Advancing a Free Society

Derailing the Medicaid Expansion: Chief Justice Roberts Gets This One Right

Thursday, June 28, 2012

Unlike his unhappy performance with the individual mandate, the Chief Justice wrote a far more compelling decision when he struck down key portions of the Medicaid mandate. This provision has been largely overshadowed by the nonstop controversy over the individual mandate, but make no mistake about it: the issue is huge. Most observers regarded this issue as a dead loser for the states, who lost (to a series of dreadful opinions) in the lower courts. But the seven to vote in favor of striking this down comes as a real, but welcome, shocker.

To back up for the moment, Medicaid is one of this nation’s growth industries, where expenditures right now are in the hundreds of billions of dollars. The Medicaid expansion is poised to increase that perhaps another $100 billion. Under the ACA, the federal government hopes to achieve that expansion in coverage by a combination of the carrot and the stick. The carrot is the willingness to cover up to 90 percent of the additional funds, so long as the states pick up the remainder of the money and the additional expenses to cover the population that earns between 100 and 133 percent of the poverty line. The threat is that the states that don’t want to play ball lose not only the matching federal money, but also their entire Medicaid allotment under the existing program, often in the billions of dollars.

For the states that like the deal, the “or else” does not matter. But for those who would rather husband their resources, there is only one rational answer when faced with this threat. The additional costs incurred by the new program are a small fraction of the total amount that would be lost by declining the deal. Whether or not they like the deal, every state has to take it so long as the threat remains. That point stuck in the Chief Justice’s craw. He was quite willing to say that those states that want to take the deal—in this instance the democratic states—were free to do so. But what was a good deal for some need not be a good deal for all, so that the effort to “leverage” the new program on the backs of the old one could not be imposed on those republican states that preferred to decline the offer.

In so doing, he drew the right distinction. You can always condition the grant on the willingness to spend moneys in certain ways. It is only slightly more problematic to insist on the matching funds from other sources. But the willingness to dig down into other funds is surely a step too far. The Chief Justice rightly brushed aside objections from Justice Ginsburg of the sort that so long as the moneys were all devoted to Medicaid, the states had consented in advance to this alteration or modification of the program. Not so, said the Chief Justice, about changes so great that they were tantamount to a new program.

None of this is entirely satisfactory. In particular the Chief Justice refused to break from the untenable distinction as it developed in earlier cases between inducement and coercion. The sensible line between the two is this: if I promise you something that I own to get you to do what I would like, it is an inducement. If I threaten to take away something that you own, it is a threat. The initial allocation of property rights matters. The current law unfortunately puts this line in the wrong place when it says that small threats should be treated like inducements. Yet it makes no sense to say that the robber who wants only 5 percent of your money for car fare has not coerced you. This gnawing issue may yet come back to haunt us, but Roberts helped move the ball in the right direction by refusing to allow this extension.