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States: “Coercion” theory is at stake

America can forget about there ever being any judicial limits on Congress’s power to spend and attach conditions to the money if the Supreme Court does not strike down the broad expansion of the Medicaid program in the new federal health care law, 26 states argued in a brief filed late Tuesday afternoon.  The brief, found here, completes the first round of full written arguments on the four issues involving the Affordable Care Act that the Justices will be reviewing this Term, with three days of hearings set in late March.

The states’ new brief is an attempt to put significant new life into what is called the “coercion” theory, mentioned only a couple of times by the Supreme Court but never actually used to nullify a federal spending law.  The theory is that conditions attached by Congress to money that is provided to the states can be so onerous that the states have a choice either of giving up their sovereignty or staying out of a federal program their residents genuinely need.  Such a program, the states contended Tuesday, is the Medicaid program for the poor.

Besides arguing that the Medicaid expansion is itself invalid, the states argued that the expansion is so closely tied to the remainder of the ACA that the entire law should be nullified along with those provisions.

The Medicaid expansion, contained in Title II of the ACA, is designed along with other provisions in the Act to push America close to “near-universal” health benefit coverage, the brief said.  That goal is also served by, among other provisions, the mandate that virtually all Americans obtain health insurance by the year 2014.  The Medicaid program is a part of that effort, the states noted.   It mandates coverage of “millions more individuals, including childless adults who have historically been ineligible for the program,” the filing added.  That will “necessitate one of the largest enrollment efforts in the program’s history,” it said.  All told, by government estimates, the Medicaid expansion will increase enrollment by 16 million people by the end of 2020.

A separate requirement in Title II, the document added, requires the Medicaid programs which states provide to provide a minimum level of benefit coverage, taking away the flexibility they previously had to determine what level of coverage they could afford to offer.

The Medicaid expansion provisions of the ACA are the surprise issue among those the Court will be hearing.  The states’ challenge has been rejected in lower courts, and the underlying “coercion” theory has been recognized by some lower courts, but never used by them, either, to invalidate any federal program.  In the case now before the Court, the Eleventh Circuit Court said that the theory exists, and if Congress is to have unlimited authority to spend despite that theory, “then the Supreme Court must be the one to say it.”

“Congress,” the states’ new brief said, “self-evidently could not impose the enormous burdens on the states envisioned by the ACA through direct compulsory legislation.  Thus, absent a limit on Congress’ ability to impose these same burdens through nominally voluntary exercises of the spending power, all other efforts to constrain Congress and preserve Our Federalism would be for naught.  In other words, a judicially enforceable outer limit on Congress’ power to use federal tax dollars to coerce states is not just consistent with this Court’s precedent; it is a constitutional necessity.”

If the Medicaid expansion “does not surpass that limit,” the brief added, “then no act of Congress ever will.”

Because the Supreme Court, in its modern rulings reinforcing state sovereignty by a new attention to “federalism,” has accepted the theory that Congress cannot command the states to pass laws that it wants them to enact, then Congress cannot achieve the same end by the conditions it imposes on states’ receipt of federal funds, the states contended.  “If Congress were free to use its spending power to coerce states into enforcing the federal government’s dictates, then the spending power would become the exception that swallows the anti-commandeering rule,” the filing said.

Going into detail on the “coercion” theory, the states’ brief drew a contrast with what Congress did in the Medicaid expansion with what it did in urging the states to set up new “health exchanges” where individuals and small businesses could shop for affordable health insurance.  If the states choose not to set up those exchanges themselves, the federal government will step in and do so, it noted.  “For Medicaid, there is no fallback.”   The states either must accept their new obligations to expand coverage to the poor, or they get no money not only for the expansion, but no money for any other aspect of the ongoing Medicaid program, the brief argued.

“The ACA threatens states with the loss of every penny of federal funding under the single largest grant-in-aid program in existence — literally billions of dollars each year– if they do not capitulate to Congress’ steep new demands,” according to the states.

The notion that states have the option of participating in the Medicaid program, on a voluntary basis, has been wiped out by the new requirements, the states asserted.


Recommended Citation: Lyle Denniston, States: “Coercion” theory is at stake, SCOTUSblog (Jan. 10, 2012, 5:36 PM),