Thursday, March 29, 2012

"Wow! WOW!"

Marty Lederman

That was Justice Kagan's reaction to the logic of the States' extradorinary Medicaid argument yesterday afternoon. (Check out the first three minutes of the audio.) And her incredulity is entirely justified, as I explained here a couple of days ago.

During the argument, the Chief Justice and Justice Scalia, as well as the plaintiff States' attorney Paul Clement, tried repeatedly to tamp down the "Wow" factor by invoking the analogy of the classic ultimatum: Holding a gun to the states' heads and saying "Your money or your life." Which would be an apt analogy . . . except that there's no gun here, and the States's argument is not based on any federal demand for (or commandeering of) the States' money. What the States are complaining about, instead, is a case of "Take our money, and spend it to provide aid to your citizens in the manner we determine or . . . you can't have our money."

At issue here is an offer by Congress to give the states hundreds of billions of dollars--Justice Kagan wasn't exaggerating when she referred to a "boatload" of money (indeed, it's a shipload)--on the condition that the states spend the money, as they have since Medicaid's inception, on the categories of needy persons identified by Congress, for the medical services the legislature prescribes. This is a much larger boatload of money than Congress has offered in the past--approximately $443 billion dollars more. And Congress determined that those additional hundreds of billions are to be spent on a new category of beneficiaries, not previously covered by Medicaid--namely, individuals under age 65, not receiving Medicare, with incomes up to 133% of the poverty level.

The objecting States don't think federal dollars should be spent on this new population of Medicaid recipients. What they are asking for, then--as a matter of constitutional right--is not the control of "their money" or "their life," but instead the freedom not to spend the federal dollars on that new population . . . but to be entitled nonetheless to re-up the deal they had previously enjoyed with the federal government. In particular, they insist that the Constitution entitles them to accept only the percentage of the federal billions Congress is offering that corresponds to the beneficiaries the States deem worthy of Medicaid protection. The "threat," such as it is, is thus that the federal government might cease giving the states Medicaid dollars to serve the populations who were Medicaid beneficiaries in years prior to the ACA, if the states refuse to use additional hundreds of billions of federal dollars to benefit the expanded set of beneficiaries. That is to say, it's an extremely generous offer, with almost no strings attached, but it's an all or nothing offer.

To use a variation on Justice Kagan's hypo: Imagine a law school hires a professor to teach Property for one year, at a salary of $200,000. The school informs the teacher, however, that it reserves the right to alter, amend or rescind the arrangement in any future years. The teacher takes the job, and it's an excellent fit: she is rehired to teach Property each year for decades on end. Every so often, the school assigns her new responsibilities, and gradually increases her salary accordingly. The teacher becomes very invested in the job; she's put a lot of time and energy into it, has made a lot of close friends and colleagues, and has shaped her life around it.

Then, decades into the arrangement, the school determines that it now needs someone who teaches both Property and Intellectual Property. It offers the existing teacher a raise to 10 million dollars if she will teach both classes. She hates IP, however, and wishes only to teach Property--and she's willing to continue to do so for her current salary. Sorry, says the school, it's both classes (and the $10 million), or neither. The teacher loves her current job so much that she reluctantly takes the $10 million, and teaches both classes.

Does that sound like "your money or your life"? Is the $10 million a dangerous weapon?

"Your money or your life" is a classic example of a choice between two options, neither of which the ultimatum-maker has the legal right to demand. The parallel in Supreme Court case law was the "take title" provision of the Low Level Radioactive Waste Policy Amendments Act (LLRWPAA), which the Court declared invalid in New York v. United States, 505 U.S. 144 (1992). That provision required New York to either legislate a solution to the problem of radioactive waste within its borders or take title to the waste and become liable for all damages associated with it. That choice between the two commands--neither of which Congress could impose sanding alone--was "no choice at all," Justice O'Connor explained. "Your money or your life" was the appropriate (if hyperbolic) analogy there.

Then there are middle-ground cases, in which one side of the choice is a demand that could not be imposed standing alone, but the other option is acceptance of a federal benefit, rather than another command. As the Solicitor General noted in his argument yesterday, there is at least one historical example in which the Court held that such a federal inducement to a State was unconstitutionally coercive because the condition--the "demand" side of the offer--cut too close to the core of state sovereignty. That was in Coyle v. Smith, 221 U.S. 559 (1911), where Congress had offered the territory of Oklahoma admittance to the Union as a State on the condition that its capital be located in the city of Guthrie (current pop.: 10.191). Most of the time, however--and in every challenge to federal spending conditions ever litigated--such "inducements" are constitutional, even when the condition is an exercise of state authority over which Congress has no article I authority. I canvass the leading such cases in my previous post. Most importantly, in New York itself, the Court described the spending choice in the LLRWPAA as one of the "variety of methods, short of outright coercion, by which Congress may urge a State to adopt a legislative program consistent with federal interests.” 505 U.S. at 166. The Court thus upheld that Spending Clause provision, even while it was invalidating the "no choice at all" take-title provision.

But Medicaid is not even one of those middle-ground cases. The requirement Congress is imposing, as a condition of the states being able to receive the portion of the Medicaid "boatload" they desire, is not that a state move its capital (Coyle), or tax its citizens (cf. Steward Machine), or legislate an unpopular solution to a vexing problem (New York), or prohibit its teenagers from drinking (Dole). It is only that the states use the entire boatload of the federal dollars, including the $443 billion for new beneficiaries, to provide the medical care for which those dollars are being offered.

As Justice Kagan said, that isn't "anything but a great choice." And if that generous offer is unconstitutionally "coercive," then, well . . . WOW is right.

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