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U.S. Supreme Court

US Win on Insurance Mandate Overshadows Significant Loss on Spending Power, Ex-SG Says

Posted Jun 29, 2012 6:37 AM CDT
By Debra Cassens Weiss

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Overlooked in much of the hoopla surrounding the Obama administration’s Supreme Court win on the health care law is a part of the decision curtailing the government’s spending power.

Writing in the New York Times, former acting Solicitor General Neal Katyal says the government “may have won the battle but lost the war.” Katyal, now a partner at Hogan Lovells, argued the health law cases before they reached the U.S. Supreme Court.

Chief Justice John G. Roberts Jr. wrote in his opinion (PDF) that the law’s Medicaid provisions as written would be unconstitutionally coercive because they allow the government to withdraw all federal Medicaid funds from states that didn’t go along with the expansion. “In this case, the financial ‘inducement’ Congress has chosen is much more than ‘relatively mild encouragement’—it is a gun to the head,” Roberts said.

Roberts said the law should be read as preventing the government from withholding existing Medicaid funds from states that opt out of the expansion. With the support of liberal justices who would have gone farther and upheld the entire expansion, Roberts’ restricted version of the law prevailed.

According to Katyal, the holding “contains the seeds for a potential restructuring of federal-state relations.”

“This was the first significant loss for the federal government’s spending power in decades,” Katyal writes. “The fancy footwork that the court employed to view the act as coercive could come back in later cases to haunt the federal government. Many programs are built on the government’s spending power, and the existence of an extraconstitutional limit on that power is a worrisome development."

Katyal is also troubled that the court rejected Congress’ commerce clause authority to enact the law’s insurance mandate. “The court employed language that could be read to suggest that whenever statutes are novel, they are unconstitutional,” he wrote. The court’s reading of the Constitution “may later blossom into a radical constitutional theory that could upend decades, if not centuries, of precedent,” he says."

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