challenge to the cooperative federal-state program is “wholly without merit today”

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 niajor modem 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.

Dellinger rebuts a potential takings claim (I’m sure Richard Epstein was behind this somewhere):

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.

See “AMA to Fight Limits on Doctors’ Fees,” Wall Street Journal (Sept. 9, 1993).


Citing Penn Central, Lochner, and Penn Coal, Dellinger finds that the law would not constitute a taking:

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 “adjust[ment of] the benefits and burdens of economic life to promote the common good” 16 rather than a taking of private property.

15 When a majority of the Supreme Court’s members appeared to make just such an equation, Justice Holmes pointed out the error in their reasoning in a famous dissent: The “Constitution is not intended to embody a particular economic theory, whether or paternalism and the ·organic relation of the citizen to the state or of laissez faire.” ·Lochner v. United States, 198 U.S. 45, 75 (1905). The Court came to decide that Holmes was right and the Lochner majority wrongmanydecadesago. SeeFergusonv.Skrupa,372U.S.726,729~30(1963)(citingHolmes’sdissentandnoting that “the doctrine that prevailed in Lochner … has long since been discarded”).

16 Penn Central Transportation Co. v. New YorkCity, 438 U.S. 104, 124 (1978). By requiring responsibility on the part of all, the plan clearly avoids economic impositions “disproportionately concentrated on a few persons” — the hallmark of an unconstitutional taking. ld. ·

17  That health care reform will have differing economic impacts on different persons, while obviously true, does not mean that those impacts will be “takings” within the meaning of the Constitution. “Government hardly ~auld go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393; 413 (1922).

In another memo for the Health Care Task force, Dellinger provides a historical perspective of the New Deal, and how the Court reacts to “novel” constitutional arguments in the face of–what I would add are–unprecedented exertions of federal power.

In the 1S30s, the United States faced • grave economic crisis that threatened the very fabric of the nation’s social and political life. The response of the administration of Franklin D. Roosevelt was a bold and ultimately successful attempt to reinvent much of American government.

As always in our constitutional system, novelty raised constitutional concerns. The Supreme Court greeted these. developments at first with caution, and for a brief.and dramatic time with constitutional rejection. In the end, however, the Court concluded that the Constitution provided the national government with ample authority to address problems that implicate the health and well-being of the national community.

President Clinton’s health care reform legislation will be the most constitutionallly innovative national initiative since the New Deal. Like the New Deal, health care reform will necessarily involve the creation of new structures of government and of new relationships between the public and the private sectors. Like the New Deal, some aspects of health care reform are likely to be assailed.in Congress and (if enacted) in the courts as unconstitutional. Careful and. creative legal advice in the formulation of the President’s proposals.will be critical to his initiative’s success in Congress and to the ability of the Department of Justice to defend health care reform in any lawsuits that ensue. ·

Health care reform on the scale that the President will be proposing may be challenged as an intrusion on a variety of constitutionally protected interests. It is our preliminary judgement that these challenges should clearly fail under current ·standards. Even so, the novel context in which the courts would address these substantive issues makes it important to consider with care even those questions that would have uncontroversial· answers in more familiar settings.

Dellinger suggests that a judicial review method be created whereby a 3-judge panel in D.C., followed by direct review to the Supreme Court. This was *not* done for Obamacare (see David Bernstein).

• Channeling attacks on the ·legislation as a whole. It will be. important for the full implementation and administration  of national health care reform that we obtain swift answers to the general constitutional challenges to the plan. Providing a specific and exclusive jurisdictional framework for such legal actions and imposing a strict statute of limitations on their initiation would address this concern. [We are exploring a requirement that any actions seeking to invalidate any provisions of the act must be brought within on year and consolidated
before a three-judge court district court in the District of Columbia with direct review by the U.S. Supreme Court.)

Dellinger also addresses the constitutionality of “Required participation in national health care” in light of questions about “liberty,” “privacy,” and “religious objections.”

Required participation in national health care: The legislation under consideration would include all American citizens and legal residents within the health care plan’s benefits and obligations. This could raise questions about the constitutionality of requiring universal participation in a governmental program under constitutional guarantees of liber·ty and privacy. _ Among those questions are issues raised by Americans with religious objections to participation and civil- libertarian concerns with universal recordkeeping and national identity cards.