jump to navigation

Federalism’s Silver Lining in the Healthcare Decision (Forbes.com) June 29, 2012

Posted by daviddavenport in Policy Articles & Papers.

Perhaps only an academic could appreciate theoretical victories on the battlefield of a major defeat.  But the 193-page U.S. Supreme Court opinion on the constitutionality of the healthcare reform bill does actually leave conservatives, and especially those concerned about states’ rights and federalism, some room for encouragement.

The 193-page U.S. Supreme Court opinion on the constitutionality of the healthcare reform bill does actually leave conservatives, and especially those concerned about states’ rights and federalism, some room for encouragement. (Photo credit: Wikipedia)

In fact, one could argue that conservatives won all the major constitutional battles in this case but, thanks to some deft footwork by Chief Justice Roberts, still managed to lose the war.  The big constitutional questions in this case were whether there are any limits to the federal government’s power under the Commerce Clause and the conditional spending power and, to each of those questions, a strong majority of the Court said “yes,” and moreover, held that Congress’ actions in this case exceeded those limits.

When this case was first brought, you couldn’t have found more than a handful of legal experts who thought there was a serious chance that the federal courts would rule the healthcare reform bill unconstitutional on commerce clause grounds, yet that is exactly what happened.  People laughed initially at the argument that not buying health insurance constituted economic inactivity and the commerce clause only allowed the regulation of activity, and yet that argument prevailed.  As Chief Justice Roberts wrote in his majority opinion:  “[T]he distinction between doing something and doing nothing would not have been lost on the Framers, who were ‘practical statesmen,’ not metaphysical philosophers.”  The Court’s conclusion in this regard is powerful and clear:  “The Framers gave Congress the power to regulate commerce, not to compel it.”

But of even greater practical significance was the Court’s holding that the federal government had, through its conditional spending power, unconstitutionally coerced the states into bending their Medicaid programs to the preferences of Congress.  The last major Supreme Court decision in this area, South Dakota v. Dole in 1986, addressed a state complaint that the federal government overstepped its authority when it said South Dakota would lose federal highway money if it did not raise its legal drinking age to 21.  Since the federal government has no constitutional power to set the legal drinking age, it was attempting to use financial leverage to get the states to follow its policy.  The Court held that Congress could deploy its spending power in this way, but that there was a limit, when the financial inducement was “so coercive as to pass the point at which pressure turns into compulsion.”  Not surprisingly, no case has found such a limit to have been reached in the 26 years since.

Today, the Court said the limit on the federal spending power had been improperly crossed by Congress in the healthcare reform bill.  Rather than the “relatively mild inducement” the Court found when five percent of South Dakota’s highway funds were at risk, today’s Court said that losing all of a state’s Medicaid funding was more like “a gun to the head.”  The Court noted that Medicaid spending accounts for over 20% of the average state’s total budget, whereas 5% of South Dakota’s highway funding was less than one half of one percent of its total budget at the time.  So we now know there is some limit beyond which the federal government may not go in withholding state funding to incentivize (bribe?) a state to do Washington’s bidding.

I can hardly wait for some states to follow this holding right back into court to challenge the federal takeover of K-12 education.  Over the last decade, beginning with President George W. Bush’s No Child Left Behind legislation to President Obama’s Race to the Top grants, the federal government has gone from the back seat to the driver’s seat in K-12 education policy.  What was only a decade ago cited as the classic example of a state or local policy matter, K-12 education is now dominated by federal testing and accountability measures, and now the beginnings of a national curriculum.  Although it falls somewhere between South Dakota’s share of federal highway money and the average state’s federal Medicaid money, the Court today opened the door for such a challenge.  Beyond the money, it is the kind of pervasive and dominating scheme that should be examined.  So this is not just a theoretical victory, but perhaps the setting of a practical stage for more state challenges to federal power.

In the end, having won these Constitutional victories, the states and conservatives lost the case because of clever maneuvering by Chief Justice Roberts.  He undercut the commerce clause argument by finding that Congress had the taxing power to regulate healthcare, even though the federal government itself said this wasn’t a tax.  And he cushioned the blow of the Medicaid provision by saying that Congress could only withhold new Medicaid funding, not existing funding, and that Congress surely intended the law to shift to that ground if the Court found any part of the Medicaid funding issue to be unconstitutional.

The high road reading of Roberts’ decision was that he himself was acting conservatively, citing the Court’s appropriate “reticence to invalidate the acts of the Nation’s elected leaders.”  Still, especially when the presumed swing vote of Justice Anthony Kennedy went with the conservatives, it was a bitter disappointment that Roberts went out of his way to rewrite and reinterpret legislation in order to save it.  Still, despite the loss, states’ rights and federalism made significant gains in this decision, and live to fight another day.

To view the Forbes.com article please click on the link:  http://www.forbes.com/sites/daviddavenport/2012/06/29/federalisms-silver-lining-in-the-healthcare-decision/


%d bloggers like this: