Seven members of the Court voted to strike down portions of the Patient Protection and Affordable Care Act of 2010 that required States to accept significant expansion of the Medicaid program to previously uncovered persons, or else lose all federal funding for Medicaid, even funding that was available to cover persons who were eligible for Medicaid before the 2010 Act’s expansion.
First, does this condition satisfy the 4-part Dole test? Is there a reasonable relationship between the condition and the federal interest in insuring the uninsured? Or does this condition amount to an unreasonable form of coercion on the states to comply with the federal program?
See p.215:
In South Dakota v. Dole, we considered a challenge to a federal law that threatened to withhold five percent of a State’s federal highway funds if the State did not raise its drinking age to 21. The Court found that the condition was ‘directly related to one of the main purposes for which highway funds are expended—safe interstate travel.’... At the same time, the condition was not a restriction on how the highway funds—set aside for specific highway improvement and maintenance efforts—were to be used.
We accordingly asked whether ‘the financial inducement offered by Congress’ was ‘so coercive as to pass the point at which ‘‘pressure turns into compulsion.’’ ’ ... By ‘financial inducement’ the Court meant the threat of losing five percent of highway funds; no new money was offered to the States to raise their drinking ages. We found that the inducement was not impermissibly coercive, because Congress was offering only ‘relatively mild encouragement to the States.’ ... We observed that ‘all South Dakota would lose if she adheres to her chosen course as to a suitable minimum drinking age is 5%’ of her highway funds...In fact, the federal funds at stake constituted less than half of one percent of South Dakota’s budget at the time.... In consequence, ‘we conclude[d] that [the] encouragement to state action [was] a valid use of the spending power.’ ... Whether to accept the drinking age change ‘remain[ed] the prerogative of the States not merely in theory but in fact.’ ...‘‘In this case, the financial ‘inducement’ Congress has chosen is much more than ‘relatively mild encouragement’—it is a gun to the head. Section 1396c of the Medicaid Act provides that if a State’s Medicaid plan does not comply with the Act’s requirements, the Secretary of Health and Human Services may declare that ‘further payments will not be made to the State.’ 42 U. S. C. § 1396c. A State that opts out of the Affordable Care Act’s expansion in health care coverage thus stands to lose not merely ‘a relatively small percentage’ of its existing Medicaid funding, but all of it.... Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs....
This is a significant holding. As Justice Ginsburg observes in her dissent, "the Court has never ruled that the terms of any grant crossed the indistinct line between temptation and coercion.’’
Why does the amount of coercion matter? As Justice Roberts put it in fn 12 of his opinion (edited from casebook): "More importantly, the size of the new financial burden imposed on a State is irrelevant in analyzing whether the State has been coerced into accepting that burden. “Your money or your life” is a coercive proposition, whether you have a single dollar in your pocket or $500." This is a buried bone that may be dug up later to overrule South Dakota v. Dole.
Many states may choose to opt out of the Heath Care Act's expansion of medicaid, thus limiting the law's reach. Moreover, as one commentator complains:
The federal government has lost considerable leverage over what type of program Medicaid will be, giving states unprecedented leeway to do less for their low-income uninsured. The upshot is that this 47-year partnership between state capitols and Washington may now be obsolete....Medicaid may have to become a national program, financed and operated by the federal government, just like Medicare is.
Another commentator also complains:
The main trouble with Robert's decision is ambiguity. While saying that Congress could constitutionally impose a smaller penalty on a state, Roberts doesn't specify at what level a penalty becomes coercive...The result is likely not only to be a flood of litigation but also uncertainty in Congress about the conditions it can attach to the funds going to a wide range of federally supported programs in the states.
Is this a good thing or a bad thing for federalism? Does it depend upon what kind of federalism we are concerned about: co-operative federalism or competitive federalism? Should the states be junior partners in national programs? Or competitive sovereigns making their own public policy choices without coercion or encouragement from the federal spending power?
If ambiguity is the problem, how about a bright line against all conditions attached to spending programs. If coercion of states by Congress is bad, isn't it also bad for Congress to bribe states? Shouldn't state laws reflect the will of the people who reside in the states, rather than the will of Congress, whether accomplished by coercion or bribery?
Why should the amount of the coercion matter? Whether a state forfeits $1 million dollars or $1 Billion dollars, isn't Congress ordering the State to regulate as Congress wishes, rather than as the state legislature wishes?
As Justice Roberts himself put it in a footnote to his opinion, "'Your money or your life' is a coercive proposition, whether you have a single dollar in your pocket or $500."
Is this a phrase he put in the opinion to use in some future case, perhaps one seeking to overrule Dole?
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