States take aim to block healthcare plan

President Obama greets members of the audience after delivering remarks on health insurance reform at George Mason University's Patriot Center in Fairfax, Virginia, March 19, 2010.

WASHINGTON/CHICAGO (Reuters) - As the Congress once again rallies to pass healthcare reform legislation, momentum is growing in many states to pass laws to block the changes -- a move that could lead to a legal battle over states' sovereignty.

Bills and resolutions have been introduced in at least 36 state legislatures seeking to limit or oppose various aspects of the reform plan through laws or state constitutional amendments, according to the National Conference of State Legislatures.

"There's going to be a big free-for-all lawsuit about this," said Michael Bird, legislative counsel for the NCSL.

The House of Representatives is to due vote on Sunday on a sweeping healthcare overhaul that would require all Americans to have health insurance, but would give subsidies to help low- and middle-income workers. It would also ban insurance practices like refusing coverage to those with pre-existing medical conditions.

Opposition efforts at the state level "in general ... seek to make or keep health insurance optional, and allow people to purchase any type of coverage they may choose," the NCSL said.

Democratic House leaders on Friday voiced growing confidence of winning a close vote. If the bill passes the House, it would then only have to pass the Senate by a simple majority under the planned procedure on the legislation.

Mirroring the partisan politics that have dogged the federal legislation, state measures to block healthcare reform are more likely to arise and succeed in states where Republicans control at least one legislative chamber and the governor's office.

So far, only two states, Idaho and Virginia, have enacted laws, while an Arizona constitutional amendment is seeking voter approval on the November ballot. No anti-health care reform legislation has emerged in Democrat-dominated states like Illinois and New York, according to the NCSL.

Idaho Governor C.L. "Butch" Otter signed a bill on Wednesday allowing the state's attorney general to file a lawsuit opposing federal healthcare legislation requiring individuals to buy medical insurance.

Otter sees federal legislation as overreaching and bound to add to medical expenses of state governments, spokesman Jon Hanian said .

"He's concerned we can't afford it," Hanian said, adding that Otter, a Republican, is disappointed in how the Democrat-led U.S. Congress is handling the legislation.

White House spokesman Robert Gibbs on Thursday dismissed as political positioning the complaints by states that the healthcare overhaul may endanger their independence or be too costly.

In the latest version of the bill, all states would receive extra funding to cover Medicaid costs that are expected to rise under the reform, including 100 percent federal coverage for new enrollees under the plan through 2016. Medicaid is the healthcare program for the poor jointly administered by the states and federal government.

Still, states are concerned that the burden of providing healthcare will fall to them without enough federal support and that the reforms infringe on their powers under the U.S. Constitution's Bill of Rights.

For example, Texas Governor Rick Perry, a Republican, says the proposal will double the number of Medicaid recipients in his state and cost an additional $24.3 billion over the next decade.

TENTH AMENDMENT ARGUMENT

Many states cite the 10th Amendment, which says "powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states," as proof that the U.S. government cannot set their healthcare laws.

Gibbs did not accept that complaint. "What we're about to pass and sign into law will meet Constitutional muster," he said.

Robert Natelson, a constitutional law professor at the University of Montana School of Law, said it would be easier for states to argue for standing to file a lawsuit that claims the federal government has overstepped its constitutional powers.

"The legal question is, Does this health care bill exceed the federal government's powers or it is invalid for other reasons?" he said.

Michael Boldin, founder of the Tenth Amendment Center, a think-tank on the relationships of the states and federal government, pointed to previous state movements to nullify federal laws in areas such as medical marijuana and Real ID, a federal standard for driving licenses. In the case of marijuana, Boldin said 14 states allow its use for medical purposes despite a prohibition in federal law that has been upheld by the U.S. Supreme Court.

A similar situation may arise with healthcare reform, where there could be mass noncompliance with the law without any real consequences, Boldin said.

(Additional reporting by Jim Christie in San Francisco and Joan Gralla in New York; Editing by Leslie Adler)