Friday, June 10, 2011

Revisiting the Medicaid question

Perhaps the most interesting--and surprising--development from Wednesday's hearing at the Eleventh Circuit was the panel's apparent interest in the question whether the ACA's Mediciad amendments are coercive, and thus amount to an unconstitutional commandeering of the states.

At the outset, here are some indications of the court's interest. First, in introducing the argument. Chief Judge Dubina stated that the panel found the questions of the constitutionality of the individual mandate and the ACA's Medicaid provisions "equally difficult." Second, both Dubina and Judge Marcus stated that they believed the coercion aspect of Dole, despite several circuit court decisions to the contrary, most definitely remains a binding element of constitutional doctrine. Third, Judge Marcus went so far as to ask Paul Clement whether, if the panel finds the Medicaid provisions unconstitutional, those provisions could be severed from the individual mandate or the rest of the ACA. In short, it is obvious that the court is taking quite seriously the states' claim that the ACA's expansion of Medicaid is unconstitutional.

As to the substance of the claim, Clement stated that there were two reasons (or perhaps three) that the ACA's expansion of Medicaid is coercive: (1) "the sheer volume" of the federal dollars at stake, and (2) the fact that the spending conditions imposed by the ACA "are not linked to the new money," but instead jeopardize all of a state's Mediciad dollars.

The potential third reason--though it is unclear whether it a reason for unconstitutionality, or instead a limiting principle, which would allow the court to invalidate the ACA's Medicaid provisions without throwing into doubt hundreds of other federal spending programs--is that the architecture of the ACA assumes that the Medicaid conditions are coercive. As stated by Clement, the Act has "no Plan B" for those Americans (under 65) who fall below 138 percent of poverty in the event a state actually withdraws from Medicaid. More specifically, the ACA (a) imposes an individual mandate on all Americans to acquire health coverage, (b) applies that mandate to everyone, including Americans below the poverty line, but (c) provides no subsidy for those persons falling below the poverty level (though it does provide subsidies for those between 133% and 400% of poverty). Thus, the ACA on its face assumes that every state will comply with the Act's Medicaid conditions, for this is the only way envisioned by the Act for indigent Americans to satisfy the mandate.

That is the argument, at least as I understand it. Now, it is unclear to me--at least at first blush--why the fact that Congress believes that every state will comply with a spending condition renders it coercive as a matter of law. One might also look at the ACA and say, "Boy, they really have a problem if one of the states decides not to go along," and thus think that Congress has left a pretty big hole in the Act. But Clement seems to be right in the sense that this sort of legislative scheme--whose effectiveness assumes and depends on the states' decision to accept the spending conditions--is unusual, if not unique.

We are still left with the basic problems with the overall coercion argument, though. The Supreme Court has never indicated that there is a particular problem in changing the conditions of a federal-state program, where new conditions attach to dollars that had previously been flowing to states in prior fiscal years. Indeed, that was precisely the case in Dole. Thus, the argument cannot rest on that factual circumstance alone, but that circumstance in combination with the "sheer volume" of the federal dollars at stake. A significant problem with that argument--perhaps one among many--is that it implies that any change to Medicaid imposing a condition to "preexisting dollars" would be unconstitutional. Indeed, all of the amendments to Medicaid over the past 20 of 30 years would presumably be unconstitutional, for they, too, attached to the preexisting streams and jeopardized all of a state's Medicaid funding (and the "sheer volume" of that Medicaid funding has been enormous for quite some time).

The one aspect of the Medicaid argument that I have yet to fully digest concerns what Clement said about the ACA's "maintenance of effort" provisions. These parts of the Act basically require states to lock in place the scope of their coverage as of the moment the ACA was passed, even though states had defined the scope of that coverage voluntarily and without knowledge as to the future consequences of those decisions under the ACA. This is the one aspect of the ACA that seems to raise traditional, contract-based reliance concerns among the states. So I want to think about how this affects the analysis a bit more. Otherwise, though, I do not think the argument has fundamentally changed the terms of the Medicaid question.

In all events, there is now much more action on the Medicaid front in this case than most had anticipated. And this just adds to the reasons that this case is the one probably most likely to go up to the Supreme Court.