The Other Issue in Florida
Today’s hearing in Pensacola—city of five flags, America’s first European settlement (sort of), and birthplace of me—concerns not only the familiar arguments over the individual mandate, but also the states’ claim that the ACA’s Medicaid reforms are unconstitutionally coercive, effectively commandeering state governments.
Medicaid is administered by state-government agencies but funded jointly by state and federal dollars (with the feds paying the lion’s share). State participation in the program is voluntary. The 20 states challenging the ACA claim that, by requiring state Medicaid programs to expand eligibility to everyone earning up to 133% the federal poverty level and to dispense with all other categorical eligibility restrictions, the federal government is imposing a huge liability on state government. The argument is that, even though Medicaid is a voluntary program, states are not “really” free to drop out if they don’t like the strings attached to the federal funding.
The recent experience of the state of Texas provides a good illustration. Texas studied (pdf) the likely consequences of dropping out of Medicaid when Governor Rick Perry began publicly mulling the possibility. It found that “the state would…lose billions each year in federal funds; billions of dollars in indigent health care costs would shift from the state and federal levels to local governments, public hospital districts, medical providers, and the privately insured; and 2.6 million Texas residents could lose health insurance, depending on future coverage options the state chooses to pursue.” (Hat tip Igor Volsky.) Clearly certain state politicians resent being subordinate to federal legislative power, but also it’s true that, in a very real political sense, they have no viable alternative to implementing the ACA’s Medicaid reforms.
However, the question is whether the political pressure thus applied by the ACA is so coercive as to constitute unconstitutional interference with state-sovereign government. And that’s a hard sell.
But the states do have a colorable claim here. That’s because the Supreme Court’s precedents in the area do not articulate a “bright-line rule” to follow. In South Dakota v. Dole, the Court upheld federal conditions on grants to state and local governments, specifically in that case the condition that 5% of highway funds would not be available to states who did not adopt a drinking age of 21. However, the Court acknowledged that at some point “the financial inducement offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion.” And compulsion is verboten.
Obviously this raises the problem of how to distinguish mere pressure or encouragement from excessive coercion or compulsion. It has been my intuition that the Court’s majority couldn’t settle on any objective limitation on the spending power but also did not want to give Congress carte blanche to impose draconian conditions. So they said the conditions must be related to the spending purpose; they must be clearly stated in the legislation; and they can’t be too harsh—or at least not tooooo harsh.
That not-tooooo-harsh qualification is the basis for the 20 states’ challenge to the ACA’s upgrade of Medicaid eligibility standards. It seems like a weak claim, because the basic qualitative framework of Medicaid—feds pay the lion’s share of the state-administered health insurance for the poor—remains the same. Many more people will be eligible (more than 15 million nationwide), but the feds will pick up a greater portion of the tab. Nevertheless the claim is not meritless, because no rule or principle exists that can tell you how much is tooooo much when it comes to federal conditions on grants to the states.
Check out Brad Joondeph’s excellent, in-depth analysis of the commandeering issue at the ACA Litigation blog.
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[...] I’ve written before, the Supreme Court’s precedents have left the door open to this kind of challenge, but they [...]