Ironically, the GOP proposal to repeal the Affordable Care Act (ACA) in the name of returning authority over health care to the states has some potentially serious constitutional issues on federalism grounds. Here are some preliminary thoughts on the matter, with the caveat that conclusions may change as we get more details.
The most obvious potential federalism problem in the bill is the so-called “Buffalo Bribe,” an amendment introduced earlier this week in an effort to eek out a few more GOP votes for the bill from upstate New York Republicans. That amendment intrudes on one of the most traditional state functions of all-- the internal revenue raising and taxing provisions of a state. It provides that New York can no longer ask counties to pay a share of its Medicaid bill, as New York has done for more than fifty years pursuant to state law. Instead, the bill provides that the state alone has to cut the full check. (The county share is currently a little over $ 2 billion.)
This amendment is likely unconstitutional. The protection from federal interference of the internal functions of a state government is one of the bedrocks of state sovereignty protected by the limitations on Congress’s powers in Article I of the Constitution and the reservation of power to the states in the Tenth Amendment. Even if one could argue that this is an exercise of the federal spending power under Article I, for Congress to legally use that power, the conditions on a state’s use of federal funding have to be tied to a reasonable federal purpose. Governor Cuomo has made clear he will most likely have to raise taxes steeply to cover the gap the bill would cause (which also means that the upstate taxpayers who Reps. Faso and Collins, the sponsors, are trying to protect are not even going to benefit). It is hard to see a reasonable federal purpose here other than garnering more GOP votes for the struggling repeal bill.
If, on the other hand, Governor Cuomo decides not to raise the money, and to close hospitals and make other dramatic cuts to other programs New York State instead (which seems to be what Faso and Collins want), then we may be getting into the realm of a different kind of constitutional problem, namely unconstitutional coercion. It would violate the Spending Clause and the Tenth Amendment’s protection of state sovereignty if the amendment is a “Godfather offer” - an offer the state can’t refuse. Of course, the irony here is that it is the Republicans who are responsible for the expansion of this same coercion doctrine that makes this kind of argument credible. It’s the argument they used to successfully attack the ACA’s original Medicaid expansion in the constitutional challenge they filed almost exactly seven years ago, NFIB v. Sebelius.
What’s more, it is my understanding that other states also have similar requirements that split Medicaid costs with localities. If that’s the case, the constitutional problems with the Buffalo Bribe are potentially even more serious, because on what rationale does it make sense to penalize only New York for this arrangement? This kind of arbitrary discrimination against New York also makes clearer the absence of a rational federal purpose for the amendment.
And here's a different way to put it: Faso and Collins are trying to use federal law to change state law in a way they wish they could, but can't get through in Albany. If they want New York to change its state law on how Medicaid checks get written, they should go through New York government.
This amendment may not be the only part of the repeal bill that raises constitutional problems. States are still investigating the effects of the more generally proposed Medicaid amendments, and time will tell if any legal issues arise. But just last night, the GOP offered a few additional amendments, in an effort to squeeze out the last few votes. One of those amendments appears to require states to provide a definition of the “essential health benefits” that covered insurance plans must include. This amendment appears to be an intra-GOP compromise: Conservatives wanted EHBs eliminated entirely from the ACA, moderates didn’t. Returning “power” to define federal requirements to the states is page 1 in the playbook of “federalism” compromises.
The EHB provision may be a drafting error. It does not make clear what the states get in return for defining the EHBs, whether they have a choice to do so, or what happens if they don’t. EHBs can be extremely controversial as a political matter (just look at the nasty headlines yesterday that resulted when Congressman Pat Roberts quipped about cutting mammography coverage), and states may not be thrilled about this new obligation. Is it an order from the federal government? If so, it could be another unconstitutional effort to commandeer the states to do the federal government’s bidding. If so, this too would violate the Tenth Amendment.
So far, the AHCA is not shaping up to the federalism friendly legislation it has promised. Instead, the GOP is clearly more concerned about getting a repeal--any repeal--through, than about getting it right. More as more develops.