This is my final preview-post on the major issues at stake in next week’s arguments at the Supreme Court regarding the constitutionality of Obamacare, or the Affordable Care Act (ACA). Next Wednesday -- the last day of Supreme Court argument -- the Court will consider the constitutionality of the ACA's expansion of Medicaid.
The issue here is federalism. Although Medicaid is thought of as a federal program, it is actually a cooperative federal-state program, which is administered by the States, and partly funded by them too. Under current law, States must extend Medicaid to certain categories of needy individuals, but, beyond that, they have considerable flexibility to determine the scope of coverage. The federal government sometimes gives the States an incentive to expand Medicaid coverage by offering additional federal funds. However, there is normally no penalty for not expanding Medicaid to "optional" categories of people.
Obamacare forces the States to accept an expansion of Medicaid. All States will be required to offer Medicaid to all individuals under 65 with incomes up to 133% of the poverty level. This new mandate will require a massive expansion of Medicaid rolls. States that refuse to participate in this expansion of Medicaid risk losing every single penny of federal Medicaid funds – for most States, more than a billion dollars a year. This is not a real choice, of course; in fact, the ACA assumes that low income persons will satisfy the individual mandate via Medicaid -- there is no other option under the statue. In short, Congress knew all along that it was forcing the States to adopt a federal policy.
On two occasions – in 1937 and 1987 – the Supreme Court stated that the federal government cannot use conditional grants to coerce states into adopting particular policies, because such coercion would violate the basic principles of federalism inherent in the Constitution. The problem is, the Court was speaking hypothetically on both occasions (in both cases, the Court held that there was no coercion), and the Court did not give clear guidance about when federal “pressure” turns into “coercion.” The Court has never held that a program of ostensibly "conditional" grants to States amounted to coercion. The Court has established an "anti-commandeering" principle, which holds that Congress cannot explicitly dictate policies to the States. The argument here is that the Medicaid expansion is an obvious example of "commandeering" the State's regulatory machinery under the fig leaf of a "conditional" grant program.
Many commentators say the odds are against the States on this one. I hope not. The expansion of Medicaid springs from the same tyrannical spirit as the individual mandate.