Archive | Spending Clause

The First Anniversary of the Obamacare Decision

Today is the first anniversary of NFIB v. Sebelius, the Supreme Court’s controversial decision in the Obamacare case. It is still too soon for us to fully appreciate the long-term impact of the ruling. We are also still far from reaching any kind of consensus about the correctness of the Court’s decision.

For the moment, however, I’m sticking with the assessment I made in this SCOTUSblog post written on the day the decision was announced:

Today’s 5-4 Supreme Court decision upholding the individual health insurance mandate is an extremely frustrating result for those of us who argued that the mandate is unconstitutional. One might even call it taxing. The plaintiffs came about as close as one can to winning a major constitutional case without actually winning it. It is the legal equivalent of losing the World Series after leading in the bottom of the ninth inning in the seventh game. It is not a happy day for supporters of limited government.

Yet the Court also offers us a measure of hope and vindication. A majority of the justices rejected claims that the mandate is authorized by the Commerce Clause and Necessary and Proper Clause. That has little immediate impact, but bodes well for the future….

As the close 5-4 division in the Court shows, the justices remain deeply divided on federalism issues. Both Chief Justice Roberts’ opinion and the powerful four-justice dissent reaffirm the need to enforce limits on congressional authority. And both accept all or most of the main constitutional arguments against the mandate. The latter will constrain future mandates imposed under the Commerce and Necessary and Proper Clauses. No one can any longer say that the case against the mandate was a sure loser that could only be endorsed by fringe extremists or people ignorant of constitutional

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Maine Sues Over Medicaid MOE Requirements

NFIB v. Sebelius may be over, but the litigation against the PPACA continues. The latest lawsuit comes from Maine, which is challenging the constitutionality of the “maintenance of effort” provisions which require that states maintain whatever Medicaid eligibility standards they had in effect as of the PPACA’s enactment in March 2010. Failure to maintain these standards results in the loss of all current Medicaid funding. Maine’s brief is here.

Maine’s argument is that the MOE provision is part of the Medicaid expansion, and was therefore invalidated by the Court’s holding in NFIB. Among other things, Maine notes that the MOE rules were originally adopted in return for receipt of stimulus funding in 2008. That choice — accepting a temporary MOE requirement in exchange for stimulus money — was “voluntary.” The choice between accepting a continuation of the MOE rules and losing all Medicaid funding is not.

Even if the MOE provision were not considered part of the Medicaid expansion, and merely a revision to the traditional Medicaid program, the provision would be unconstitutional under NFIB insofar as it seeks to use Medicaid funding to coerce states into adopting new programs. Forinstance, the PPACA provides that once a state has adopted other policies, such as creating a qualifying health insurance exchange, the MOE requirement is lifted. So the MOE provision operates so as to condition Medicaid funding on the state’s cooperation with other policies, crossing the line of what is permissible under NFIB. […]

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NFIB as Marbury

My article yesterday for Scotusblog discussed the tremendous importance of the Court’s 7-2 use of the non-coercion rule to limit Spending Clause violations of State sovereignty and independence. The rule has been around ever since Steward Machine Company v. Davis (1937), but NFIB v. Sebelius is the first decision by any federal court to find that a conditional congressional grant violates the rule.

The folks who think that the “evolving Constitution” completed its evolution in 1937-42, and that everything the Court did during those years must be applied today with the broadest possible reading, should be especially pleased with the NFIB Court’s vigorous enforcement of a very important New Deal precedent.

My essay argues that the application of the non-coercion rule, as well as the  application of the doctrine of incidental powers for the Necessary and Proper Clause, are among the many elements of the Roberts opinion whose significance approaches that of some of the most important opinions by Chief Justice Marshall.

Although we do not know Chief Justice Roberts’ motives, I suggestion a comparison of NFIB to Marbury v. Madison: adroitly escaping from a partisan assault on the Court itself, the opinion moves constitutional law very far in the opposite of the direction favored by partisan assaulters–and does so in a way that leaves the partisan assaulters unable to use the case in their attacks on the Court. […]

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Thoughts on the Medicaid Spending Clause Decision

While the 26 state plaintiffs ultimately lost the case challenging the constitutionality of the individual mandate, they partially prevailed on the other federalism case decided today: the challenge to provisions of the Affordable Care Act requiring states to massively expand Medicaid coverage or lose all of their federal Medicaid funds.

The Supreme Court ruled that the federal government may deny the states additional Medicaid funds if they refuse to comply with the coverage expansion requirement, but may not take away their preexisting Medicaid funds. In previous cases, such as South Dakota v. Dole (1987), which upheld the denial of 5% of federal highway funds to states that refused to raise their drinking age to 21, the Court ruled that federal grant conditions are might be unconstitutionally “coercive” if they put too much pressure on states. But this is the first time the Court has actually invalidated spending condition on that basis. Because states are so heavily dependent on federal Medicaid grants, Chief Justice John Roberts’ opinion for the Court reasons as follows:

[In South Dakota v. Dole], [w]e found that the inducement was not impermissibly coercive, because Congress was offering only “relatively mild encouragement to the States…” We observed that “all South Dakota would lose if she adheres to her chosen course as to a suitable minimum drinking age is 5%” of her highway funds. In fact, the federal funds at stake constituted less than half of one percent of South Dakota’s budget at the time. In consequence, “we conclude[d] that [the] encouragement to state action [was] a valid use of the spending power.” . Whether to accept the drinking age change “remain[ed] the prerogative of the States not merely in theory but in fact.”

In this case, the financial “inducement” Congress has chosen is much more than

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Are States Required to Help the Federal Government’s “War on Terror”?

Last month, Virginia enacted a law forbidding state officers, including police, from helping the federal government investigate, surveil, or detain terrorist suspects who are U.S. citizens. This may or may not be good policy. David Rivkin and Charles Stimson argue it’s also unconstitutional. They write:

It trenches on the federal government’s war powers and violates conditions under which Virginia and other states have received billions of dollars of federal funding. It has dangerous symbolic and practical consequences and undermines the cooperation necessary to disrupt and defeat al-Qaeda plots on our shores. . . .

The Virginia legislation, and similar legislation in other states, violate the U.S. Constitution. It has nothing to do with states’ rights. It is a dangerous mistake, perpetrated by groups and people who misunderstand detainee law, including the NDAA, or who, since Sept. 11, have viscerally opposed the laws-of-war paradigm. Whatever their motivations, they are wrong, and their efforts should be strongly opposed.

This is an odd argument. It’s black letter law that the federal government may not “commandeer” state officers to enforce or implement federal law. This is true without regard to the purpose of the requirement. If a particular federal policy is that important, the federal government can expend its own resources and direct its own officers to implement and enforce the law. This is true even if, as Rivkin and Stimson maintain, that Virginia’s legislation is premised upon mistaken assumptions about what federal law authorizes or requires.

Rivkin and Stimson imply that Virginia’s new law violates conditions imposed on funds Virginia willingly accepted from the federal government. Maybe so, but this does not make Virginia’s law unconstitutional. It just means Virginia may have to give up some federal funds, provided that the conditions were clear when Congress authorized and Virginia accepted the relevant […]

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Independence Institute brief on Medicaid mandate

On behalf of the Independence Institute, Rob Natelson and I wrote an amicus brief on the Medicaid mandate currently before the Supreme Court. (The ACA requirement that states must drastically expand Medicaid eligibility, or lose all their federal matching funds for Medicaid.) Here’s the Summary of Argument:

By imposing the Medicaid mandates in the Affordable Care Act (“ACA”), Congress exceeded the scope of its enumerated powers. If allowed to stand, those mandates could be the death-knell for the Constitution’s finely calibrated system of federalism. The states truly would be little more than agencies for Congress to “commandeer” at will.

The Founders created and the People ratified a Constitution protecting the States’ role as limited “sovereigns.” As this Court has ruled repeatedly, the states’ sovereign “independence” entitles them to make decisions within their sphere based on their own policy judgments, free of federal coercion. As explained below, this rule and the closely-related principle of federal non-coercion is of particular constitutional importance in financing health and social services.

In sustaining the Medicaid mandates, the United States Court of Appeals for the Eleventh Circuit overlooked both Founding-Era constitutional principle and modern Supreme Court doctrine. It also overlooked aspects of the Medicaid mandates that particularly aggravate their coercive qualities. Insofar as the ACA authorizes withdrawal of all Medicaid funds from States that choose not to submit to the Medicaid mandates, that statute slashes at the heart of American federalism. It is unconstitutional and void.

Intelligent comments are welcome, although experience suggests that there will also be plenty of comments from twits who have not read the brief, yet proclaim their absolute certainty about supposedly fatal errors in its legal reasoning. Rob’s summary of brief is available on his blog. […]

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Can the Education Department Place Conditions on NCLB Waivers?

This past week, the Department of Education announced it would allow states to obtain waivers under the No Child Left Behind Act, but “would set a “high bar on flexibility.”. (HT: Neal McCluskey) According to the announcement:

states can get relief from provisions of the Elementary and Secondary Education Act—or No Child Left Behind (NCLB)—in exchange for serious state-led efforts to close achievement gaps, promote rigorous accountability, and ensure that all students are on track to graduate college- and career-ready.

Specifically, according this fact sheet, a State may receive flexibility if it develops a “rigorous and comprehensive plan” to address “three critical areas” the Department of Education believes will “improve educational outcomes for all students, close achievement gaps and increase equity, and improve the quality of instruction.” Encouraging school districts to emphasize these three “critical areas” may or may not be a good idea, but it is highly problematic if (as it appears) the Department of Education is imposing these conditions without statutory authorization.

The NCLB Act allows for waivers of statutory and regulatory requirements placed on state recipients of federal education funds in Section 9401.  This provision identifies things a state must do to be eligible for a waiver, including showings a state must make, but it does not impose any of the conditions detailed in the Department of Education’s announcement. For example, Section 9401 requires a state to explain how the waiver will enable the state to ” increase the quality of instruction for students” and “improve the academic achievement of students,” but the Department of Education’s new requirements seem to go much farther than this. Moreover, nothing in Section 9401 appears to authorize the Secretary of Education from setting additional conditions on waiver requests.  So has the Department of Education over-stepped its bounds? It […]

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District Court Upholds Individual Mandate Against Challenge Filed by Liberty University

Yesterday, federal district Judge Norman Moon of the Western District of Virginia upheld the Obamacare individual mandate against a constitutional challenged filed by Liberty University and several private plaintiffs. For the most part, Judge Moon’s reasoning closely follows that of Michigan district Judge George Caram Steeh in the recent Thomas More Law Center decision. Both judges upheld the mandate under the Constitution’s Commerce Clause alone on the grounds that failure to purchase health insurance, even if it doesn’t qualify as “economic activity,” is an “economic decision” that has substantial effects on interstate commerce. I outlined my objections to Judge Steeh’s reasoning here and here, and will not repeat them in detail in this post. Here is the most important flaw:

“Economic decisions,” [Steeh] reasoned, include decisions not to engage in economic activity. This approach would allow the Commerce Clause to cover virtually any choice of any kind. Any decision to do anything is necessarily a decision not to use the same time and effort to engage in “economic activity.”

If I choose to spend an hour sleeping, I necessarily choose not to spend that time working or buying products. Under Judge Steeh’s logic, the Commerce Clause authorizes Congress to force workers to get up earlier in the morning so that they would spend more time on the job.

Judge Moon also contends that the mandate should be upheld under Gonzales v. Raich and Wickard v. Filburn. In reasoning thus, he simply ignores the various ways in which Raich does not in fact cover the mandate case, which I analyzed in detail here. To briefly summarize, Raich gave Congress the power to regulate virtually any kind of “economic activity” and a wide range of “noneconomic” activities, but said absolutely nothing about regulation of inactivity, which is what […]

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My Richmond Times-Dispatch Op Ed on the Obama Health Care Plan Individual Mandate Litigation

Yesterday, I published an op ed on the state of the individual mandate litigation in the Richmond Times-Dispatch:

When 21 states and several private groups initiated lawsuits challenging the constitutionality of the Obama health care law earlier this year, critics denounced the suits as frivolous political grandstanding. But it is increasingly clear that the plaintiffs have a serious case with a real chance of victory.

The suits focus primarily on challenges to the new law’s “individual mandate,” which requires most American citizens to purchase a government-approved health insurance plan by 2014 or pay a fine….

The judges considering the Florida and Virginia cases have both issued rulings rejecting the federal government’s motions to dismiss the suits and indicating that the mandate can’t be upheld based on current Supreme Court precedent. By contrast, Michigan district Judge George Caram Steeh wrote a decision concluding that the mandate is constitutional. But even he agreed that the case raises an “issue of first impression.”

The op ed focuses primarily on the recent district court decisions in the Virginia, Michigan, and Florida cases, which I blogged about in more detail here, here, and here. So there will be few new points for those who have closely followed my previous VC writings on the mandate litigation. My main purpose in the op ed was to briefly analyze the three rulings and explain why the anti-mandate plaintiffs have a strong case that could well prevail, even though they still face an uphill struggle.

I would add that the results of the recent election modestly increase the chances that the plaintiffs will win. Federal courts are unlikely to strike down a major federal policy initiative that has strong presidential, congressional, and popular support. But last week’s elections brought to power a House majority that […]

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The Florida District Court Decision Rejecting the Federal Government’s Motion to Dismiss the Case Against the Individual Mandate

There are several interesting aspects of today’s Florida federal district court ruling rejecting the government’s motion to dismiss a challenge to the Obama health care plan’s individual mandate brought by 20 states and the National Federation of Independent Business. First, as Randy Barnett emphasizes, this ruling, like the similar Virginia decision before it, further undercuts claims that the lawsuits against the mandate are either frivolous or clearly precluded by existing precedent. Even the recent Michigan district court ruling upholding the mandate conceded that it was a case of “first impression” (although the judge also tried to argue that the mandate ultimately does fit under current doctrine).

I. Judge Vinson Rules that the Mandate is Not a Tax.

Second, Judge Roger Vinson rejected outright the federal government’s claim that the mandate is a “tax” that is authorized by Congress’ authority under the Tax Clause. Instead, he concludes that it is a regulatory penalty, a point that I emphasized in my amicus brief in the Virginia case on behalf of the Washington Legal Foundation and a group of constitutional law professors:

Because it is called a penalty on its face (and because Congress knew how to say “tax” when it intended to….), it would be improper to inquire as to whether Congress really meant to impose a tax. I will not assume that Congress had an unstated design to act pursuant to its taxing authority, nor will I impute a revenue-generating purpose to the penalty when Congress specifically chose not to provide one. It is “beyond the competency” of this court to question and ascertain whether Congress really meant to do and say something other than what it did.

As the Supreme Court held by necessary implication, this court cannot “undertake, by collateral inquiry as to the measure of the [revenue-raising]

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Kopel comment on states’ victory on health control lawsuit.

My comment on today’s decision, granting the motion to dismiss on some counts, and while allowing other counts to proceed. Like Randy’s comment, my comment is posted on the blog of the site Health Care Lawsuits, which is hosted by the Independent Women’s Forum.

The court entirely rejected the administration’s claim that the penalty for disobeying the mandate is justified under the federal tax power. As the court noted, Congress went out of its way to specify that the penalty is not a tax. Second, the court ruled that it is proper for the plaintiffs to be heard in their challenge to the mandate, which goes into effect in 2014. The court cited extensive precedent showing that when a future harm is certain, courts can act in the present to protect citizens from that harm. The court rejected the argument that the various employer mandates violate the constitutional sovereignty of states; as the court noted, the law simply treats states like other large employers, and so making states provide the same health benefits as other large employers must provide is no different from making states pay the same minimum wage as all other employers.

While federal spending programs may set conditions on grants to states, Supreme Court precedent states that the grants must not be coercive. Here, the court agreed that the states had raised a plausible legal argument which should be allowed to go forward:  the health control presents states with the unacceptable choice of massively increasing their own Medicaid spending on millions of more people, or of losing all funding for the traditional Medicaid program. Finally, the court agreed that the challenge to the individual mandate could go forward, because the mandate was “unprecedented.” Never before has Congress attempted to use its power of regulating interstate

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Our Amicus Brief in the Virginia Case Challenging the Constitutionality of the Obama Health Care Plan

Today, we filed an amicus brief in Virginia v. Sebelius, one of the cases challenging the constitutionality of the Obama health care plan’s individual mandate, which requires nearly all Americans to purchase health insurance by 2014 or pay a fine. I wrote the brief on behalf of the Washington Legal Foundation, a leading pro-free market public interest law firm, and fourteen prominent constitutional law scholars (this was the pro bono project that I finished right before my wedding).

The brief signers include VC co-conspirators Jonathan Adler, David Kopel, and Todd Zywicki, along with other well-known constitutional law scholars such as James Ely (Vanderbilt), Kurt Lash (University of Illinois), Gary Lawson (BU), Steven Presser (Northwestern), and others. Also among the signers is Professor Steven Willis of the University of Florida, coauthor of an important article explaining why, even if the mandate is a tax, it is not a tax authorized by the Constitution. Co-blogger Randy Barnett is filing his own amicus brief along with the Cato Institute and Competitive Enterprise Institute.

If nothing else, I hope the brief will help dispel the myth that there is an expert consensus to the effect that the mandate is constitutional (see also here). It should by now be obvious that many well-known and highly respected scholars believe otherwise.

The brief covers all three provisions of the Constitution that the government claims authorize the mandate: The Commerce Clause, the Tax Clause, and the Necessary and Proper Clause. Part I addresses the Commerce Clause and includes what I think is the most thorough discussion so far of why the mandate is not authorized by the Supreme Court’s broadest-ever Commerce Clause decision, Gonzales v. Raich (pp. 6-10). Part I also addresses many other relevant Commerce Clause decisions, including lower court cases. Part II […]

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My Washington Examiner Op Ed on The Recent Ruling in the Virginia Health Care Lawsuit

The Washington Examiner recently posted my op ed on Monday’s ruling in the Virginia health care lawsuit, which I previously discussed in this post:

Monday’s federal district court decision refusing to dismiss a lawsuit challenging the constitutionality of the Obama health care plan is an important step forward for opponents of the plan.

The suit by the state of Virginia focuses primarily on a challenge to the “individual mandate” element of the plan, which requires most American citizens and legal residents to purchase a government-approved health insurance plan by 2014 or pay a fine for noncompliance……

Judge Henry Hudson wrote that the individual mandate “literally forges new ground and extends Commerce Clause powers beyond its current high watermark.” As he put it, “No reported case from any federal appellate court has” ruled that Congress has the power to “regulate a person’s decision not to purchase a product….”

The legal battle over the Obama health care plan is far from over.

Nonetheless, Hudson’s ruling is a victory for those who believe that the individual mandate is unconstitutional. It makes it difficult to argue that the lawsuits against the mandate are mere political grandstanding with no basis in serious legal argument.

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Thoughts on the Federal District Court Ruling Refusing to Dismiss the Virginia Health Care Lawsuit

Federal District Judge Henry Hudson’s opinion refusing to dismiss Virginia’s lawsuit challenging the constitutionality of the Obama health care plan has several interesting aspects. The suit focuses primarily on a challenge to the “individual mandate” element of the plan, which requires most American citizens and legal residents to purchase a government-approved health insurance plan by 2014 or pay a fine for nocompliance. Here are a few of the most important points covered in the opinion.

First, Hudson rejected the federal government’s claim that Virginia did not have standing to challenge the mandate. Although states are generally not allowed standing to litigate the interests of their citizens, Hudson argues that Virginia has standing because the federal health care bill conflicts with a recently enacted Virginia state law, the Health Care Freedom Act. This, he argues, is enough to give Virginia standing, overcoming the sorts of federal government standing arguments that I discussed in this post. This argument may have negative implications for the other major lawsuit against Obamacare, filed by 20 states and the National Federation of Independent Business. Most of those states do not have state laws comparable to the Health Care Freedom Act. NFIB, however, has individual members who are subject to it, such as self-employed businessmen. In addition, the other states could try to establish standing by relying on the broad theories of state standing endorsed by the Supreme Court in Massachusetts v. EPA. Hudson also rejects the federal government’s argument that the lawsuit isn’t “ripe” for adjudication because the individual mandate will not come into effect until 2014. He points out that the new federal law will force both individuals and the state government to make adjustments to their health insurance plans even before that.

Second, Hudson agrees with co-blogger Randy Barnett that the […]

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DOMA Section 3 Unconstitutional, Says Massachusetts District Court

That’s the decision this afternoon, based on equal protection principles applied to the federal government through the Fifth Amendment’s Due Process Clause.  Section 3 of the Defense of Marriage Act of 1996 established a federal definition of marriage for the first time.  This meant that the federal government could refuse to grant validly married same-sex couples the federal benefits and privileges accorded opposite-sex married couples.  I’m still looking at the decision and will probably post soon.

UPDATE: In a companion case, the same judge has ruled that DOMA intrudes on the Tenth Amendment powers of the states.  Very interesting. […]

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