The Great Dissent Part IV: Why Medicaid Expansion is Unconstitutional


ACRU Staff


July 12, 2012

This column by ACRU Senior Legal Analyst Ken Klukowski was published July 12, 2012 on

We can all be thankful that one thing the Supreme Court got right in the Obamacare decision was striking down at least part of the Affordable Care Act’s massive expansion of Medicaid that would reduce the states to a subservient position before the federal government. Even two liberals–Justice Stephen Breyer and President Barack Obama’s second appointee, Justice Elena Kagan–joined Chief Justice John Roberts’ opinion invalidating a key provision in the ACA. But the four dissenters who wrote the Great Dissent would have gone further, striking down the entire expansion as an unconstitutional coercion of the states which violates the Tenth Amendment.

Following my overall analysis of the Obamacare decision, we decided to take up the call of the four dissenting justices, that this case should be a historic teaching opportunity to impress upon the American people the structure and nature of the Constitution and how its limits on government are to ensure the liberty and happiness of the American people by keeping government out of their lives.

Here is the fourth part of our five-part series on the Great Dissent. Part I discussed the dissenting justices’ conclusion on why Obamacare must be struck down, and Part II explained why the Commerce Clause does not authorize the Individual Mandate. Part III explained why the Individual Mandate is not a tax, and why Mitt Romney was right both in saying that it was not a tax, but that it is one now because of the Supreme Court’s stunning redefinition of the word “tax.”

From Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito in NFIB v. Sebelius (omitting case names, citations, punctuation, and editing marks):

We now consider [the 26 States’] second challenge to the constitutionality of the ACA, namely, that the Act’s dramatic expansion of the Medicaid program exceeds Congress’ power to attach conditions to federal grants to the States.

The ACA does not legally compel the States to participate in the expanded Medicaid program, but the Act authorizes a severe sanction for any State that refuses to go along: termination of all the State’s Medicaid funding. For the average State, the annual federal Medicaid subsidy is equal to more than one-fifth of the State’s expenditures. A State forced out of the program would not only lose this huge sum but would almost certainly find it necessary to increase its own healthcare expenditures substantially, requiring either a drastic reduction in funding for other programs or a large increase in state taxes. And these new taxes would come on top of the federal taxes already paid by the State’s citizens to fund the Medicaid program in other States.

The States challenging the constitutionality of the ACA’s Medicaid Expansion contend that, for these practical reasons, the Act really does not give them any choice at all….


When Congress makes grants to the States, it customarily attaches conditions, and this Court has long held that the Constitution generally permits Congress to do this…. This practice of attaching conditions to federal funds greatly increases federal power. Objectives not thought to be within Article I’s enumerated legislative fields, may nevertheless be attained through the use of the spending power and the conditional grant of federal funds….

This formidable power, if not checked in any way, would present a grave threat to the system of federalism created by our Constitution. If Congress’ Spending Clause power to pursue objectives outside of Article I’s enumerated legislative fields is limited only by Congress’ notion of the general welfare, the reality, given the vast financial resources of the Federal Government, is that the Spending Clause gives power to the Congress to tear down the barriers, to invade the states’ jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed. The Spending Clause power, if wielded without concern for the federal balance, has the potential to obliterate distinctions between national and local spheres of interest and power by permitting the Federal Government to set policy in the most sensitive areas of traditional state concern, areas which otherwise would lie outside its reach.

Recognizing this potential for abuse, our cases have long held that the power to attach conditions to grants to the States has limits. For one thing, any such conditions must be unambiguous so that a State at least knows what it is getting into. Conditions must also be related to the federal interest in particular national projects or programs, and the conditional grant of federal funds may not induce the States to engage in activities that would themselves be unconstitutional. Finally, while Congress may seek to induce States to accept conditional grants, Congress may not cross the point at which pressure turns into compulsion, and ceases to be inducement.


Where all Congress has done is to encourage state regulation rather than compel it, state governments remain responsive to the local electorate’s preferences; state officials remain accountable to the people. But where the Federal Government compels States to regulate, the accountability of both state and federal officials is diminished.


The answer to the first of these questions–the meaning of coercion in the present context–is straightforward. As we have explained, the legitimacy of attaching conditions to federal grants to the States depends on the voluntariness of the States’ choice to accept or decline the offered package. Therefore, if States really have no choice other than to accept the package, the offer is coercive, and the conditions cannot be sustained under the spending power. And as our decision in South Dakota v. Dole makes clear, theoretical voluntariness is not enough.


The question whether a law enacted under the spending power is coercive in fact will sometimes be difficult, but where Congress has plainly crossed the line distinguishing encouragement from coercion, a federal program that coopts the States’ political processes must be declared unconstitutional. The federal balance is too essential a part of our constitutional structure and plays too vital a role in securing freedom for us to admit inability to intervene.

… In structuring the ACA, Congress unambiguously signaled its belief that every State would have no real choice but to go along with the Medicaid Expansion. If the anticoercion rule does not apply in this case, then there is no such rule.

… Any State that refuses to expand its Medicaid programs in this way is threatened with a severe sanction: the loss of all its federal Medicaid funds.

Medicaid has long been the largest federal program of grants to the States…. [and the] States devote a larger percentage of their budgets to Medicaid than to any other item.


The Federal Government does not dispute the inference that Congress anticipated 100% state participation, but it argues that this assumption was based on the fact that ACA’s offer was an “exceedingly generous” gift. As the Federal Government sees things, Congress is like the generous benefactor who offers $1 million with few strings attached to 50 randomly selected individuals….

This characterization of the ACA’s offer raises obv
ious questions. If that offer is “exceedingly generous,” as the Federal Government maintains, why have more than half the States brought this lawsuit, contending that the offer is coercive? And why did Congress find it necessary to threaten that any State refusing to accept this “exceedingly generous” gift would risk losing all Medicaid funds?…

Congress’ decision to [not just make the additional funding contingent on joining the expansion] reflects its understanding that the ACA offer is not an “exceedingly generous” gift that no State in its right mind would decline. Instead, acceptance of the offer will impose very substantial costs on participating States….

In sum, it is perfectly clear from the goal and structure of the ACA that the offer of the Medicaid Expansion was one that Congress understood no State could refuse. The Medicaid Expansion therefore exceeds Congress’ spending power and cannot be implemented.

[But Chief Justice Roberts’ decision to make the Medicaid expansion optional is also wrong.] That is because the Medicaid Expansion will no longer offset the cost to the insurance industry imposed by the ACA’s insurance regulations and taxes, a point that is explained in more detail in the severability section below. To make the Medicaid Expansion optional despite the ACA’s structure and design would be to make a new law, not to enforce an old one. This is no part of our duty.



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