December 10, 2011
Jumping Ahead to Coercion
I had intended to address Douglas next, as it is a nice gateway for discussing Florida v. HHS, but a defense of the coercion argument just published in the New England Journal of Medicine Online inspired me to address the latter first. I will begin by discussing why I think the Court granted the petition for certiorari then turn to the Medicaid coercion question.
The Rehnquist Court excluded the Spending Clause from its federalism revolution inasmuch as that would have meant limiting the power to spend by the Tenth Amendment. When Chief Justice Rehnquist authored South Dakota v. Dole, the evidence is that he believed it was an easy and relatively inconsequential case. For those sane enough not to engage in the reading of tea leaves that is deciphering the spending power, a quick review. Dole articulates typical Rehnquist categories for evaluating the constitutionality of conditions placed on federal spending: the spending must be for the general welfare; the conditions must be clear and unambiguous (as modified by Arlington Central School District Board of Education v. Murphy); the conditions must have a nexus with the federal spending (“germaneness”); and the conditions cannot themselves be unconstitutional. After providing this test, Rehnquist noted that “in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.’” No theory or constitutional provision was cited, but the opinion indicated that coercion would depend on the amount of money or percentage of money withheld if the state violates the conditions. It seems that the Court meant that coercion would be a Tenth Amendment, state sovereignty problem. But, Dole also explicitly stated that the Tenth Amendment was not implicated in the bar on unconstitutional conditions. So, while Dole provides the test for conditional spending, it is undertheorized and a bit self-contradictory. Nevertheless, the Rehnquist Court reiterated that the Spending Clause is not limited by the Tenth Amendment in New York v. U.S. and held to that position in subsequent cases, disappointing many who believed spending to be the next front in judicially-enforced federalism.
The Roberts Court has given hints now as to its approach to spending as well as federalism, and members of the Court have signaled interest in revisiting both topics. For example, Justice Kennedy’s concurrence in Comstock stated: “The limits upon the spending power have not been much discussed, but if the relevant standard is parallel to the Commerce Clause cases, then the limits and the analytic approach in those precedents should be respected.” Justice Kennedy also addressed broader federalism concerns in that concurrence, which were given free rein in his opinion for the Court in Bond v. U.S. as well. Likewise, Justice Alito’s opinion in Arlington was written as a spending power decision rather than a limited statutory interpretation, which I have written elsewhere resulted in a narrower clear statement rule for the second element of the Dole test.
Additionally, even though the Court seems to dislike hearing both spending and healthcare cases, it already has heard Douglas this term, so spending, federalism, and Medicaid are fresh in the justices’ minds. And, what could be a better vehicle for considering coercion than the largest grant-in-aid program that also constitutes the second largest portion of states’ budgets? (Education is first.) Further, numerous lower federal courts have attempted to construe coercion, but none have struck down federal legislation under the doctrine, making the issue ripe for the Court’s consideration.
Despite the idea of coercion arising repeatedly in federalism cases over the last thirty-ish years, its contours are unknown. At what point is the money being offered too much? And is the offer really the issue, or is the problem the amount or percent of money a state stands to lose if it does not comply with the conditions? (Dole indicated the latter, as South Dakota was not coerced because it would lose only 5% of its federal highway funding if it refused to comply with the minimum drinking age that the federal government sought to impose.) Can coercion only apply to an existing conditional spending program that a state could not leave because it has become dependent on the program? Or is there some federal program that would offer so much money that no state could turn it down, even at the outset, such that the new program would be coercive? If it is the former, then clear statement rules also need to be revisited, because they seem to assume some kind of regular restatement of the rules of the program to which a state actively agrees. That simply does not occur in a long-standing program like Medicaid, making me think that clear statement rules are almost meaningless in that context. Additionally, states inherently relinquish some sovereignty when they agree to the terms of a cooperative federalism program, highlighting tensions between dual sovereignty and cooperative federalism.
So, what is the upshot for the Medicaid expansion? [more after the jump]
As I wrote last week, PPACA makes anyone under the age of 65 and earning less than 133% of the federal poverty level eligible to enroll in Medicaid. Additionally, even though the federal government typically covers 50 to 83 cents on the Medicaid dollar, a match that varies by state per capita income and a few other factors, the federal government will pay 100% for the new population, which phases down to 90 cents on the dollar by 2020. The states do not quarrel with the philosophical change in the program, and they do not claim that any other element of the Dole test is violated; instead, they claim that the expansion is impermissibly coercive because it will be too expensive for the states, and they stand to lose all of their Medicaid funding if they refuse to enroll the newly eligible population. From a Dole perspective, this argument is smart, as it covers the most obvious interpretations of coercion.
But, from a Medicaid perspective, the argument is not persuasive for at least five reasons. First, the federal government has always mandated the fundamental elements of Medicaid, the baselines of who is eligible and what services they must receive, while allowing states options that expand on the baselines. At least twice before baseline Medicaid eligibility has been drastically expanded in this way, and the states remained in the program. Second, the federal government is totally funding the expansion initially, then primarily funding it after the start up period. Notably, a number of states have argued that they will benefit greatly from the Medicaid expansion, and they do not want to see it eliminated. Third, the states have a number of years to plan administratively and fiscally for the expansion. Even in 2014 they will only have to pay some of the administrative costs of the newly eligible (the federal government pays at least 50% of state administrative expenses in Medicaid in addition to matching medical expenditures). States have time to leave Medicaid if they choose. Fourth, though Florida et al. essentially argue they are locked-in to participating in Medicaid, and it is true that most states could not afford to run their own welfare medicine programs, it is not a direct line to concluding that states are coerced into participating in Medicaid. Perhaps it simply means that Medicaid fills a need. Fifth, spending legislation is the law of the land, just like any federal law, by virtue of the Supremacy Clause. Telling the federal government that it cannot set the terms of its own duly enacted conditional spending statute would be a dangerous step toward reversing our understanding of the power to spend as its own enumerated power, which was endorsed by Hamilton.
The coercion issue is being taken seriously and is likely to be decided with an eye toward reinforcing the federalism ideals recently articulated in Bond. I would not be surprised if a majority of justices are willing to expand the fifth element of Dole but then declare this particular act by Congress not to be unconstitutional – much like the 11th Circuit did. So many major public programs ride on conditional spending structures, all stakeholders will potentially be affected by this decision.
If you’ve read this far, thanks for sticking with me. I’ll get back to my tea leaves now….
December 10, 2011 | Permalink
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