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Wednesday, May 08, 2013

“Why is a big gift from the federal government a matter of coercion? ... It’s just a boatload of federal money for you to take and spend on poor people’s health care” or the mysterious coercion theory in the ACA case

At oral argument in NFIB v. Sebelius, the Affordable Care Act (ACA) case, Justice Kagan asked Paul Clement:

“Why is a big gift from the federal government a matter of coercion? It’s just a boatload of federal money for you to take and spend on poor people’s health care. It doesn’t sound coercive to me, I have to tell you.”

The exchange is all the more curious because, despite her scepticism, Kagan signed on to the Court’s holding that the Medicaid expansion in the ACA was coercive, as did all but two of the Justices (Ginsburg and Sotomayor). What happened? I try to answer this question, suggesting the court misunderstood what makes an offer coercive, in this article published as a part of a symposium on philosophical analysis of the decision by the peer-reviewed journal Ethical Perspectives.

First a little bit of background since some readers may not be as familiar with the Medicaid expansion part of the ACA and Sebelius: The ACA purported to expand the scope of Medicaid and increase the number of individuals the States must cover, most importantly by requiring States to provide Medicaid coverage to adults with incomes up to 133 percent of the federal poverty level. At the time the ACA was passed, most States covered adults with children only if their income was much lower, and did not cover childless adults. Under the ACA reforms, the federal government would have increased federal funding to cover the States’ costs for several years in the future, with States picking up only a small part of the tab. However, a State that did not comply with the new ACA coverage requirements could lose not only the federal funding for the expansion, but all of its Medicaid funding.

In Sebelius, for the first time in its history, the Court found such unconstitutional ‘compulsion’ in the deal offered to States in order to expand Medicaid under the ACA. In finding the Medicaid expansion unconstitutional, the Court contrasted the ACA case with the facts of the Dole case, wherein Congress “had threatened to withhold five percent of a State’s federal highway funds if the State did not raise its drinking age to 21.”In discussing Dole, the Sebelius Court determined that “that the inducement was not impermissibly coercive, because Congress was offering only ‘relatively mild encouragement to the States’,” and the Court noted that it was “less than half of one percent of South Dakota’s budget at the time” such that “[w]hether to accept the drinking age change ‘remain[ed] the prerogative of the States not merely in theory but in fact’.”

By contrast, when evaluating the Medicare expansion under the ACA, the Sebelius Court held that the

financial “inducement” Congress has chosen is much more than “rela- tively mild encouragement” – it is a gun to the head [...] A State that opts out of the Affordable Care Act’s expansion in health care cover- age thus stands to lose not merely “a relatively small percentage” of its existing Medicaid funding, but all of it. Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs [...] The threatened loss of over 10 percent of a State’s overall budget, in contrast [to Dole], is economic dragooning that leaves the States with no real option but to acquiesce in the Medicaid expansion.

I argue that this analysis is fundamentally misguided, and (if I may say so) I have some fun doing it! As I summarize the argument structure: If the new terms offered by the Medicaid expansion were not coercive, the old terms were not coercive, and the change in terms was not coercive, I find it hard to understand how seven Supreme Court Justices could have concluded that coercion was afoot; the only plausible explanation is that these seven Justices in Sebelius fundamentally misunderstood coercion. This misunderstanding becomes only more manifest when we ask exactly ‘who’ has been coerced, and see the way in which personifying the States as answer obfuscates rather than clarifies matters.

The paper is out, but I will be doing a book chapter adapting it so comments still very much approeciated.

- I. Glenn Cohen

Posted by Ivan Cohen on May 8, 2013 at 12:01 PM in Article Spotlight, Constitutional thoughts, Current Affairs, Legal Theory, Peer-Reviewed Journals | Permalink


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As strange as it feels to say it, I agree with David. The better way forward, and descriptively (for some of the justices) the best-fit understanding of coercion, is really as a placeholder for underlying federalism values. (Though I imagine his view of how to implement that underlying value differs a lot from mine...). But it turns out not all the justices see it that way--for some of them, these concepts of consent and "fair notice" seem to be doing real intellectual work. Peter Smith has a fine explanation of all this, using cases from the 90's and early 00's, in his Chevron & the Spending Power article, 110 YLJ 1187. So I think it's fair game to call them on it, and kudos to Glenn for that.

Posted by: BDG | May 10, 2013 4:05:57 PM

(that said, I agree that the opinion is not very coherent, in particular because original Medicaid is in fact "coercive" under the relevant analysis. OTOH, Medicaid was a much smaller program when it first started, so an additional question would be "when does the 'coercion' analysis stop and start?" If the states agree to join a relatively small program that later balloons into 20% of their budgets, can they challenge it at that later point? If so, it would create significant instability).

Posted by: David Bernstein | May 10, 2013 3:51:19 PM

Glenn, thanks for the response. I guess the way I'm looking at it is the Court is trying to come up with a workable legal standard for "when does the government's use of the Spending power go from being 'something more akin to a bribe a state can reasonably say no to', to 'something that would put a state at such a competitive disadvantage relative to other states if it says no that it has little choice but to agree'?" Even if you persuaded all nine Justices to agree that they misused the concept of "coercion", that wouldn't make the problem go away, they would just use a different word instead of coercion to address the same issue.
I'm a veteran of the Daubert wars, which included a host of law review articles discussing whether the philosophical concepts the Court used in that case (a) were accepted by philosophers of science these days; and (b) were used correctly. The total influence of all of that chatter was approximately zero, because judges, including the justices in the later Daubert trilogy cases, were not interested in the philosophy debates.

Posted by: David Bernstein | May 10, 2013 3:46:26 PM

Thank you all for the engaged and good comments. Let me respond to a few:

- On Anon 5:40. In part due to the word length limits (which I had already exceeded), the personification issue had to be kept exceedingly brief, and was more a teaser than a full argument, so I don't disagree that it needs more discussion and development. I do think that the reality of the current Medicaid expansion by some governors in the wake of the decision, though, is an interesting cleavage between the gubernatorial preferences and the preferences of the governed in many of those states. As you know, unlike in Dole, there was not even a specter of the issue of germaneness raised in NFIB because the nexus was so tight. I do think it is an interesting set of questions how the notion of germaneness relates to coercion. One view would be it is a constitutional add on, something can violate the spending clause if is either coercive or not germane. Another would be to try to fold the germaneness notion into coercion itself, and perhaps apply it beyond the constitution.

- On Jim von der Heydt and Anon: your back and forth has made my day! It may have been somewhat sloppy or hyperbolic to say that the court misunderstood coercion, and I concede that the horse trading explanation is also entirely possible.

- On David Bernstein: In what is my all time favorite instance of "law prof speak," let me use the phrase "I think you have offered a false dichotomy" (how often has one heard THAT in a workshop!) I don't think there is a philosophical sense of coercion that is to be contrasted with the constitutional sense. Instead the role of philosophy here is to help us understand what we mean when we say A coerced B and when that action is wrongful. As Justice Kagan's question that sparked my essay suggested, there is something very odd about the notion that what the federal government did here was coercive or wrongful in the ordinary sense of those words for the very reason that thinking seriously about the claim (which is all philosophy helps us do) suggests. But even if you disagree with me on this, as you know from the essay, much of my argument is routed in basic contract law conceptions of coercion and it is Justice Roberts' opinion that draws on that set of law to make his case in his opinion, so I don't think it is off base to call him on that. Two more small points: I agree with you that this same notion of coercion that I find problematic is hinted at in Dole, so NFIB is not inventing it out of Whole Cloth, but this is the first time it has been more than dictum and a federal program has been struck down on this ground. Indeed, I think NFIB's main contribution to con law will be that now every spending clause legislation will be attacked on this ground and we will have to litigate it within the very murky standard given by the majority. Second, as I acknowledge in the beginning of the essay there is more to the spending clause than the coercion analysis, and that the court has suggested that things may offend the spending clause even if not coercive. In that sense I agree with you that the account of coercion I give does not exhaust the spending clause constitutional analysis, but I do not think one can plausibly say there are two senses of coercion here based on the way the court has written the opinion.

Posted by: I. Glenn Cohen | May 10, 2013 12:27:13 PM

Allow me to suggest the possibility that "coercion" for constitutional federalism purposes does not and need not track the meaning of "coercion" in a general philosophical sense. Indeed, the quote you provide from Dole, about "impermissibly coercive" suggests that precedent already said as much. I would go so far as to argue that it's fundamentally misguided to apply a philosophical analysis of coercion here, because the Court didn't in Dole or NFIB define coercion in philosophical terms.
On your second, "personification" point, it seems to me that the point of the "coercion" analysis is not to protect the states because they have a "right" not be coerced, but simply to police the boundaries of federalism. If the federal government could in essence destroy the autonomy of states through use of the spending power, the problem is not that the states would lose their "right" to be free from coercion, but that this would undermine the federalist nature of the United States. And federalism, as the Court made clear in the Bond case, is thought to protect the liberty of all Americans, not simply too protect state autonomy. If you wanted to make an especially cogent philosophic argument against the Spending Clause ruling in NFIB, I'd suggest focusing on the question of whether preserving some level state autonomy actually serves the goals it is thought to serve.

Posted by: David Bernstein | May 10, 2013 5:40:32 AM

It is probably worth adding that nothing in my dispute with Anon has anything to do with Prof. Cohen's article (which I've now looked at and find very interesting). It's just about whether the blog post makes factually plausible claims about what drove the seven votes against mandatory Medicaid expansion in Sebelius.

Posted by: Jim von der Heydt | May 9, 2013 7:09:23 PM

I. "I kind of doubt that the gap between his and their grasp of constitutional concepts, especially the concepts relevant here, is a tenth as great as you state."

You are right. When it comes to getting the right answer about whether Congress has 'dragooned' the states into accepting huge quantities of federal money to go to local health-care providers, the gap between (a Supreme Court Justice + staff + other justices + countless amici) and (one professor + me) is one-twelfth the size that I suggested in my ill-considered and inappropriately scatological sentence.

I'm not sure why you think Supreme Court justices need to write scholarly articles to prove their bona fides on any particular constitutional concept.

But look, I didn't mean to insult Prof. Cohen even a little bit. I was responding to the original post's assertion that "The only plausible explanation is that these seven Justices in Sebelius fundamentally misunderstood coercion."
I think that is a very unpromising approach to explaining Supreme Court votes in a case like this one. I think results in such cases are driven by other things than the ability to understand something, or the need to have it explained better.

Theorizing coercion is valuable work, and I'm sure the article does a superb job, but in its essence the right answer on the Sebelius coercion question, yea or nay, is easy. Very few people doubted what it should be in advance. Flooding states with new federal money to go to health-care providers is coercion under the Dole precedent only if you hate Obamacare.
The article is important for helping to re-correct the theory of coercion, but no one should imagine that it was defective theorizing that created the 7 votes in Sebelius. These justices are very, very far from inept.

II. On point two, I didn't mean to imply that Kagan and Breyer's votes were but-for causes of Roberts' switch. I think when he realized that switching was probably the right thing to do he was open to considering pot-sweeteners. And I think Kagan was there. (Prof. Koppelman suggests something similar in his chapter on the Roberts question.) It offered him a chance to save face and cost the country very little practically (especially given the way the expansion was set up to incentivize states' acceptance of the money).

III. "Point number three is that doctrinally and maybe even practically, the Medica[id] holding is a way bigger, vastly more dangerous deal than [the rest of the case]."

I could not disagree with you more. Outcomes matter very, very much. And the idea that the Supreme Court can invent new Commerce Clause doctrine and strike down a vast new regime based on a single novel 'inactivity' distinction in one corner of the law would have been thunderously significant.

By contrast, invalidating the mandatory expansion of Medicaid (not the expansion, just its mandatoriness) does nothing but give a bunch of Republican governors the opportunity to cut off their local healthcare industries' noses to spite the federal face. Given the incentive structure Kagan and Breyer saw, it made no sense for any state to do that; I still think most states will come around.

Coercion, moreover, is a secondary issue in terms of federal power, isn't it? Many of the Spending things done through the states can be done directly if need be. (I'm open to correction on this hasty opinion, of course.) Dole requires some nexus between the spending and the requirements placed on states.

"I don't recall the severability arguments, but I'd think the argument for keeping the Medicaid expansion after you invalidate them andate would be pretty weak."

You should recall the severability arguments, since they were the most revealing part of the four conservatives' approach. They wanted the entire law gone. Roberts balked. This was a key issue.

On the merits, you are dead wrong about whether expanding Medicaid can be severed from the exchanges and the mandate and the other insurance regulations. Medicaid is a whole separate issue, and expanding is a straight-up good idea completely independent of everything else. Whether Congress would have voted for it standing alone is arguable, but it is not of a piece with the rest of the law.

IV. "Point four, I have no idea what makes you think that Sotomayor and RBG are the Justices "most likely to find such a deal unseemly." Because Breyer and Kagan worked in politics?"


Breyer worked with Ted Kennedy to get legislation passed as a staffer on the Senate Judiciary committee. He was a Watergate sub-prosecutor. And Kagan ran a law-school faculty. They know maybe a little better than the other two that sometimes egos matter, and that doctrine should sometimes be readily compromised to get to better results practically. I don't suggest that they are temperamentally different from the other two justices, just that they are slightly more likely to consider it professionally appropriate to roll logs in an institutional context, at the expense of good doctrine.

Look, good doctrine is very important. This is an important article. But I just don't think the Supreme Court outcome is explained by "misunderstanding" coercion doctrine. The questions presented by the case were, once one got past the 'inactivity is never commerce' claim (or went around it using basic necessary&proper or Raich analysis), not close ones. Even without the ability to theorize coercion pellucidly, the most inept clerk ever to serve on the Court could have applied the precedents and gotten the answer Justice Ginsburg defended on coercion. So my opinion is that "misunderstanding" is not, to quote Iqbal, a plausible allegation.

There is a lot more work to be done to understand Justice Roberts' switch. But I do think the bizarre Kagan and Breyer votes are explained by it, even if they don't explain it.

Posted by: Jim von der Heydt | May 9, 2013 6:57:01 PM

Some comments on the article and some comments on Jim's comment. On the article, I think the part about state personification being undertheorized is itself pretty undertheorized. I think you'd acknowledge that some federal threats to cut off funding or services can be coercive, so long as they're the right sort of funds or services, a sort that the state's somehow entitled to. For example, perhaps statehood creates an entitlement to be protected by the national defense, and the federal government could not threaten to withdraw that protection if a state didn't expand Medicaid. If that's coercive, someone or something is being coerced, and I don't quite see why we should insist on saying that the governor's being coerced, or the legislature, instead of the state. No individual legislator is coerced to do anything; he can vote against the expansion in protest so long as a majority acts sanely. And the governor can probably veto the expansion in protest and count on an override. So at the least, what's being coerced is some collective, even as no individual's coerced, and at that point I would just say it's the state that's coerced to avoid confusion and paradox. Especially because while I do think it should be uncontroversial that the federal government can't make a state enact laws under a truly coercive threat, like refusing to protect a state from external attacks, as you say it's far from clear that a governor has an entitlement not to be put in a difficult choice situation. Along these lines, something I think is missing from your discussion is germaneness. Everyone seems to agree, in the judiciary at least and in the Solicitor General's office, that a germaneness requirement exists, but it doesn't at all follow from what Wertheimer says about coercion. So is germaneness wrong? Does the intuition that a germaneness requirement should be the law suggest that his analysis of coercion is inapposite here? Maybe we shouldn't be talking about coercion in the strict sense at all.

On Jim's comment. First on this bit: "No offense to you or me, but I think each of them [Breyer and Kagan] handles constitutional concepts better on the john than the two of us could do in a week with an abacus." You know, being that Cohen's article is easily one of the best things ever written on coercion and the Spending Clause, and leaps and bounds better than anything any of the Justices have written on this issue, I kind of doubt that the gap between his and their grasp of "constitutional concepts," especially the concepts relevant here, is a tenth as great as you state. And that's not even taking into account the fact that Breyer at least is hardly a great constitutional lawyer. Point number one.

Point number two is that this great rumored deal that supposedly occurred has never made any sense to me, given that Roberts is hardly likely to have based his decision to uphold the Act on whether he got a sixth and seventh vote on Medicaid. Could the mere appearance of some consensus on the decidedly less ballyhooed issue in the case have been worth that much to him? Really implausible.

Point number three is that doctrinally and maybe even practically, the Medicare holding is a way bigger, vastly more dangerous deal than whatever the Court could have held about the sui generis mandate; hence, hard to see the putative mastermind of this deal as an "unsung hero". Even if Breyer and Kagan can be counted on to read the holding as good for that day only, there are still 5 other Justices who will faithfully apply the holding - one that on your theory they helped create, because without their extra votes, the mandate goes down and perhaps the entire bill is treated as unseverable and invalidated without the Court ever reaching Medicaid, or at least the expansion is treated as unseverable. I don't recall the severability arguments, but I'd think the argument for keeping the Medicaid expansion after you invalidate them andate would be pretty weak.

Point four, I have no idea what makes you think that Sotomayor and RBG are the Justices "most likely to find such a deal unseemly." Because Breyer and Kagan worked in politics? Because Sotomayor and RBG dissent a little more often (though certainly not more angrily) than the other two liberals? Is there some evidence that they're loath to vote-trade and Breyer and Kagan aren't? Did Toobin say something about this in his latest scotus airport novella?

Posted by: Anon | May 9, 2013 5:40:57 PM

I think the log-rolling theory is much, much, much more plausible than the theory that Justices Breyer and Kagan are dumber than us and couldn't get Justice Ginsburg to explain the right answer to them. No offense to you or me, but I think each of them handles constitutional concepts better on the john than the two of us could do in a week with an abacus.

If you had to pick two Justices most likely to find such a deal unseemly, and keen to get out of it if they weren't needed, Ginsburg and Sotomayor would be them.

Note that I don't think these negotiations were done explicitly. And I consider Kagan the probable unsung hero of the whole outcome.

Posted by: Jim von der Heydt | May 9, 2013 8:33:00 AM

Thanks AndyK. Actually the majority and dissent both discuss how much pressure the Medicaid (not Medicare) funds are, so I am pretty sure she was quite aware of it. Moreover, as I suggest in the paper, the problem is not the size of the funds but the theory of coercion at work.
The horse trading theory is possible, and only those inside the Court will know for sure, but given that Ginsburg and Sotomayor continued to dissent and Roberts voted against the Commerce Clause part of the opinion it seems an odd horse trade.

Posted by: I. Glenn Cohen | May 8, 2013 5:51:39 PM

Maybe Justice Kagan was not aware of the proportion of the state budgets that the Medicare funds represented.

More probably she bargained on the Commerce Clause in order to uphold the law, confident that law professors would, ex post facto, attempt to minimize the CC holding.

Posted by: AndyK | May 8, 2013 1:20:17 PM

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