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According to The New York Times, Florida, like about a dozen other states, debated a proposed amendment to its state constitution that would try to block, at least symbolically, much of the proposed federal health care overhaul on the grounds that it tramples individual liberty. Before getting to the matter of federalism, whose primary object is the protection of liberty, I raise the issue of an industry with such a vested interest making substantial campaign contributions to the supporters of the amendment nonetheless. I contend that there is an ethical conflict of interest in the practice, even if it is constitutional (assuming wealth as free speech, which is problematic).

What united the proposal’s legislative backers in Florida was more than this ideology. Its 42 co-sponsors, all Republicans, were almost all recipients of outsized campaign contributions from major health care interests, a total of about $765,000 in 2008.  Around the 2008 election, the groups that provide health care contributed about $102 million to state political campaigns across the country, surpassing the $89 million the same donors spent at the federal level. This opened the backers and their state government to attack by those "nationalists" who wanted the federal government to be involved in health-insurance. Indeed, they argued that the magnitude of the health care industry’s contributions demonstrated the dangers of leaving such a question up to individual states, where campaign finance and ethics rules vary from strict to negligible. The industry has enormous power at the state level, they contended, and very few states have state-level consumer groups that are able to lobby effectively against them. Yet the alternative of consolidation of the "extended republic" carries with it other dangers.

Indeed, the matter of the US Government’s enumerated powers was not lost on the state legislators opposed to a federal health-care law.  “We are trying to prepare, and trying to send a message that there is no reason for those decisions to get made at the federal level,” said Representative Linda L. Upmeyer, a Republican who is leading the council’s efforts in Iowa.  Without “opt-in” or “opt-out” provisions in the federal legislation, state constitutional amendments would be preempted, and thus merely symbolic.  It seems like a lot of work just to make a statement. 

In terms of health-care policy, states opting out could compromise the economies of scale being assumed by the federal cost-saving measures.  However, such policy reflects ideological preferences, which can vary from state to state.   The effect on our system of public governance (i.e., federalism) ought to be considered as well, lest we inadvertantly run our ship of state into a wall.  Consolidation at the expense of federalism (i.e., semi-sovereign political units—in this case states that are republics) works against the inherent diversity in an empire-scale Union.  However, if the health-care industry is able to dominate health-care policy at the state level—a consolidated industry against comparatively smaller republics—then federal action might be necessary to protect republican principles…yet at the expense of federalism.   In other words, what if the cost of maintaining federalism is rule by industry?  Governmental consolidation may well be foisted on us by necessity, given the power of consolidated private capital in the US.   Yet by this logic, why stop at the US Government?  To be sure, the health-care and banking industries have demonstrated their influence on Congressional action (and inaction).  Why not then argue that a federation of the US and the EU is necessary to create a governmental entity large and powerful enough to fend off the encroachments of big business?
I suspect that anti-trust legislation is necessary not only to protect the viability of competition and the market, but also to keep industry from capturing government.  The latter is particularly important where federalism exists because the smaller units of a federal system are perhaps more easily dominated by big business.   Sadly, those who are in favor of free-market health-insurance (rather than government involvement) do not also push for enforcement of the anti-trust law.

In terms of US federalism specifically, federal health-care legislation cannot be justified by any of the enumerated powers granted to the US Goverment. So it must be the spending clause that the feds are using.  The US Government may spend for the general welfare.  In my view, this is best interpreted as “for that which the states cannot do” or “for emergencies rather than ordinary spending.”  Otherwise, the spending clause easily trumps any enumeration at all because with spending comes power (i.e., strings).   My interpretation dovetails with the heterogenious nature of an empire-scale Union such as the US or EU, wherein consolidation is not natural.   Broadening out to political economy, the problem then is the ability of big business to bully state governments.  This can be viewed as a threat to the semi-sovereignty of the states, and thus to the federal system itself.  Federalism, in other words, may make it possible for industries to veto any reform they do not favor (and to ensure special treatment for themselves).   Large concentrations of commercial wealth may be able to use federalism for their purposes, and perhaps a consolidated government of the Union less well.  In allowing such private concentrations of power, we may be forcing ourselves to consolidate our public governance.  State governments are reduced to symbolic amendments (i.e., impotence); one size fits all, across a continent.  Yet the alternative is capture by industry.  However, this can be a false dichotomy.  If the business interest can be trumped at the federal level, US anti-trust law could be expanded to include “protection of the state governments.”  The US Government could still serve as a check on those governments (e.g., when they are captured by an industry), and vice versa!   It is perhaps because this is not in the interest of big business that we no longer have the checks and balances of federalism.  In any case, we can’t very well afford to look at federalism in isolation, though it is equally dangerous to ignore it in favor of the issue, or flavor, of the day.

Source: http://www.nytimes.com/2009/12/29/health/policy/29lobby.html?_r=1&ref=politics