Government Spending

Could Medicaid Ruling Lead to Challenges to Other "Voluntary" Federal Funding Regulations?



As Peter Suderman noted, the majority opinion in today's ObamaCare ruling allows states to opt out of expanding their Medicaid programs without threatening all of their federal Medicaid funding. From the majority opinion:

When Congress threatens to terminate other grants as a means of pressur¬≠ing the States to accept a Spending Clause program, the legislation runs counter to this Nation's system of federalism. …

The threatened loss of over 10 percent of a State's overall budget is economic dragooning that leaves the States with no real option but to acquiesce in the Medicaid expansion.

The federal government regularly threatens to withhold funding to states in order to encourage compliance with federal guidelines. New federal rules on preventing prison rape would withhold five percent of the federal funding for any state or municipal facility that declined to comply with their guidelines, and there are scores of other examples. The Supreme Court gave its nod of approval in South Dakota v. Dole in 1987, when the state challenged federal pressure to raise the drinking age to 21 or lose five percent of its highway funding.

Could all these federal rules now be in jeopardy? Jordan Weissmann at The Atlantic explored the issue with Michigan Law Professor Samuel Bagenstos, who filed an amicus brief supporting the Medicaid expansion:

The grounds on which they found this Medicaid expansion to be coercive are not entirely easy to figure out. But they are problematic for other federal spending laws, for other cooperative federal programs. I could foresee, and I do foresee, that there will be a number of challenges over the next months and years to a number of cooperative federal spending programs, like the Elementary and Secondary Education Act, particularly depending on what changes ultimately get made to No Child Left Behind and what kind of regulations get imposed on states for federal education funds. I think there could be challenges to the Individuals with Disabilities Education Act. There could be challenges to the civil rights statutes that impose conditions on the states that accept federal funds, like the Rehabilitation Act, which prohibits disabilities discrimination. So there are lots of possibilities that are opened up by this ruling to challenge well-entrenched cooperative federal spending programs. Those opportunities didn't exist before today because the court had never a condition on federal spending coercive to the states.

Today's decision, though, emphasizes that the undue coercion of the Medicaid expansion is because it would withhold the entirety of the Medicaid funding from non-compliant states, not just five or ten percent. In South Dakota v. Dole, the majority did not determine five percent to be sufficiently coercive to overturn it. So now there's an ambiguity of what does and does not count as "coercion" when the federal government threatens funding in order to encourage regulation compliance from the states.