Monday, March 02, 2015

King v. Burwell Pre-Mortem: The Spending Clause Question

by Michael Dorf

So much has been said already about the statutory interpretation issue in King v. Burwell (which will be argued on Wednesday), that I thought it might be worth jumping ahead a bit to consider an issue that might arise in the event that the Court finds that ACA subsidies are not available on federal exchanges. I think that this would be the wrong outcome of the case, but it is a live possibility, and thus worth some thought.

What would happen after a ruling for the petitioners? With political pressure already building on mostly Republican governors and state legislators, some would probably establish state exchanges. But probably not all. The ideological opposition to the ACA in some states--and perhaps more importantly, in the Republican primary electorate--is so strong that even though it would make no economic sense, there would be states that do not run state exchanges, perhaps leading to the dreaded "death spiral" of the federal exchanges for those states.

However, even before it came to that, might the objecting states be able to argue that, in light of King (as imagined here), the ACA is impermissibly coercive? Here's how the argument would go:

Money for federal subsidies comes from taxes collected nationwide, but is only distributed to people in states that have established their own exchanges. That arrangement puts states to a terrible choice: Either cross-subsidize health exchanges in other states or establish their own exchanges, which they have a constitutional right not to do, because--under New York v. United States--Congress may not force the states to enact legislation.

Under the current case law, that argument is a loser. NY v. US expressly acknowledges that while Congress may not directly "commandeer" state legislatures, it can offer them financial inducements, via conditional exercises of the Spending power. Moreover, in 1937, in Steward Machine Co. v. Davis, the SCOTUS upheld, as a valid exercise of the Spending power, a regime of unemployment insurance that worked more or less the same way: If states put into place unemployment insurance meeting federal requirements, then employers collecting unemployment premiums got 90% of that rebated as a federal tax credit. There, as in the hypothesized post-King world, the regime created a large benefit for private actors in states that did the federal bidding. But this financial inducement was not found to be unconstitutionally coercive.

Accordingly, if the argument I'm imagining here had been made prior to the 2012 ruling in NFIB v. Sebelius, I would have said it's a clear loser. I think it still loses, but not quite as decisively now, in light of the Court's ruling--inexplicably 7-2 on this point--that conditions on the expansion of Medicaid in the ACA were so hard to resist as to constitute impermissible coercion under the Spending Clause. That aspect of the case arguably marked a shift in the Court's jurisprudence towards greater skepticism of conditional spending.

I nonetheless think that even the Roberts Court would reject the hypothesized Spending Clause challenge as different from the successful challenge to the Medicaid expansion in NFIB on three grounds. First, there's less money at stake here, and the dollar figures--both in absolute terms and as a percentage of state budgets--seem to matter. Second, here, as in Steward Machine but unlike in NFIB, the federal subsidies go to in-state private actors rather than to the state itself, and are thus less of a temptation to the state. And third, the Court in NFIB thought it significant that Congress attached new conditions to receipt of new money as well as money under the prior program. Although Justice Ginsburg's dissent explained persuasively why this was a nonsensical classification, the majority thought it significant, and nothing like it would be true of the state exchange subsidy that would come into play after a ruling for the petitioners in King.

So, as we head into the oral argument on Wednesday, I still expect the government to win; and if the government loses, a state that tried the Spending Clause argument I've previewed here would likely lose. However, I have less confidence in those expectations than my doctrinal analysis should predict, simply because, over the last decade and a half I and other liberals have repeatedly been surprised by the Rehnquist and then the Roberts Court taking seriously or accepting arguments that we thought were off the wall.

9 comments:

Unknown said...

Is there a difference between "cross-subsidize" and "subsidize"?

Joe said...

Is this post a reply to the argument made in this brief that there is an unconstitutional burden on states provided w/o a clear statement?

http://www.americanbar.org/content/dam/aba/publications/supreme_court_preview/BriefsV5/14-114_amicus_affirm_va.authcheckdam.pdf

Hard to tell how much usefulness this argument has, but it does seem possible it might help make the challengers' stance that much less unsavory, here with a dash of constitutional avoidance.

A perhaps related argument suggests the reading would have anti-federalist implications that might be constitutional but not ideal using values Kennedy et. al. claim to care about.

http://balkin.blogspot.com/2015/02/where-have-federalists-gone-obamacare.html

But, it's hard to judge how much this all would matter, especially since (unlike, e.g., a professor at Concurring Opinions), I find the argument made by the challengers particularly shoddy but apparently it is taking seriously by at least some justices.

Joe said...

ETA: To be clear, the argument I find "shoddy" is the statutory argument made by the King challengers. I think Ginsburg was correct on the Medicaid argument but if we take the seven justices' argument seriously, I think the argument made in the brief at least a serious one.

Ryan White said...

I would think that the stronger anti-commandeering argument would be that it forces states to choose between setting up an exchange or having their individual-insurance markets destroyed.

Guo Guo said...

guowenhao20150326
coach outlet store online
michael kors outlet
jordan 4
prada shoes
louis vuitton handbags
timberland shoes
hollister pas cher
tod's sale
nhl jerseys wholesale
kate spade handbags
beats by dre
prada outlet
kate spade uk
prada handbags
ray ban
louis vuitton outlet
abercrombie
new balance shoes
burberry outlet
coach outlet
tods outlet
adidas wings
coach outlet online
toms shoes
foamposite gold
lacoste outlet
adidas shoes
christian louboutin
kate spade outlet
tiffany and co jewelry
michael kors canada
toms shoes outlet online
lululemon
giuseppe zanotti outlet
kobe 9 elite
michael kors handbags
converse outlet
michael kors outlet
foamposite shoes
michael kors outlet

Chang bui thi said...

Thank your post. It is a very useful information with everyone....Love it. keep posting
---
Signature:
i like play games descargar whatsapp gratis | descargar whatsapp plus| descargar whatsapp plus gratis

Guo Guo said...

guowenhao20150430calvin klein outlet
swarovski crystal
links of london
michael kors outlet
burberry outlet online
lacoste outlet
ray ban sunglasses
nba jerseys
ray ban wayfarer
michael kors handbags
mac makeup
kobe bryants shoes
michael kors outlet
tods outlet
toms shoes
ray ban uk
ray ban sunglasses
coach factory outlet
celine outlet
adidas wings
marc jacobs outlet
abercrombie and fitch
timberland boots
true religion outlet
michael kors factory outlet
coach outlet store online
instyler
louboutin shoes
beats solo
nike roshe run
ray ban sunglasses
air force one shoes
ray ban sale
herve leger dresses
michael kors outlet
cheap oakley sunglasses
salvatore ferragamo
michael kors handbags
cheap toms
mcm bags

Shijun Lin said...

shijun 5.20
christian louboutin
christian louboutin shoes
louis vuitton outlet
louis vuitton
abercrombie
louis vuitton
ray ban glasses
fitflops outlet
jordan 11
burberry bags
michael kors outlet
christian louboutin shoes
hollister outlet
coach outlet store online
gucci outlet
michael kors
burberry handbags
gucci handbags
michael kors
fake watches
louis vuitton
toms outlet
celine
louis vuitton handbags
michael kors outlet online
ray ban sunglass
dior outlet store
coach factory outlet
michael kors
coach outlet
burberry
burberry handbags
christian louboutin outlet
oakley sunglasses
white timberland boots
knockoff watches
michael kors outlet
chanel handbags
hollister kids
cheap oakley sunglasses

Guo Guo said...

guowenhao20150605
mcm bags
new york jets jerseys
tory burch outlet online
timberland shoes
roshe run men
lacoste shirts
oakley sunglasses
boston celtics jersey
chanel handbags
swarovski crystal
hermes birkin
iphone 6 plus cases
louis vuitton outlet
prada outlet
michael kors handbags
burberry outlet online
abercrombie and fitch
tods shoes
abercrombie
converse all star
lacoste outlet
denver broncos jerseys
air jordan shoes
adidas outlet
adidas shoes
nike running shoes
marc jacobs outlet
seattle seahawks jerseys
michael kors handbags
coach outlet
kate spade handbags
ray ban sunglasses
hermes belt
insanity
converse shoes
mcm handbags
lebron james shoes
gucci outlet
calvin klein underwear
louis vuitton outlet