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Coercion

By Dr. Nilesh Kalyanaraman
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The Supreme Court heard arguments last week brought by 26 states against Obamacare (it IS catchy). One of the many good things in the health care reform law is the expansion of Medicaid to include everyone who makes up to 133% the federal poverty level. The federal government will fund 100% of the cost starting in 2014 when the expansion goes into effect. Over the subsequent years the federal government will slowly pay less each year until the year 2020 when it’s contribution levels off at 90%.

 

Some of you may think that’s a great deal for the states. To cover the poorest of its citizens, states only need to pay 10% of the cost from 2020 onwards. Of course, Medicaid has rules and states would have to adhere to them but that’s what usually happens when someone gives you a chunk of money.

 

I’ve been following this case closely but I have to admit that I was surprised to find out last week that the lawyer for the 26 states argued that the Medicaid expansion was unconstitutional. Here’s the lawyer for the 26 states, Paul Clement, on what the constitutional issue is:

The constitutionality of the Act's massive expansion of Medicaid depends on the answer to two related questions. First, is the expansion coercive? And, second, does that coercion matter?

 

And here is Paul Clement on what constitutes coercion:

One is the sheer size. Two is the fact that this statute uniquely is tied to an individual mandate which is decidedly nonvoluntary. And three is the fact that they've leveraged the prior participation in the program, notwithstanding that they've broken this out as a separately segregated fund going forward...

 

I am at a loss as to what the constitutional principle is regarding coercion between the federal government and the states. The argument seems to be that if a deal is so good that it can’t be turned down, it’s coercion. To my mind this argument sounds political in nature but if anyone can explain the constitutional issue at hand please leave a comment. (Make sure you cite the relevant case.)

 

The first point, that the size of the program makes it coercive, is bogus. As some of the justices correctly noted, big problems require big solutions so when you’re dealing with a problem on the scope of health care, the costs are huge. The irony is that Medicaid is one of the cheapest ways to provide for health care in this country and the cost per beneficiary is lower than in private plans.

 

The second point is that because the Medicaid expansion is tied to the individual mandate, which is nonvoluntary, it coerces the states to participate in Medicaid. If that state refuses Medicaid money it would then need to find a way to provide health coverage for it’s citizens through state health insurance exchanges in order to comply with the law. Since there is a choice in how states choose to comply with the law there is no coercion. It would be infinitely smarter to participate in Medicaid than not but there are two choices available. Also, it should go without saying, that the federal government routinely enacts laws that states have to comply with and this law is no different.

 

The third point is that because the states are already participating in Medicaid, if they don’t accept these new conditions then they’ll lose all their Medicaid money. The conditions for Medicaid coverage have changed before and can change in the future if Congress passes a law to do so. This is Congress’s prerogative and states are free to leave the program if they want to. Once again, this seems to be a political issue, how much can the federal government change the terms under which it gives money to the states, not a constitutional issue.

 

It’s dispiriting to think that such a plainly political argument is being made at the level of the Supreme Court. It’s even worse that it’s being entertained by the justices. More importantly, we have a lot more work to do if states are fighting to not care for the poorest of their citizens even if the cost to them is relatively small.

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