Posted on 01 November 2009

by Paul Ballonoff

Posted on 01 November 2009

The interest of the current administration in creating a federal national health care program, has provoked discussion of whether the federal government has sufficient power to do so. Often, the discussion is phrased as whether “the government” has sufficient power. Others have asked if the federal government has the power to compel individuals to purchase health insurance.

My article (“Limits to Regulation due to the Interaction of the Patent and Commerce Clause”, in CATO Journal, Vol. 20, No. 3, Winter 2001, pages 401 – 423), gives an insight into both questions, by answering this one: why does the so-called “patent clause” of the federal constitution, not use the word “patent”?

If the word “patent” meant what we currently mean by that term, then the clause could have simply stated the relevant power by saying the federal government can issue patents. Instead, the “patent clause” carefully states that the Congress has the power to issue exclusive rights for a limited time to authors or inventors. It does not use the word “patent” at all.

As reviewed in that article, this use of words tells us a great deal about the purposes and structure of the federal constitution. Citing principal legal scholars of the day, the article shows that at the time the federal constitution was written, the word “patent” actually had a much broader meaning. It referred to any government grant of an economic right, called in the article a “general patent power”. Of course if the federal government can grant such rights without limit, we would not need to ask if the federal government has such power over health care.

Yet we ask. On the other hand, when the US states have created health care programs, or otherwise regulated matters like health insurance, the existence of that power in a state has been little questioned. And note: this common understanding is consistent with the 10th Amendment to the federal constitution, that powers not enumerated to the federal Congress are reserved to the states respectively or to the people.

So looking carefully at the choice of words in the “patent clause” tells us a great deal on what the federal government cannot do. The only general patent power granted by the federal constitution to the federal Congress is the specifically described power to create what we today call patents. All other aspects of the general patent power were not given to the federal government, so if exercised at all could be done only by states.

For example, the states can, and normally do, protect the general welfare by requiring holders of driver licenses (issue of which is a proper exercise of a general patent power by a state government) to also buy accident insurance. The federal government however does not regulate drivers or issue of driver licenses within the jurisdiction of any state.

Given this careful allocation of general patent powers, principally to the states, what then is the role if any of the federal government in matters of commerce? Since the word “patent” when the federal constitution was written refers to allocation of economic rights, and those powers generally were reserved to states (or the people), then the commerce language of the federal constitution cannot be interpreted as a general allocation of such power to the federal government. Had that been the intent, the simple grant to Congress of a power to issue patents, without any other words, would have been sufficient.

Now, the federal commerce clause (Article I, Section 8 of the federal constitution) says that Congress has the power: “to regulate commerce with foreign nations, and among the several States, and with the Indian tribes.” But we just saw that Congress has no power to regulate commerce among the several States by the use of an exclusive federal grant of markets, or indeed to allocate those markets, because to do so in that form would be to exercise a power (the “general patent power”) not granted. Since the Congress has no power to allocate economic rights (except what today we call patents), therefore, the commerce language must have some other meaning.

But that meaning also is not a mystery. A review of other powers of the federal government in relation to states, shows that the role of the federal government is to prevent overly restrictive use of powers by the states. Thus, in commerce among the several states, (“interstate commerce”) the role of the federal government was not to allocate rights, but to prevent the states from unduly closing commerce when they exercise their own powers to allocate rights.

This fact is consistent with the historical problem of the day, when states had often done exactly that, to the detriment of the general welfare of all. The “general welfare” words of the federal constitution in no sense changes this separation of powers. The federal government protects the general welfare by preventing excesses of exercise of power by the states.

The details of those arguments are laid out in the referenced article. The application to the health care debate seems straight forward: the states can require health insurance or not, as each may choose; the states could create state supported systems of health care for their citizens, if they choose. The federal government can do neither.

What the federal government might do is this: if in the exercise of their rights to regulate health insurance or provide it, the states create rules that obstruct commerce in health care, then the Congress can prevent such obstruction. It is not simply ironic that the one thing the Congress might be able to constitutionally do with regard to health care, to remove obstruction to competitive access, is not among those included in the proposed legislation.

Paul A. Ballonoff operates Ballonoff Network in Alexandria, VA.

Copyright © 2009, Paul A. Ballonoff