JURIST Guest Columnist Nicole Huberfeld of the University of Kentucky College of Law says that the oral arguments made before the Supreme Court regarding the Medicaid expansion of health care reform evidence a troubling lack of understanding of the Court’s prior decisions in this area…

Medicaid remains the black sheep of the health care reform litigation. Before the six-and-a-half hours of oral argument at the end of March, commentators focused primarily on whether Congress may require a minimum level of health insurance coverage. Even the number of amicus briefs filed (about 23 on the Medicaid issue versus about 78 on the “individual mandate”) indicates lack of attention to the spending question in Florida v. US Department of Health and Human Services. Both Solicitor General Donald Verrilli and Paul Clement referred to Medicaid as Medicare, a blunder that may be natural after three days of arguments. But, such stumbles suggested a lack of understanding of both spending doctrine and the Medicaid expansion and do not bode well for the Court’s decision-making processes.

To appreciate the spending foibles, it helps to understand that the states’ position largely relies on dicta from South Dakota v. Dole that a point may exist where “financial inducement offered by Congress might be so coercive as to pass the point at which ‘pressure turns into compulsion.'” Dole outlined a four-part test for constitutionality of conditions on spending, commanding that the spending be for the general welfare; the conditions be clear and unambiguous; the conditions be related to the purpose of the spending (“germaneness”); and that the conditions themselves not be unconstitutional. The second and fourth elements have carried the burden. In fact, the Court has never invalidated spending legislation based upon general welfare, germaneness or coercion theory; so, the states requested that the Court “fashion” a coercion doctrine.

Though Chief Justice Rehnquist deemed it an easy case, Verrilli did not discuss Dole accurately during oral arguments. When asked about “political accountability” in spending programs, Verrilli replied that he thought Justice O’Connor addressed this issue in her dissent in Dole. Not so. Justice O’Connor’s dissent disagreed with the majority’s application of the germaneness element. In Dole, the question was whether drinking age of 21 was related to federal highway funding because it would make roads safer. Justice O’Connor wrote that germaneness required a closer nexus between the condition and the spending, so that the federal government was not using the spending power to regulate subjects beyond the scope of the spending. The states have not challenged the germaneness of the Medicaid expansion. Also, Verrilli stated that South Dakota stood to lose seven percent of its highway funding when in fact it could lose five percent. The larger point, that the state would only lose a small portion of its funding, remained the same. But, the lack of attention to detail for the dominant spending case is disconcerting.

Clement maintained that Congress knew the states would not reject the Medicaid expansion and that Congress’s reliance on continuing state participation in Medicaid proves Congress’s objective to coerce the states. This view confuses calculation with coercion, as if Congress’s prediction that states will stay in Medicaid somehow reflects nefarious intent to keep states in the program by offering no other alternative. Dole, however, does not require that states be given a menu of options, only the choice to accept or reject federal funding. How Congress handles a hypothetical rejection does not reflect the offer’s appropriateness. Congress reasonably expects states’ continued participation because history establishes that they benefit from Medicaid enough to continue participating; after all, every time Medicaid was expanded over the last 47 years, the states have stayed in the program.

Medicaid was also mischaracterized and flubbed in several ways. A few examples: Clement repeatedly minimized Medicaid as covering the “visually impaired and disabled,” when these are just two of the categories of “deserving poor” that have historically been covered (also included are pregnant women, children, parents and the elderly). Clement asserted that not all states cover prescription drugs when in fact all states opt to cover some prescription drugs. Clement also mischaracterized the limited coverage of the Medicaid program, claiming it was intended to protect the states. Medicaid was limited because Congress adopted antiquated ideas regarding which impoverished citizens deserve public help (a concept dating to the Elizabethan Poor Laws). States’ rights have been a factor in Medicaid but are reflected in options and waivers, which expand rather than limit the program (and contribute greatly to its cost).

Verrilli seemed unable to explain why the Secretary of the Department of Health and Human Services (HHS) has never withdrawn all Medicaid funding from a state that fails to comply with the Medicaid Act. Quite simply, such withdrawal would hurt the people intended to benefit from the program more than it would hurt a state, so HHS prefers negotiation and encouragement. Furthermore, Justice Breyer misstated the start date of Medicaid, a surprise given that he authored the majority opinion in Douglas v. Independent Living Center, the other Medicaid case this term.

Chief Justice Roberts and Justice Kennedy appeared to contemplate a New York v. US “accountability” analysis as a way to draw the contours of coercion. This would misread New York and its acceptance of federal spending as a way to influence states. In New York, the Court explained that the federal government may not “commandeer” the states because if the states enact legislation at the federal government’s command, voters ostensibly will not know which legislative body to penalize if they do not like the resulting policies. This concept does not align with the nature of a conditional spending program, which inherently requires the federal government to offer the states enough money that they want to participate in, and often enact laws to advance, a federal policy goal. Even if the federal government offers the states very large sums of money, it does not mask the state’s choice to accept that money. And, if the federal government must cut funding, then the state has a reason to leave the program. Either way, state voters know that the federal government is driving the Medicaid program changes.

Any of these gaffes, taken individually, seems small. Taken in the aggregate, it is hard to see how the Court can get the question of coercion right when so much discussed at the Court was wrong. To invalidate not only the Medicaid expansion, which finally will include all of the nation’s poor in our safety net, but also all of the Patient Protection and Affordable Care Act (as the states ask) based upon so many mistakes could be the worst blunder of all.

Nicole Huberfeld is the Gallion & Baker Professor of Law at the University of Kentucky College of Law and a Bioethics Associate with the College of Medicine. Her scholarship focuses on the cross-section of constitutional law and federal health care programs with a particular interest in federalism and Spending Clause jurisprudence.

Suggested citation: Nicole Huberfeld, Medicaid in the Supreme Court: Small Errors, Big Problems, JURIST – Forum, Apr. 21, 2012, http://jurist.org/forum/2012/04/nicole-huberfeld-medicaid.php.