Mitchell N. Berman

91 Texas L. Rev. 1283

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The Supreme Court’s feverishly anticipated decision in National Federation of Independent Business v. Sebelius regarding the constitutionality of the Patient Protection and Affordable Care Act (“Obamacare”) produced three main holdings concerning two critical provisions of the Act.  The first two holdings concerned the “individual mandate” that requires most Americans to maintain “minimum essential” health insurance.  The third holding concerned “the Medicaid expansion,” which expanded the class of persons to whom the states must provide Medicaid coverage as a condition for receiving federal funds under the Medicaid program. In a 7–2 decision, the Court struck down this provision as an impermissible condition on the provision of federal funds to the states.  Of these three holdings, the third—concerning what is often called Congress’s “conditional spending power”—is apt to have the most far-reaching consequences beyond health care.

In this Article, Professor Berman advances four main arguments.  First, insofar as the majority rested its holding of unconstitutionality on the ground that the amount of funds that a state would lose by not agreeing to the condition was so great as to compel the states to accept, that is a highly dubious rationale.  Second, it does not necessarily follow that the Court’s bottom-line conclusion was wrong.  A more promising rationale for that conclusion would be the one merely hinted at by the Chief Justice: Congress’s threat to withhold all Medicaid funds from a state if it did not agree to provide for a new class of beneficiaries would constitute the constitutional wrong of coercion if animated or infected by a bad purpose.

Third, the basic principles that govern whether a conditional spending offer from the national government to the states is unconstitutionally coercive are not particular to the conditional spending context.  Instead, they lie at the heart of a general solution to the ubiquitous puzzle of “unconstitutional conditions”—that is, the puzzle regarding whether and under what circumstances it is constitutionally permissible for government to condition a benefit on an offeree’s exercising or not exercising its constitutional rights in some preferred way.  Fourth, application of these general “trans-substantive” principles to the instant case suggests that the Medicaid expansion probably was coercive and therefore the Court was probably right—though not for the reasons it gave—to hold that that provision exceeds our best understanding of constitutional limits on Congress’s power.