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Argument recap: Will Medicaid be sacrificed? (FINAL UPDATE 7:08 pm)


Unless a closing oration by a top government lawyer stirs some real sympathy for the poor, the new health care law’s broad expansion of the Medicaid program that serves the needy may be sacrificed to a historic expression of judicial sympathy for states’ rights.  It probably would require the Court to be really bold, to strike down a program passed by Congress under its spending power, and to do so for the first time in 76 years, but the temptation was very much in evidence in the final round of the Court’s hearings this week on the Affordable Care Act.  If that happens, it probably would be done by a 5-4 vote.

Solicitor General Donald B. Verrilli, Jr., and his principal adversary this week, Washington attorney Paul D. Clement, took turns as the final minutes of the third day of argument wound down to make a plea to the Court to think more broadly about the coming decision on not only the Medicaid expansion, but on another key piece of the ACA: the individual insurance mandate that the Court had explored on Tuesday.  Verrilli edged toward the emotional, while Clement was crisp and blunt in making a final plea for the Court to sweep away all of the new law.   They stepped back as the Court left the bench, to start the task — far from easy — of sorting through four profound legal or constitutional issues they had heard beginning on Monday.

The Justices were actively engaged in what was the Court’s first full exploration in history of the theory — never put into actual practice — that the conditions that Congress attaches to money it hands out to the states can be so onerous that they deprive the states of their sovereign independence, coercing them into compliance with federal controls.   Chief Justice John G. Roberts, Jr., allowed the argument to run 25 minutes beyond the scheduled hour.  The end result was what appeared to be a very sharp division within the Court, straight along ideological lines, with the skeptics about this “coercion theory” quite conspicuously in the minority.

In fact, the final argument turned out to be two arguments — the Court’s four more liberal members dominated the first half, trying in a wide variety of ways to pick apart the coercion theory and Clement’s employment of that notion, and the Court’s four more conservative members (leaving out Justice Clarence Thomas, who remained silent as usual) controlling the second half, using a multiplicity of arguments (including the age-old stickup message of “your money or your life”) to defend the theory against Verrilli’s claim that the Medicaid expansion was no such thing.

If, as would be expected, Thomas wound up voting with the latter four, that could make a majority to give some new life to the states’ rights theory that Clement was pressing.  It definitely would be an exaggeration to suggest that those four were wholly and uncritically committed to the states-as-victims concept, but it also would be wrong to indicate that they would have any part in declaring the theory totally dead before it actually have been given any real life in the Court’s history of applying the Constitution’s Spending Clause.

What may give the conservatives some pause is that, once the Court started down the road of second-guessing Congress’s use of its spending authority, it would never hear the end of it.  So, if there does turn out to be an actual embrace of it in the health care case, it might be quite cautious.  For those Justices, the theory definitely moved on Wednesday from abstraction to potentiality, and perhaps to the threshold of reality.  The tough part of writing a decision to employ it would be to describe how it might be kept within bounds.   One facet of such a ruling, the hearing seemed to suggest, would be that the federal government — in imposing conditions on states’ use of federal dollars — would actually have to have made something that counts as a genuine threat — something that seriously affronted their dignity and sovereignty.

Clement tried his best, and that is usually very good, indeed, to show that the sheer size of the Medicaid expansion, its link to another form of coercion in the law — the individual insurance mandate — and its withdrawal of states’ discretion about who among the poor is eligible and what benefits they get, crossed the threshold into coercion.   And the threat he described was that, if states did not go along with the hugely expensive addition of millions to the Medicaid rolls, they faced the very explicit threat of losing every dollar they otherwise would receive from the federal government, for every aspect of their Medicaid program, old as well as new.  He talked of a threatening letter from the government to Arizona about losing $7.8 billion of money if it dropped out of the special program of medical care for children, related to Medicaid.

From Justice Elena Kagan’s opening questions about what could be coercive about the federal government offering the states “a boatload of money,” to Justice Ruth Bader Ginsburg’s comment that Congress has many times expanded Medicaid coverage and attached conditions, to Justice Stephen G. Breyer’s reading from the statute to argue that there would not be a total cutoff for a disobedient state, to Justice Sonia Sotomayor’s comment that a court would have no way to know where to draw a line beyond which coercion would be found, Clement spent most of his time trying to get out his points between repeated interruptions.

Justice Sotomayor probably came closest to exposing a potential weakness in the theory when she expressed her “greatest fear.”  She told Clement: “We’re going to tie the hands of the federal government in choosing how to structure a cooperative relationship with the states.  We’re going to say to the federal government, the bigger the problem, the less your powers are. Because once you give that much money, you can’t structure the program the way you want.’  It was a good counter to Clement’s emphasis on the size of the money that would be withdrawn from the states if they balked at the conditions laid down with the Medicaid expansion.

In fact, the liberal Justices’ challenges did cause Clement to pull back a bit, saying at one point that it would not be easy for the Court to draw a line, but that “it’s exceptionally important to draw that line, and this is a case where it ought to be easy to establish a beachhead, say that coercion matters…and you will have effectively instructed Congress that there are limits…”

Solicitor General Verrilli had barely started his side of the argument when Justice Scalia brought up the Court’s prior mention of the coercion theory, and asked what the government lawyer thought the Court had meant.  Verrilli said that it probably meant that coercion would exist only if a situation where the federal government imposed a condition that would cause “a fundamental transformation of the structure of state government in a situation in which the state didn’t have a choice.”

One of the Solicitor General’s tactics that simply did not work was his repeated effort to avoid direct answers by suggesting that the question involved a situation not present in this case.   The Chief Justice, in particular, seemed mildly irritated at that response, and pressed Verrilli hard to say whether he acknowledged any constitutional limit on potential coercion by the federal government, or whether any such Spending Clause limit that might be argued was “largely meaningless.”  The government lawyer said it depended upon the circumstances of a given case, so it was “very hard to say in the abstract” that there was coercion in a government funding program.

To a number of the conservative Justices’ questions about hypothetical government programs that they were suggesting might be coercive, Verrilli had a somewhat standard response: if the program allowed the states not to participate, as he argued repeatedly is the case with the Medicaid program, they would not be coerced.

Verrilli also had little success trying to head off questions about whether the government had the discretion to lay down a coercive threat to a disobedient state, as he countered with the argument that government officials had not done that but that he could not make a commitment right here and now that they would not have that option.  In particular, that seemed to irritate the Chief Justice, who said that the Court had to analyze the case on the assumption that the power would be exercised.  And, faced with such a threat, especially a threat of losing a lot of federal grant money, no state is going to say “okay, go ahead,make my day, take it away,” Roberts commented.  They are going to give in, he suggested.

Perhaps the most threatening point for the Solicitor General’s argument, and for the Medicaid expansion itself, was a comment by Justice Kennedy — whose vote, as is so often true with a divided Court, might be crucial.  Kennedy picked up on one of the points in Clement’s brief, that onerous conditions imposed in a federal grant program raised the threat that the people of a state would not know whom they could hold accountable if a state disobeyed a condition and lost its federal funding for an important public program.

That gave Kennedy an opportunity to talk about one of his favorite subjects: how the citizenry can know whom to blame when something goes awry in government, when the lines get blurred.   “Does federalism require,” Kennedy asked, “that there be a relatively clear line of accountability for political acts?  Is that subsumed in the coercion test, or is that an independent one”   Verrilli conceded that the coercion test was related to concerns about threats to federalism. Kennedy responded that it was “necessary for the idea of federalism that there be a clear line of accountability so the citizen knows it’s the federal or the state government should be held responsible for the program.”

The seeming significance of that exchange was that, if Kennedy were persuaded that the coercion theory was, indeed, a part of the accountability equation, then he might well embrace it.  It was not a promising moment for Verrilli.  Other comments by Kennedy later on indicated that he was warming to the theory.

As the Solicitor General was finishing his side of the argument, he urged the Court to step back from from a focus upon the Medicaid expansion and the individual insurance mandate as related to economic problems, and see the issues in the case more in human terms.  The programs, he said, had resulted in “millions of people not having health care because they can’t afford insurance.”  This, he went on, is related to human liberty — an idea that obviously was meant to counter the challengers’ argument that the new health care law threatened the liberty of all Americans.

“I do think it’s important that we not lose sight of that…In a very fundamental way, this Medicaid expansion, as well as the provisions we discussed yesterday [the mandate], secure of the blessings of liberty.”  The health care law, he said, was worked out after years of trying by a democratically elected branch of government, and the Court should respect that and uphold the entire law, he said, concluding.

Clement, in his rebuttal, made the legal points he wanted, and then addressed the closing remarks that Verrilli had made.  “I certainly appreciate what the Solicitor General says, that when you support a policy, you think that the policy spreads the blessings of liberty.  But I would respectfully suggest that it’s a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not.”

“And,” he wound up, “it’s a very strange conception of federalism that says that we can simply give the states an offer that they can’t refuse, and through the spending power which is premised on the notion that Congress can do more because it’s voluntary, we can force the states to do whatever we tell them to.  That is a direct threat to our federalism.”

After the Chief Justice thanked all of the lawyers, he then commented: “The case is submitted.”

The Court is expected to cast preliminary votes on the four health care issues heard this week, and then the opinion drafting process can begin.






Recommended Citation: Lyle Denniston, Argument recap: Will Medicaid be sacrificed? (FINAL UPDATE 7:08 pm), SCOTUSblog (Mar. 28, 2012, 6:56 PM),