Will GOP Governors Really Try "Nullifying" Obamacare?

Despite Americans overwhelmingly rejecting Mitt Romney and his plans to "repeal Obamacare on day one," an effort to nonetheless thwart the federal health care law on the state level is underway, led by the Koch-funded Americans for Prosperity and Cato Institute, with help from American Legislative Exchange Council (ALEC) model legislation. Wisconsin Governor Scott Walker is a key holdout and has not indicated whether he will continue to actively block the health care law.

Republican Governors Defying Health Care Reform

After a majority of Americans reelected President Obama on November 6, ensuring that his signature health care reform remains what even House Speaker John Boehner acknowledged is "the law of the land," several Republican governors -- Rick Scott (FL), Bobby Jindal (LA), Sam Brownback (KS), Rick Perry (TX), Nikki Haley (SC), Nathan Deal (GA) and Robert McDonnell (VA) -- announced they would nonetheless refuse to implement the state-based health care marketplace "exchanges" that are key to reducing health care costs and expanding access. In Missouri, voters approved a ballot measure on election night giving the decision about creating the state's exchange to the Republican-led legislature, eliminating the chance that Democratic Gov. Jay Nixon might authorize the state's exchange. Under the health care law, states that do not design their own plan will have the federal government do it for them.

The David Koch founded-and-funded Tea Party group Americans for Prosperity (AFP) quickly issued a press release "applaud[ing] the principled stance of these governors," and is now circulating a petition to residents of other GOP-led states urging governors to reject the exchanges. The Tea Party group Freedomworks is also circulating a petition.

A key target for AFP and Freedomworks is Wisconsin Governor Scott Walker. Walker initially began setting up the exchanges in 2011 -- albeit with a decidedly right-wing bent, titling it the "Office of Free Market Health Care" -- then returned $38 million in federal funding and said, "We're going to wait. We said all along there was a legal step, there's a political step and after each of those steps were exhausted we see what the future holds." Now that each of those steps are exhausted, Walker must meet a Friday, November 16 Health & Human Services deadline to declare whether he will move forward with an exchange or follow the lead of other Tea Party governors and default to a federal government-led plan.

Why are Republican-led states, typically averse to federal intervention, giving up the opportunity to design their own exchanges?

Cato Tries Killing Law by Denying Families Financial Assistance

A handful of right-wing legal theories and tactics have been floated to make right-wing activists believe they can successfully battle health care reform on the state level.

A leading theory comes from the Koch-founded Cato Institute, which has asserted that the entire health care law cannot take effect if a state defaults to a federal exchange.

The online insurance marketplace exchanges are not only where individuals can shop and compare insurance coverage, but also where low-income individuals can qualify for "premium assistance" tax credits from the federal government to offset the costs. Cato's Michael Cannon and Case Western Reserve University School of Law Professor Jonathan Adler have argued the health care law was drafted in such a way that the tax credits are only available through a state-run exchange, but not a federally run exchange -- and without those subsidies, the law would collapse, since many low-income people could not afford coverage.

Additionally, Cannon and Adler argue, because the tax credits trigger the "employer mandate" requiring all companies that employ more than 59 workers to provide insurance, defaulting to a federally run exchange means businesses would not be subject to tax penalties if they fail to purchase coverage for their workers.

The Cannon and Adler position is at odds with that of the IRS, which has interpreted the law to provide tax credits regardless of whether an exchange is run by the states or the federal government.

The State of Oklahoma is relying on Cannon and Adler's theory in a lawsuit challenging those IRS rules and arguing the tax credits are only available for state-run exchanges. Oklahoma's suit has been described as a way for states to "protect job creators from being subject to large and variable penalties." If Oklahoma were to prevail in its suit -- a prospect many scholars believe is unlikely -- the individual mandate could still be in place, but the subsidies for low-income residents would disappear, leaving many individuals in a precarious situation.

In Wisconsin, Cannon has appeared on right-wing talker Vicki McKenna's show, and his writings have been circulating among Tea Party groups advocating for Walker to reject the exchanges.

ALEC Legislation Aims to Block Individual Mandate

The "corporate bill mill" ALEC has also been pushing an initiative to thwart federal health care reform at the state level.

In 2011 and 2012, 43 states introduced laws or constitutional amendments modeled after the ALEC "Freedom of Choice in Health Care Act" that would thwart the law's individual mandate by prohibiting state residents from being required to purchase health insurance. The laws passed as a constitutional amendment in seven states (three as ballot measures on November 6) and as statutory provisions in thirteen. According to ALEC, the Freedom of Choice in Health Care Acts set the stage for Tenth Amendment litigation by creating state laws at odds with the federal healthcare reform's individual mandate.

ALEC's law could work in tandem with the Cannon-Adler notion that Obamacare cannot be fully implemented through federally run exchanges. If both efforts were to pass legal muster, the Freedom of Choice in Health Care Act could theoretically block the individual mandate in a state, and the Cannon-Adler theory would block the employer mandate. ALEC hosted a conference call in August with Cannon and Adler to explain their theory to members of the Tax & Fiscal Policy Task Force.

There could be further problems within states that have passed the law but whose governors nonetheless set up the exchanges. In Ohio, for example, a Health Care Freedom Act was added to the state constitution, and some have asserted that if Governor John Kasich sets up an exchange he will be violating the state constitution by indirectly compelling a person to participate in a health care system.

ALEC has lobbied Wisconsin legislators on the ALEC Freedom of Choice in Healthcare Act, and a version of the bill was introduced and passed the Wisconsin Senate but failed to pass in the House.

"Nullification" Gains Ground

With the Freedom of Choice in Health Care Act, ALEC is essentially arguing for "nullification," a legal theory that relies on the notion that any state has the right to nullify or invalidate a federal law the state deems unconstitutional.** The U.S. Supreme Court has rejected nullification, most recently in the 1950s when Southern states tried using the strategy to resist racial integration of public schools. (The Cannon and Adler theory is based largely on a textual analysis of the health care law and is not "nullification" in a traditional sense).

But even in states where the ALEC Freedom of Choice in Health Care Act has not become law, Tea Party groups and others on the right have been urging governors and legislatures to find other ways to "nullify" health care reform.

The day after the U.S. Supreme Court upheld Obamacare as constitutional, Americans for Prosperity-Wisconsin held a rally with Michael Boldin of the California-based Tenth Amendment Center arguing directly for nullification, telling the crowd that "any act or set of actions that you take on a state or a local level which has as its effect rendering a federal act null and void -- that's what we are trying to do."

In July on the Rush Limbaugh Show, George Mason University economics professor Walter E. Williams argued that, "I think the American citizens ought to press their state governors and legislatures just to nullify the law -- just to plain nullify it and say, 'The citizens of such-and-such-a state don't have to obey Obamacare because it's unconstitutional, regardless of what the Supreme Court says.'"

In the past week, local Republican Party chapters and Tea Party groups across Wisconsin have been urging Walker to avoid implementation and explicitly "nullify" the law. A Facebook page called "Wisconsin United for Nullification" has also popped up.*

Legal scholars expect that efforts to nullify the federal health care law would fail because, under the U.S. Constitution's Supremacy Clause (Article VI), the federal law would trump any "Health Care Freedom Acts" or state executive orders.

Wisconsin Governor Scott Walker Ponders Next Steps

"Walker has tried to build up his political credibility with the national GOP and Tea Party by being a leading opponent of the health care law," says Robert Kraig, director of Citizen Action Wisconsin, who notes that Walker is the head of the Health Care Committee of the National Governors Association and has been a "ringleader" for right-wing governors on the issue. But, Kraig says, key groups important to Walker such as "the insurance industry groups and the National Federation of Independent Business are lining up in favor of establishing a state exchange" rather than letting it default to the federal government.

With Walker stuck between Tea Party group opposed to the exchanges and industry groups in support, Kraig says the governor may try "playing it both ways:" setting up an exchange that does not meet the basic consumer protections required under the federal law, such as minimum coverage or cost-sharing requirements, and then "cast the federal government as the enemy" if it takes an enforcement action against the state and its sub-standard exchange. This could satisfy his industry supporters while still appealing to his national right-wing audience. Information obtained through open records requests indicates the state does have a blueprint for a plan if they decided to go that route, Kraig notes, albeit one developed in secret and without shareholder input.

Regardless of what path Walker takes on the exchanges, once the legislature is back in session he is going to have to contend with the Republican-led legislature. At least nine Republican lawmakers say they back legislation to arrest any federal official who tries to implement the health care law in Wisconsin.

This article has been updated.

* The "Wisconsin United for Nullification" Facebook page was initially attributed to the Tenth Amendment Center, since the organization's web address is listed on the page. The Tenth Amendment Center has contacted us to say they are not responsible for the Facebook page. We regret the error.

** The article initially stated nullification was "a legal theory asserted before the Civil War to protect slavery in the South (although Northern states also tried using it to reject the Fugitive Slave Acts)," but as some readers noted in the comments section (read below), nullification was discussed before the Civil War to protect slavery, but never "asserted" because there was no federal law outlawing slavery. The reference has been deleted because it distracted from the main point of the article. Though some activists have asserted the doctrne in America's history, it has been repeatedly rejected by the U.S. Supreme Court.


Rights: The people always have the right to reject bad laws. See Declaration of Independence "whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it". Pot Laws are Not Direct Nullification: The Federal drug laws stand; the States pass laws that directly contravenes Federal law and ignores Federal law. The State laws treat Federal law as if it does not exist, as legal nullity. To treat Federal law as a legal nullity is nullification, plain and simple. Federal Law is Supreme: Obviously it is not, because Washington and Colorado now have legalized marijuana in direct contravention of Federal law. The Federal courts say one thing, the people of Washington and Colorado say another: the people win. 30,000 to 100,000 slaves escaped to the northern states, so those states did nullify the Fugitive Slave acts despite the Federal court rulings, and once again, the People won. Segregation: School desegregation laws were good, so the people did not support their nullification, thus they did not stand, despite the efforts of a few misguided lawmakers. Your statement about the nullification being 'first asserted [sic] to protect slavery' is still factually incorrect. See Alien and Sedition Acts, 1798. Please cite one law passed by a Southern state which uses nullification to protect slavery. Unless you find it, then I think you must conclude that your premise that Southern states used nullification to defend slavery is false. Slavery was already codified in Federal law and in the Constitution, the Federal courts supported slavery. It is illogical that a State could or would use nullification to protect a Federal law: nullification can only be used to defy Federal law. Thank you for acknowledging some of the positive uses of nullification.

Thanks to both of you for the comments. My abridged description of the relationship between nullification and slavery was oversimplified, so I cut the reference entirely because it was an insignificant point and distracted from the article. But, I still don't see how a state allowing marijuana to be used for recreational or medicinal purposes does anything to "nullify" the federal laws outlawing the same. The states are not treating federal drug laws "as if they don't exist" nor are they "directly contraven[ing]" those laws. They are largely deciding that state law enforcement and judicial resources are not going to be dedicated towards arresting and prosecuting potheads. The federal government never told the states to pass anti-drug laws (it would have clearly violated the Tenth Amendment if it had), so states are not contravening nor are they ignoring any federal law by refusing to do so. What is particularly notable about the Gonzalez v Reich decision is that the court did NOT tell California to rescind its state laws allowing medical marijuana. Instead, the decision held that the federal government can enforce federal anti-marijuana laws in a state whose own laws allow marijuana. If a state had passed a law declaring that federal marijuana laws cannot be enforced within its borders, then we would be talking nullification. But none have done so.

True, you have added that nullification was used against the Fugitive Slave Acts, and might I add it was still used post Dred Scott for the same purpose. But you erroneously contend it was used to protect slavery, which it never was, as the Constitution and federal law declared slavery legal. The first application of nullification was in the Virginia and Kentucky Resolutions in 1798 in response to the Alien and Sedition Acts. It was later used against the Embargo Act and threatened during the War of 1812, all well before the Civil War. Nullification is also not something that has lain dormant since 1950. Nullification was abused (the only instance of its abuse I can find) even after the Supreme Court declared itself infallible through continued segregation. So for better or for worse, the Supreme Court can have its opinion, but let them come enforce it. Even before ObamaCare, states have been nullifying federal laws on drug use, with over a dozen having done so after the 2005 Gonzalez v Reich decision, which ruled no State could legalize marijuana, even for medical reasons. Even if you don't recognize that as nullification, half the states have refused to comply with the Bush era REAL ID Act as well. In states that have refused to comply, REAL ID has been unenforceable, with the "deadline" for implementation being pushed back constantly.

Sir, I think you don't understand the whole philosophy behind Nullification. When you consider that we have natural rights and that we are sovereign individuals, you will ultimately come to the conclusion that nullification is a completely legitimate exercise of rights that can't be taken away from us. If our rights are inalienable, how could one then simply say that a "right" doesn't exist because the Supreme Court said so? How could we have a written Constitution that is supposed to be the law of the land, but then expect that only a small group of lawyers in black robes are the only ones that can interpret it? If that happened to be the case, then our rights couldn't be thought of as inalienable and the powers of the government would be whatever the Supreme Court deemed them to be.. no matter what the actual Constitution said. Does it make sense to allow the Federal Gov't to be the sole arbiter of what its powers are? Of course not. Then who is going to let it know when it's crossing the line? The states and the people within them, both of which are sovereign. Please learn more on the topic of nullification before writing something so erroneous. Thomas E. Woods, Jr's book, Nullification, would be a great start.

The Supremecy Clause only applies to those powers which have been given to the federal government, see the Tenth Amendment. When those are read together, the only logical conclusion is that the feds are supreme only in those powers delegated to the federal governement in the Constitution. That's true even if the US Supreme Court gets it wrong, think Plessy v. Ferguson.

You have got to be kidding me... Let those people get out there and work and do it for themselves... Stop sponging off others and take care of yourself! Lazy lazy lazy... It's is not everyone else's responsibility to take care of those who won't help themselves...

Dear Kidding; Whom would you like to get out there first? The 3yr old or the 80yr. old? How about the couple that are working their butts off making minimum wage and are barely able to keep a roof over there families head and food on the table? It is a good thing to THINK!

Jay Nixon, the Governor of Missouri, is a democrat.

Thank you for the comment! That error arose in the editing process. I have inserted this sentence to clarify: In Missouri, voters approved a ballot measure on election night giving the decision about creating the state’s exchange to the Republican-led legislature, eliminating the chance that Democratic Gov. Jay Nixon might authorize the state’s exchange.