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A Lurking Threat to Federal Spending Clause Programs

January 3, 2013

On Tuesday, the Supreme Court will hear oral argument in Delia v. E.M.A., a Medicaid case in which North Carolina seeks resolution of a relatively narrow dispute regarding statutory interpretation, but Texas, in an amicus brief, is asking the Court to address far-reaching constitutional issues regarding the enforceability of spending clause programs.  The statutory issue concerns procedures to determine the amount of a tort claim settlement that is fairly attributable to medical expenses and may therefore be subject to a lien to reimburse Medicaid payments.  The decision below and the question presented for certiorari address nothing else.  But Texas has injected into the case the issue of whether Spending Clause statutes, which are enacted by Congress pursuant to its constitutional power to spend funds for the general welfare of the United States, are enforceable under the Constitution’s Supremacy Clause, which establishes that federal laws supersede conflicting state statutes.  The Texas brief, joined by ten other States, asks the Court to rule that, under the Constitution, because Medicaid is “spending legislation,” it “does not obligate the States to do anything.” 

The Constitutional Accountability Center (CAC) and AARP have joined forces to oppose Texas’s arguments that would negate States’ constitutional obligation to comply with federal laws prescribing conditions on funds states receive from the Federal government.  While the Court should not even entertain the argument Texas has introduced into this case, we explain that Texas’s approach threatens myriad major laws based on the Federal government’s conditional spending power, such as Medicaid, Federal aid to education programs like No Child Left Behind, Food Stamps, Federal housing statutes, and significant provisions of the Clean Air Act. The CAC-AARP brief is available here.

Were the Court to accept Texas’ argument, the Federal Medicaid statute and all other such statutes based on Congress’ conditional spending authority would no longer constitute the “supreme law of the land” under the Supremacy Clause.  They would be converted into constitutionally mandated de facto block grants – blank checks – to the States. 

Texas’ governor, Rick Perry, has received frequent media coverage for refusing to implement the Affordable Care Act’s expansion of Medicaid and the law’s optional provision for state-administered “exchanges” or virtual health insurance markets.  But this attempt to ratchet up the stakes in a low-profile Supreme Court case actually represents a far more extensive challenge to the Federal government’s long-established policy role.

The CAC-AARP brief demonstrates that Texas’s arguments are out of line with the text and history of the Supremacy Clause and Spending Clause.  The CAC-AARP brief shows that the intention of the Framers at the Constitutional Convention in 1787 was to establish the supremacy of all federal laws, enforceable in court at the instance of private individuals.  The Convention record makes clear that the drafters considered authority to spend for “the general welfare of the United States” among the most important powers conferred on the Federal government, and that laws implementing that power, no less than laws based on other constitutional powers, would have preemptive force to displace conflicting state laws on national issues. 

Iconic precedents handed down by the early Supreme Court, written by Chief Justice John Marshall, also expressed the understanding of the Founding Generation, reaffirmed by all succeeding generations including the contemporary Court, that every conflicting state law must yield to federal law.

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