The Supreme Court's ObamaCare surprise issue

Article Highlights

  • SCOTUS allots an unprecedented 5.5 hrs for oral argument on four separate #ObamaCare issues

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  • Overturning Medicaid coercion parts of Obamacare would have huge effects not just for health care laws but for all federal aid legislation

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  • Has Obamacare reduced the federal government’s power to impose one-size-fits-all regimes of all kinds?

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The Supreme Court has agreed to hear cases challenging the constitutionality of Obamacare and has allotted an apparently unprecedented five and a half hours for oral argument on four separate issues. The fourth probably comes as a surprise to many, though not to attentive readers of this blog. The Court allotted one hour to determining whether the new terms and conditions that Obamacare imposes on states’ continued participation in Medicaid are an unconstitutional exercise of federal power. This is an issue I discussed in a June 6, 2011 Beltway Confidential blogpost. The issue of Medicaid coercion (to give it a shorthand name) was raised in an amicus brief in the Eleventh Circuit Court of Appeals case by Vanderbilt law professor (and my law school classmate) James Blumstein. Here’s what I wrote back in June:

"In their attempt to impose a one-size-fits-all health care regime on the whole country, they may have reduced the federal government’s power to impose one-size-fits-all regimes of all kinds."--Michael Barone

“The law requires that states expand Medicaid to cover by 2014 all persons with income below 133% of poverty; the only alternative is for states to opt out of Medicaid entirely and relinquish the federal dollars that come with it."

“In 1981 the Supreme Court in Pennhurst State School and Hospital v. Haldermann ruled that while the federal government could require states to fulfill specific conditions in order to receive federal dollars under aid programs like Medicaid, the federal government could not sharply change those requirements. These programs are in the nature of a contract, the Court said, and terms which the federal government could demand at the formation of such a contract could not be added as a requirement by modification of the contract. In a contract case, for example, sailors could demand a certain wage before leaving port to which the shipowner could agree. But it’s unfair for the sailors to modify that by demanding much more money when the ship has reached the fishing grounds.  Similarly, Blumstein argues, Obamacare’s substantial changes in Medicaid, made after states have become dependent on federal dollars to maintain their existing programs, constitutes an unfair modification of a preexisting contract. The states have acted in reliance on the previous contract and done things they would not otherwise have done, leaving them vulnerable to grave damage if the rules are changed in the middle of the game.”

A Supreme Court decision overturning the Medicaid coercion parts of Obamacare, or even language in a decision overturning the whole law suggesting that this provision fails to pass constitutional muster, would have enormous ramifications not just for health care legislation but for federal aid legislation of all kind. Congress and administrations of both parties have expanded many federal programs of all kinds by requiring the states to meet new terms and conditions or forfeit the right to additional federal funds. A decision against Medicaid coercion might cast a pall over the validity of all such existing legislation and would make it more difficult if not impossible for Congress to pass such legislation in the future, on issues ranging from federal aid to education to requirements in transportation bills that states set specific speed limits or blood alcohol limits in drunk driving laws in order to receive federal funds. In other words, a blow would be struck at federal power and states would have more power to make decisions for themselves on a wide range of issues.

Pretty high stakes, and stakes that I suspect the drafters of Obamacare never gave a thought to. In their attempt to impose a one-size-fits-all health care regime on the whole country, they may have reduced the federal government’s power to impose one-size-fits-all regimes of all kinds.

Michael Barone is a resident fellow at AEI

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