The Corner

Challenging Obamacare’s Coercive Medicaid Provisions

In today’s Wall Street Journal, Prof. Richard Epstein and I argue that the Medicaid-expansion provisions of Obama’s health-reform law should be struck down as unconstitutional. This is one of the two main issues — the other being the individual mandate — that will be tested in oral argument before the 11th Circuit Court of Appeals tomorrow.

The law requires states to expand their Medicaid programs as a condition of continuing to receive federal Medicaid matching grants. At issue is the meaning and validity of the Supreme Court’s holding in South Dakota v. Dole (1987) Our op-ed explains:

Under the Patient Protection and Affordable Care Act, states have a choice: Expand their Medicaid rolls or bear the full cost of caring for their state’s current Medicaid population, while continuing to subsidize the Medicaid programs of other states. The constitutional danger of such a scheme has long been recognized. In 1936, the Supreme Court warned in U.S. v. Butler that if conditional federal grants were not restrained the taxing and spending power “could become the instrument for the total subversion of the governmental powers reserved to the individual states.”

And yet the government is comparing this Medicaid requirement to a “voluntary” contract. Does anyone believe that a person is entitled “voluntarily” to continue his journey so long as he pays for all poor people who use the roads? The government’s action is plainly coercive because it necessarily conditions the exercise of one right upon the conscious surrender of a second.

Unfortunately, the Supreme Court’s decision in South Dakota v. Dole (1987) confused matters. Dole let Congress condition 5% of federal highway funds on states’ raising their drinking age to 21. The Court argued that this modest penalty was mere persuasion—not coercion—but cautioned 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.’”

The question, then, is where that point is. Judge Vinson denied that any such point exists because the federal courts have routinely ignored the Court’s warning in Dole by approving virtually every conditional federal grant program—no matter how intrusive.

The reason why the analysis in Dole has failed to offer any protection for state autonomy is that it is fundamentally wrong to think of coercion as a matter of degree. The government always engages in coercion when it taxes away money from the citizens of several states, only to return it to those states that abide by certain conditions.

There must be some limit on the federal government’s ability to condition grants to the states on their adherence to federal preferences on the range of issues the Framers clearly intended to leave to the states. Otherwise, the federal government will swallow up the people’s ability to govern themselves at the local and state level. In fact, as the ratification debates make clear, the Constitution would never have been ratified if the Framers had known that we would now be facing this relentless accumulation of central government power, which they would have equated with a nascent tyranny. Quaint? Perhaps. Silly? Maybe not so much.

The federal government seems to agree with Judge Vinson’s summary judgment, which was essentially that no conditional federal grant program could be constitutionally coercive, no matter how coercive in fact. They’re fairly sure to win if the issue is returned to Judge Vinson for a full trial. But Judge Vinson seems to have ruled the way he did chiefly because he refused to perpetuate the charade of homage to Dole’s coercion doctrine when the federal courts have upheld virtually every federal program, no matter how coercive in fact. In agreeing with Judge Vinson, the federal government is contradicting a vital premise of Dole, thus falling into what may have been a cleverly set trap on Judge Vinson’s part. Stay tuned.

Mario Loyola is director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation. His 11th Circuit amicus brief for the Texas Public Policy Foundation, on behalf of the states, is here.

Mario Loyola is a senior fellow at the Competitive Enterprise Institute, the director of the Environmental Finance and Risk Management Program of Florida International University, and a visiting fellow at the National Security Institute of George Mason University. The opinions expressed in this column are his alone.


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