Chapter 3 The Source of Law and Regulations 55 Copyright Goodheart-Willcox Co., Inc. accompanying authority, to provide for the safety and welfare of the country and its citizens through healthcare. This interpretation is implemented through the government’s police power, which means its obligation to protect public safety and welfare. The authority of the police power is not limited to the federal government but is inherent in the various states’ authorities as well. Therefore, when a state creates licensing laws for hospitals or healthcare providers, or enacts public health laws related to contagious diseases, it is exercising its police power. Congress’ ability to regulate commerce, as stated in Article 1, Section 8 of the US Constitution, is closely aligned to the police power. The courts have repeatedly held that Congress has the authority to reg- ulate transactions that are involved in, or impact, interstate commerce. Healthcare makes up about one-seventh of the US economy and is involved in interstate commerce in innumerable ways, from using the US mail for billing to buying pharmaceuticals from companies in various parts of the country. In the rare instance when the Congressional power under the Com- merce Clause is not sufficient to manage all aspects of healthcare, the power to tax has been used. When the “individual mandate” requiring individual citizens to buy health insurance under the ACA was chal- lenged in the Supreme Court, it was decided that this feature of the ACA was constitutional. The Supreme Court found that while the Commerce Clause did not involve the power to compel individuals to act, the taxing power was available to Congress to shape individual action. State Governments State government structures generally parallel the structure of the federal government, including their own elected legislatures. Because states have all remaining power not granted to the federal government or prohibited by it, the states are deeply involved in healthcare regula- tion. Not only do the states regulate healthcare delivery, they often pro- vide direct services such as operating state mental health hospitals. Ever expanding on their inherent power, states have recently been authorized by federal law (by way of the Affordable Care Act and the Commerce Clause) to establish healthcare exchanges to improve access to health insurance (Figure 3.9). Individual practitioners, healthcare businesses and organizations, and insurance companies comprise the healthcare field. In addition to these components, state and local governments can operate a full range of healthcare services directly as part of the government, particularly for homeless or mentally ill individuals. Each state is actively participating in healthcare regulation. police power term that describes the basic right of state and local governments to make laws and regulations for the benefit of their communities