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A giant hole in the safety net?


The modern welfare state, one in which a socially sensitive Congress has been eager to soothe the pangs of poverty, hunger, disease and aging, has created a huge safety net, but people keep falling through it.  It definitely has not been as sturdy as Congress or the advocates for society’s neglected, outcast or under-served had wanted.   The question, in the wake of Thursday’s compromise decision by the Supreme Court, salvaging a part of Congress’s massive expansion of the Medicaid program for the poor, is whether a gaping new hole has been opened in that net.

If there is a hole, huge or less so, it has a name: the “coercion” theory.   Seven Justices of the Supreme Court, rescuing that theory from the back of history’s closet where it has remained totally unused, embraced at least a version of the idea that Congress can make life so tough for its state partners in a joint social welfare program that it violates the Constitution.  In the form outlined in the opinion by Chief Justice John G. Roberts, Jr., it can be thought of properly as a new doctrine of states’ rights, or of federalism.

Congress, in the Affordable Care Act, sought to bring some 17 million more of the nation’s low-income individuals into the giant Medicaid program by the year 2021, with the first 9 million coming in by 2014.  This was definitely a part of the overall scheme to achieve nearly universal health insurance coverage.  And Congress greatly expanded who was eligible to get in, with the expectation that overall Medicaid spending of federal funds would rise by $100 billion a year, 40 percent above the current rate.

Some 26 states balked, arguing in their constitutional challenge that their share in such an expanded joint program would bust their budgets.  But the core of their constitutional complaint was that the expansion ran headlong into the “coercion” theory.  That is something the Supreme Court had mentioned a few times since 1937, when it first coined the idea, although it had never put the theory to work to scuttle a federal spending program (that is, one enacted under the constitutional grant to Congress to raise and spend federal revenue).

The theory had been so neglected that no federal court considering challenges to the Medicaid expansion thought it worked against those provisions.  That is why nearly everybody — that is, everybody but the Supreme Court — thought the Justices would not even review the challenge to the new Medicaid scheme.  .

Those who have followed the Court’s docket over the years have been aware that state governments had made repeated attempts to employ the “coercion” theory against conditions that were attached to a federal spending program, and yet the Supreme Court had not once taken on such a case.   It was the surprise of the day, then, when the Justices did grant review of the ACA challenges on November 14. To some observers, the mere fact that the Court was willing to ponder the issue suggested that the expansion might be vulnerable.

And so it was.   When Thursday’s decision emerged, with three votes in the majority opinion by Chief Justice Roberts, plus the four votes of the dissenters who wanted to strike down the entire ACA, the “coercion” theory got its very first application.  Supporters of the safety net in coming days will no doubt be raising the alarm about what this means, as they started to do the day after the Court took on that question last fall.  When they ponder the specifics of the new ruling, they may well be most threatened by a few comments written by Chief Justice Roberts.

Harking back to the 1937 decision in Stewart Machine Co. v. Davis, the first time the Court mentioned the theory, Roberts noted that the Court there “did not attempt to ‘fix the outermost line’ where persuasion gives way to coercion….We have no need to fix a line either.  It is enough for today that wherever that line may be, this statute is surely beyond it.  Congress may not simply conscript state agencies into the national bureaucratic army,…and that is what it is attempting to do with the Medicaid expansion.”

Repeat those words: “We have no need to fix a line…”

The line, though, was drawn at least for Medicaid this time.  Here is where that line was: Congress may pass a law that extends money to state governments for a social welfare program, and it may attach conditions, but one of the conditions that cannot be imposed is that a state must join in the expansion of that program and obey all of its conditions however demanding or lose all of the money it would otherwise be entitled to under the program as it existed before the expansion.

But if that is not the “outermost” limit of the line, what is?   The Court, of course, did not say.  And in this area of constitutional understanding, not knowing can be quite threatening.  What must Congress take into account when it crafts a new social welfare program, or expands an existing one, and attaches conditions that state partners must obey?   At one point do those conditions intrude on the free choice of the states?  At one point is the states’ sovereignty and dignity impaired or threatened?

The Court, to be sure, did not wipe out any part of the expansion, other than this threat of a total fund cut-off to an unwilling state.   That was because the Chief Justice and the two who joined in that part of his opinion — Justices Stephen G. Breyer and Elena Kagan — were not willing to nullify anything other than the offending condition, and two other Justices (Ruth Bader Ginsburg and Sonia Sotomayor) wanted to uphold all parts of the Medicaid expansion as is.  That made it 5-4 to keep the terms of the expansion intact, without the fund cut-off threat.

In effect, the Roberts compromise left it up to the states to choose whether to take the added money available to fund the expansion, and thus submit to the fund cut-off condition, or to confine their participation in the Medicaid program to its existing limits within each state.   In the existing program, without the expansion, a state need not open its Medicaid program to all adults under age 65, if their income level is no higher than 133 percent of the federal poverty line, as would be the case is states joining in the expansion.

At this point, it is unclear how many of the projected 9 million poor people that would have been brought into the program will not become eligible, because some states opt to stay with their existing coverage formulas.

When a future spending program, with tough conditions attached, reaches the Supreme Court, because some states have objected about what they were claiming would be “coercion,” the deciding vote will be with the Chief Justice (assuming the Court’s membership does not change).  He would likely have the four votes of Thursday’s dissenters, if he chose to react negatively to a tough condition.   And it would not make any difference if he then lost the support of the two more liberal Justices who joined in the new ruling against the new Medicaid condition.

Under that scenario, then, the decision on Medicaid may not be the “outermost limit” of the “coercion” theory, after all.


Recommended Citation: Lyle Denniston, A giant hole in the safety net?, SCOTUSblog (Jun. 28, 2012, 8:55 PM),