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A Viper In the Grass: Could the Supreme Court Find Medicaid, And Programs Like It, Unconstitutional?

March 21, 2012

In the lead-up to next week’s historic, six-hour Supreme Court argument on the constitutionality of the Patient Protection and Affordable Care Act (ACA), the press and commentariat remain focused almost exclusively on the challenge to the ACA’s minimum coverage provision (which requires many Americans to obtain health care insurance or pay a tax penalty) and the argument that this provision exceeds Congress’ power under the Constitution’s Commerce Clause.   Lost in the avalanche of coverage of that aspect of the case is the fact that the Court will also be hearing a sweeping attack on the Act’s expansion of the Medicaid program to provide health care for 16 million more low-income Americans.  The challengers claim that the Medicaid expansion is “coercive” to the states and thus an unconstitutional exercise of Congress’s Spending Clause authority. This claim is wrong, but if it were to succeed, it would be a constitutional earthquake that would throw into question Medicaid and other federal statutes that create federal/state partnerships to solve nationwide problems such as health care, child welfare and discrimination. 

Progressives should be particularly attuned to the attacks on Medicaid and Congress’ Spending Clause power.  Unlike the minimum coverage provision -- a concept designed by the conservative Heritage Foundation that has generated considerable unease among some progressives -- Medicaid is a quintessential social safety net program.  Its expansion is perhaps the single most significant progressive victory in the ACA.   Thus, for progressives -- including more than 500 state legislators from all 50 states who are defending the Medicaid expansion -- the Supreme Court’s decision to review the claim by 26 states that the ACA unconstitutionally coerced states by conditioning Medicaid funds on the states’ agreement to expand coverage to more of their residents was a particularly unsettling surprise. In contrast to the claims against the ACA’s minimum coverage provision, there was no split in lower court rulings on the constitutionality of the Medicaid expansion: not a single lower court judge ruled for the states on this claim. Indeed, no court has ever ruled that any Spending Clause statute is unduly coercive, a recognition that it is difficult, if not impossible, to differentiate between an appropriate financial inducement and unconstitutional coercion. 

So why did the Court decide to review this claim? Could this particular claim of coercion succeed where all others have failed?  The text and history of the Constitution and the Court’s precedents say otherwise. The Spending Clause in Article I, Section 8 grants Congress the power “to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States.”  In the Federalist Papers, Alexander Hamilton described this broad grant of authority to tax and spend as “an indispensible ingredient in every Constitution.”  The Supreme Court, too, has generally interpreted the Spending Clause according to its broad terms, ruling in the leading case in this area, South Dakota v. Dole (1987), that “Congress may attach conditions on the receipt of federal funds, and has repeatedly employed the power ‘to further broad policy objectives by conditioning the receipt of federal moneys upon compliance with federal statutory and administrative directives.’”

Paul Clement, the high-profile conservative lawyer representing the Medicaid challengers, argues that the ACA’s expansion of Medicaid is a bridge too far.   Because the federal government could withhold all Medicaid payments to states that fail to comply with the Act’s expanded coverage and other requirements -- which is no small thing, given that the federal government will fund 100% of the Medicaid expansion initially, eventually tapering down to 90% -- Clement argues “[t]here is no plausible argument that a State could afford to turn down such a massive federal inducement.”  Essentially, the argument is that the federal government’s Medicaid spending is too generous, that the states and their residents have become too dependent on this valuable program, and that it is therefore an offer the states cannot afford to refuse.  This argument should be a loser.  While the Supreme Court has suggested that there might be a “point at which pressure turns into compulsion,” it has never found any conditioned spending to be inappropriate coercion or compulsion.  In addition, the Court has recognized that “every rebate from a tax when conditioned upon conduct is in some measure a temptation” and “to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties.”  

Clement is asking the Court to take the plunge, which is what makes this aspect of the ACA case so scary.  Clement argues that a ruling for the challenger states on this point would invalidate “the entire Affordable Care Act,” an enormously significant outcome, even if this were the only fallout.  But that limited result seems unlikely.  To some degree or another, the objective of Congress in employing the Spending Clause is always to make an offer to states that is so generous -- or politically popular -- that they cannot afford to turn it down: the federal government always wants to convince states to participate.  As a result, a ruling for Clement and his clients would throw into doubt prior expansions of Medicaid and federal/state partnerships across a wide range of areas including education (No Child Left Behind), child welfare (Adoption and Safe Families Act), disabilities (Individuals with Disabilities in Education Act), and civil rights (Title VI of the Civil Rights Act of 1965 and Title IX of the Education Amendments of 1972), a prospect that has some conservatives cheering.

Even if the Supreme Court ultimately rejects the states’ coercion argument in this case, as it should, its ruling could make important new law on the ability of the federal government to use the Spending Clause to enlist states in federal-led efforts. As the Court turns to the ACA next week, most eyes will focus on Tuesday’s oral argument on the minimum coverage provision, but we should all be watching just as closely during Wednesday’s argument on Medicaid.  While this aspect of the case could easily fizzle out, it could also end up being the part of the challenge to health care reform that matters most. 

Doug Kendall is President of Constitutional Accountability Center (CAC) and a co-author of the two briefs CAC filed in the ACA litigation on behalf of a coalition of more than 500 elected state legislators from all 50 states, one defending the constitutionality of the minimum coverage provision, the other defending the constitutionality of the expansion of Medicaid. 

Cross-posted on The Huffington Post