Sunday, August 14, 2011

The Medicaid question

Now that the dust is starting to settle from Friday's decision in Florida v. HHS, I thought it might be worth examining a few aspects of the opinion in a bit greater depth, and with eye to what might be on the horizon. And I thought a good place to start would be the court's unanimous conclusion that the ACA's amendments to Medicaid are constitutional -- that they are not "unduly coercive," and thus do not amount to an unconstitutional "commandeering" of the states.

First, the court took pains to endorse the idea that the "coercion doctrine" (adverted to by the Supreme Court in Dole and Steward Machine) is a binding part of constitutional law. As the court remarked on p.63, "it is a mystery to us why so many of our sister circuits have" cast aside their "duty to apply it." This is a defensible, but not uncontroversial, conclusion. A close reading of Dole and Steward Machine reveals that there may not actually be any "coercion doctrine" as such. In both cases, the Court seems merely to assume the idea arguendo, and then hold that the challenged spending condition was constitutional regardless. Here, the Eleventh Circuit held that the doctrine does, in fact, limit Congress.

Second, the Court held that, although the doctrine exists, the conditions imposed by the ACA were not "unduly coercive." The court cited four specific reasons for its conclusion:

1. The Medicaid statute specifically and explicitly warns participating states (42 U.S.C. 1304) that Congress may "alter, amend, or repeal" any provision of the program.

2. The federal government will cover almost all of the costs of Medicaid coverage expansion (100% for the first few years, declining gradually to 90% in 2020 and beyond).

3. The states have four years' notice to decide whether they wish to comply with the new conditions or instead withdraw from Medicaid.

4. It is not a "foregone conclusion" that non-compliance with the ACA's Medicaid provisions will lead to a loss of all of a state's federal Medicaid assistance. See 42 U.S.C. 1396c.

"Taken together," the court concluded, "these factors convince us that the Medicaid-participating states have a real choice--not just in theory but in fact--to participate in the Act's Medicaid expansion." (P.67)

I generally agree with the court's legal conclusion that the ACA's Medicaid provisions are constitutional. But I have some quibbles with the first three factors cited by the court, and the fourth has some interesting implications. Addressing them briefly in turn:

1. It is true, the Medicaid statute contains an express warning to states that Congress might alter the terms of the program going forward. But this seems implicit in any federal spending program funded through annual appropriations. That is, it would seem odd if Congress's inclusion of such a boiler-plate provision affected the constitutionality of a law in any meaningful way. Congress modifies scores of spending programs that lack a similar provision, and I would think those revisions are just as constitutional.

2. True enough, Congress will cover most of the costs of coverage expansion. But the states' real coercion claim was that the total amount of all of their federal Medicaid assistance--all of which is at least jeopardized by the failure to adhere to the new ACA conditions--rendered nearly any significant alteration to Medicaid coercive. Understood this way, the federal assistance with Medicaid expansion is largely beside the point. It is the huge amount of funds that the states are already taking in (and have grown dependent on) that make the ACA's provisions coercive. (Indeed, Paul Clement stated at argument that, if anything, the additional funding provided in the ACA for coverage expansion made the coercion worse.) Thus, while true, this factor is largely beside the point, at least in answering the states' argument.

3. Again, the essence of the states' claim concerns the amount of funding at stake, and not the time it would take to make adjustments. There are some references in their papers filed in the district court about the ability to make an orderly transition to life without federal Medicaid assistance. But the briefs before the Eleventh Circuit were all about the money. And while time may solve many problems, it does not solve this one. Perhaps this point, more generally, suggests that so long as states have sufficient time to recalculate whether they want to participate in a federal spending program, there really cannot be coercion. That is fair enough. But if so, it also suggests that the amount of federal assistance at stake is immaterial.

The fourth factor seems right on point. If the coercion claim, at bottom, turns on the HUGE amount of federal assistance at stake, then the fact that CMS (or HHS or whomever) may not completely pull the plug on a state's FMAP dollars--that the Secretary has discretion to take much less drastic measures--is certainly relevant. But it implies two things: (1) the mere threat of complete Medicaid funding loss is not enough, in itself, to make the condition coercive, an important point in its own right; and (2) perhaps we have a different case in an as-applied challenge where CMS has, in fact, completely cut off a state from federal Medicaid assistance. (This possibility seems remote, not to mention counterproductive, but the logic of the Eleventh Circuit's decision leaves open such a possibility.)

In any event, given that this is the only lawsuit to raise the Medicaid "commandeering" question, and that all four judges to have faced the question have rejected the challenge on the merits, it seems a decent bet that that Supreme Court will simply deny certiorari if the states seek it. But there is one thing to keep in mind, as I mentioned Friday: the Court might prefer to have both constitutional questions before it, so it could render a decision that appears more "split" and less ideological. The severability question provides that opportunity as well, and perhaps that would be sufficient. But upholding Medicaid coverage expansion would potentially offer the Court's five more conservative justices even more political cover if, in the same ruling, they vote to invalidate the minimum coverage provision.

(Just to be clear, I am not suggesting that the justices necessarily consciously think in such blatantly political terms. My point is only that these dynamics might subtly influence how they view the case as a whole, and thus affect how they think subconsciously about the certiorari petitions.)