Justices Wrestle with Forced Medicaid Expansion on the States


Yesterday afternoon’s argument on the constitutionality of ObamaCare’s expansion of Medicaid began with critiques of the States’ argument, but ended with several justices expressing concern about the federal government’s use of its spending power over the States.

This final oral argument on ObamaCare was the first to go over its allotted time. It was extended by nearly a half-hour of argument, much of which came from questions at the end of Paul Clement’s argument on behalf of the States.

The first five minutes of the argument began as a colloquy between Clement and Justice Kagan on whether Congress’ offer of “a boatload of federal money for you to take and spend on poor people’s healthcare” is coercive. Justice Kagan concluded, “It doesn’t sound coercive to me, I have to tell you.” Justice Sotomayor joined in the questioning asking if “the States would have a claim against the Federal Government raising their taxes because somehow the States will feel coerced to lower their tax rate?”

Justice Breyer stated that he could not find where a State’s refusal of new money for Medicaid coverage under ObamaCare would allow the federal government to withhold all Medicaid funding to the State. He asserted that under his reading of the law:

[I]t’s up to the secretary whether, should a state refuse to fund the new people, the secretary will cut off funding for the new people, as it’s obvious the state doesn’t want it, and whether the secretary can go further. I also should think — I could not find one case where the secretary ever did go further, but I also would think that the secretary could not go further where going further would be an unreasonable thing to do, since government action is governed by the Administrative Procedure Act, since it’s governed by the general principle, it must always be reasonable.

Justice Scalia interrupted:

[D]o you agree that the government has to act reasonably? Do we strike down unreasonable statutes? My God! . . . The executive has to act reasonably, that’s certain, in implementing a statute; but, if the statute says, in so many words, that the secretary can strike the whole — funding for the whole program, that’s the law, unreasonable or not, isn’t it?

Justice Ginsburg asked Clement, “You are — you are saying that because you represent a sizeable number of States, you can destroy this whole program, even though there may be as many States that want it, that don’t feel coerced, that say — think this is a good thing?”

Justice Sotomayor stated her biggest issue with the States’ argument that the Medicaid expansion is unconstitutionally coercive:

I guess my greatest fear, Mr. Clement, with your argument is the following: The bigger the problem, the more resources it needs. 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.

Clement responded that the coercion comes when “they decide they’re going to totally expand the program, and they say that you have to give up even your prior program, where we — first came in and offered you cooperation, we’re now going to say you have to give that up if you don’t take our new conditions.”

Chief Justice Roberts asked about the coercive choice the federal government has given the states: “Is it the amount that’s being offered, that it’s just so much money, of course you can’t turn it down, or is it the amount that’s going to be taken away if you don’t take what they’re offering?” Clement responded, “It’s both.”

Chief Justice Roberts, Justice Alito, and Justice Scalia asked the federal government for an example of government coercion under the spending power. The Chief Justice specifically asked, “So do you think it would be all right for the Federal Government to say, same program: States, you can take this, or you can leave it; but, if you don’t take it, you lose every last dollar of Federal funding for every program?”

Chief Justice Roberts asked for an assurance from the federal government that it would not revoke the States’ funding for refusal to participate in the new program. He ask, “[W]hy shouldn’t we be concerned about the extent of authority that the government is exercising, simply because they could do something less? We have to analyze the case on the assumption that that power will be exercised, don’t we?”

When the federal government responded that state funds had never been cut off for failure to cooperate, Justice Roberts interjected, “It’s been used to threaten . . . . Of course no State is going say, okay, go ahead, make my day, take it away. They’re — they’re going to give in.” He continued, “[T]hat’s just saying that when, you know, the analogy that has been used, the gun to your head, ‘your money or your life,’ you say, well, there’s no evidence that anyone has ever been shot.” He further reminded the federal government, “[Y]ou cannot represent that the Secretary has never said: And if you don’t do it, we are going to take away all the funds.”

Justice Alito added that if the objective of ObamaCare is covering everyone then is it realistic to think the federal government would not threaten to remove all funding from a State that failed to cooperate. He asked, “[I]t’s a realistic possibility the Secretary is going to say, well, okay, fine, you know. We are going to cut off your new funds, but we are not going to cut off your old funds, and just let that condition sit there?”

Justice Kagan stated, “I think that this question about are we — what do we think the Secretary is going to do is an important one.” However, she said that she believed “when the Secretary withdraws funds, what the Secretary is doing is withdrawing funds from poor people’s health care, and that the Secretary is reluctant and loathed to take money away from poor people’s health care. And that that’s why these things are always worked out.”

Chief Justice Roberts cautioned, “I don’t think you can deny that it’s a significant authority that we are giving the Federal Government to say, you can take away everything if the States don’t buy into the next program.”

Justice Kennedy asked:

[D]o you agree that there still is inherent and implicit in the idea of federalism, necessary for the idea of federalism, that there be a clear line of accountability so the citizen knows that it’s the Federal or the State government who should be held responsible for their program? . . . And does coercion relate to that, or is that a separate . . . doctrine?”

Justice Scalia poignantly asked:

Doesn’t the question come down to this . . . Is it conceivable to you, as it was evidently not to Congress, that any State would turn down this offer, that they can’t refuse? Is it conceivable to you that any State would have said no to this program? Congress didn’t think that, because some of its other provisions are based on the assumption that every single State will be in this thing. . . .

Now, do you — can you conceive of a State saying no? And — and if you can’t, that sounds like coercion to me.

Justice Alito added, “So Congress obviously assumed — it thought it was inconceivable that any State would reject this offer, because the objective of the Affordable Care Act is to provide near-universal care. . . . And when — when that’s the case, how can that not be coercion?” When the federal government argued that it is not coercion; it’s “extremely generous offer of funds,” Chief Justice Roberts responded, “If it’s such a good deal, why do you need the club?”

Justice Kennedy joined in skepticism of Justices Scalia and Alito and Chief Justice Roberts, stating, “There’s no real choice. And Congress does not in effect allow for an out — opt out. We just know that.”

You can listen to yesterday’s final oral argument here or read the transcript here. You can learn more about the ACLJ’s legal analysis of the Medicaid issue here.

Matthew Clark is an associate counsel with the ACLJ in Media and Government Affairs.

Used with the permission of the ACLJ.