Florida v. Department of Health and Human Services (11-400)
Oral argument: Mar. 28, 2012
Appealed from: United States Court of Appeals for the Eleventh Circuit (Aug. 12, 2011)
AFFORDABLE CARE ACT, MEDICAID, SPENDING POWER, FEDERALISM
Congress established Medicaid in 1965 as way to provide health care to needy individuals in the United States. The program set forth several categories into which potential enrollees could fall. The categories took into account income level, existing medical conditions, and various other factors. The federal government imposes certain conditions on individual state-run Medicaid programs in exchange for federal funding for those programs. In 2010, President Obama signed the Patient Protection and Affordable Care Act, which will expand Medicaid to cover all persons below 133% of the poverty line, regardless of other factors. Florida and several other states filed a lawsuit arguing that this expansion represented an unconstitutional act beyond the scope of Congress’s spending power. Florida argued that the size of the program and lack of a specific alternative to participation effectively coerces states into complying with federal government’s conditions to funding. The Department of Health and Human Services argues that each state has the legal right to abstain from the program, and that the size of the program and the amount of funding involved should not determine whether the conditions are coercive. The Supreme Court’s decision in this case will affect access to health care for needy individuals, the expansiveness of state sovereignty, and the financial burden imposed on the states.
Does Congress exceed its enumerated powers and violate basic principles of federalism when it coerces States into accepting onerous conditions that it could not impose directly by threatening to withhold all federal funding under the single largest grant-in-aid program, or does the limitation on Congress’s spending power that this Court recognized in South Dakota v. Dole, 483 U.S. 203 (1987), no longer apply?
Whether Congress, through its spending power, has the authority to impose conditions on funding that force states to choose between accepting those conditions and receiving federal funding and not accepting those conditions and forfeiting all federal Medicaid funding.
The Medicaid Program Prior to Expansion
Congress established Medicaid in 1965 to provide federal reimbursement to states that voluntarily funded certain types of health care for specified categories of low-income residents. See Florida v. U.S. Dept. of Health & Human Services, 648 F.3d 1235, 1262 (11th Cir. 2011); 42 U.S.C. §1396. While the federal government established categories of eligible individuals, states were initially left to their own discretion to establish eligibility requirements for participation. See Brief for Petitioner, Florida et al. at 2. While not all states initially chose to participate, Medicaid participation increased considerably over the first few years of the program’s existence. See id. at 3.
Congress altered Medicaid for the first time in 1972 when it established the Supplemental Security Income for the Aged, Blind, and Disabled (“SSI”), which created a single federal program that replaced state-run programs for the aged, blind, and disabled. See id. This shift meant that, in some states, a greater number of individuals would be eligible for SSI assistance than had been eligible for care under state-run programs. See id. at 4. Congress did not mandate that states adopt these eligibility criteria; instead it gave states the option of either expanding coverage to all individuals then eligible under SSI, or maintaining the coverage as it existed under the then current Medicaid plan. See id. Following the establishment of SSI, states’ Medicaid participation and coverage continued to expand to the point that the Supreme Court recognized that the federal component was essential to a state’s ability to adequately provide healthcare to its residents. See id.
By the 1980s, every state was participating in Medicaid, and Congress continued to expand the scope of Medicaid coverage. See Brief for Respondent, Dep’t. Health and Human Services at 6–7. The expansions included the imposition of mandatory requirements on the states; for example, coverage of children and pregnant women was required for continued state participation in Medicaid. See id. Congress also encouraged states to expand coverage by increasing the available funding. See Brief for Petitioner at 6. In most categories, however, Congress continued to allow states the discretion to choose the extent of the coverage they would provide. See id.
The Health Care Act’s Expansion of Medicaid
In 2010, President Obama signed the Patient Protection and Affordable Care Act (“Healthcare Act”), which expanded the Medicaid program to require states to provide healthcare to individuals under the age of 65 receiving income below 133% of the federal poverty level. See Florida v. U.S. Dep’t. Health and Human Services, 780 F.Supp. 2d 1256, 1262. The Health Care Act provides that the federal government will initially cover the entire cost of care for newly eligible individuals. See id. at 1263. After 2016, the amount of federal coverage will decrease slightly each year until 2020, at which point federal cost coverage will remain steady at 90% of the cost of care for individuals made newly eligible under the Healthcare Act. See id.
Lower Court Proceedings
After the passage of the Health Care Act, Florida and twenty-five other states (“the States”) filed suit, arguing that the expansion of Medicaid was unconstitutional because it violated the Spending Clause of the Constitution and the Ninth and Tenth Amendments. See Florida v. U.S. Dep’t. of Health and Human Services, 780 F.Supp. 2d at 1264. The United States District Court for the Northern District of Florida granted summary judgment to the government, holding that the Medicaid expansion is constitutional. See id. at 1240–41. The States appealed the ruling on the Medicaid claim, but the Eleventh Circuit affirmed the district court, holding that the States failed to demonstrate coercion. See id. at 1328.
Florida and its supporters argue that the Medicaid expansion coerces the states into accepting its new requirements by making it financially unfeasible to opt out of Medicaid, and therefore is an abuse of Congress’s spending power and an encroachment on state sovereignty. See Brief for Petitioner at 31–32. Supporters of the Department of Health and Human Services, on the other hand, insist that the expansion of Medicaid merely enables, but does not force, the states to expand health coverage at a minimal cost to the states themselves. See Brief of Amici Curiae the States of Oregon et al. (“Oregon”) in Support of Respondents at 9, 12.
Access to Affordable Healthcare and the Financial Burden on the States
A group of state legislators praise the expansion of Medicaid, and contend that it will allow for an immense reduction in the number of uninsured Americans, with little or no cost to the states. See Brief of Amici Curiae State Legislators from the 50 States, the District of Columbia, and Puerto Rico (“Brief of State Legislators”) at 11. Oregon contends that the Health Care Act sets a higher bar for all states by extending mandatory eligibility requirements. See Brief of Oregon at 19. Oregon argues that Medicaid expansion is a positive development because the Health Care Act facilitates and furthers the ability of leading healthcare states to experiment with different methods of providing health care. See id. at 10–11.
Florida argues that states that fail to meet the onerous requirements of the new Medicaid face the potential loss of billions of dollars of federal aid. See Brief for Petitioner at 39. In support of Florida, the Association of American Physicians (“Physicians”) adds that health care spending threatens the financial stability of states more than any other factor. See Brief of Amicus Curiae Association of American Physicians (“Physicians”) at 5. The Physicians argue that essentially mandating that states increase health care spending through the expansion of Medicaid places unavoidable fiscal pressure on the states when many of them already struggle financially. See id.
Oregon, on the other hand, maintains that the Medicaid expansion can be a financial boon to the states. See Brief of Oregon at 13. According to Oregon, the Health Care Act Medicaid expansion is necessary because without it, states could face increased enrollment without the advantage of a proportional increase in federal funding. See id. at 12–13. Oregon argues that without national reform, states would be practically unable to expand their own Medicaid programs for fear of overburdening their system with applicants from other states that provide fewer health care benefits. See id. at 7. Oregon contends that if Medicaid is expanded across all participating states, enrollment can increase without costs falling to just a few states. See id. at 7–8.
Federalism and State Sovereignty
On behalf of Florida, the American Civil Rights Union (“ACRU”) insists that Congress’s imposition of mandatory requirements on the states directly threatens federalism. See Brief of Amicus Curiae American Civil Rights Union (“ACRU”) at 11, 16. The ACRU argues that Congress’s coercion of the states into participation in the expanded Medicaid program interferes with state sovereignty. See id. at 11, 15. The ACRU argues that the Health Care Act’s expansion of Medicaid disrupts this balance, overreaching the limits of Congress’s power by removing the states’ discretion in their application of Medicaid. See id. at 15–16.
The Department of Health and Human Services (“HHS”) and its supporters agree that Congress’s spending power, if unconstrained, could undermine State authority and local policy preferences. See Brief of Oregon at 7. However, HHS argues that Medicaid expansion does not exceed the constitutional limits of Congress’s spending power, which includes the power to set conditions with which the states must comply in exchange for the benefit of federal funds. See Brief for Respondent at 21–22. Similarly, Oregon insists that the Health Care Act’s expansion of Medicaid does not usurp the flexibility and autonomy of the states. See id. at 9–10. In fact, Oregon argues, far from crippling the power of the states, federal action can aid the states in pursuing their desired policies. See id. at 7–8. A group of state legislators argue that Medicaid expansion actually furthers cooperation between the federal government and the states by allowing states that want to make health care more widely available achieve their goals through voluntary partnership with the federal government. See Brief of State Legislators at 6. Oregon contends that the Court’s acceptance of Florida’s coercion argument would halt this federal and state cooperation, freezing Medicaid in time and preventing it from meeting changing healthcare needs. See Brief of Oregon at 27.
Constitutional Limitations on the Congressional Spending Power
Florida argues that the Supreme Court should reaffirm the limitations of Congress’s spending power by declaring the Medicaid expansion contained in the Health Care Act unconstitutional. See Brief for Petitioner, Florida et al. at 24, 32. Florida asserts that if the Supreme Court fails to rule in its favor, the court will have failed to limit the spending power in any way. See id. at 32. Florida argues that because this case involves a particularly serious abuse of the spending power, the precedent set by a ruling against Florida would mean future spending power acts would never fall outside of constitutional limitation. See id. Florida maintains that in United States v. Butler, the Supreme Court held that Congress may not use its spending power as an “instrument for total subversion of the governmental powers reserved to the individual states.” See id. at 26. Florida maintains that upholding the Medicaid expansion provision would represent an unprecedented increase in Congressional power and would violate the holding of Butler. See id. at 32. Florida argues that the expansion of Medicaid is the federal government commandeering tax dollars to coerce the states. See id. at 40–41. The federal government is prohibited from taking such actions to use state governments to accomplish what would be unconstitutional for the federal government to do itself. See id. at 29. If such action is upheld, Florida argues, all measures to restrict the power of the federal government will become meaningless. See id. at 32. Florida argues that with this as precedent, Congress will have the ability use the spending power to circumvent constitutional restrictions. See id. at 59. Florida argues that the anti-coercion doctrine must be taken seriously and should apply here to prevent a limitless federal government. See id.
In contrast, the Department of Health and Human Services (“HHS”) argues that the Congressional spending power is broad, and that the expansion of Medicaid falls within this power. See Brief for Respondent, Department of Health and Human Services at 20, 24. HHS argues that the restrictions on the spending power of Congress enumerated in South Dakota v. Dole allow Congress to spend to promote the general welfare, as long as conditions on funding are made clear and unambiguous and the conditions are related to the federal program. See id. at 21–22. HHS contends that as long as Congress complies with the restrictions, Congress has broad power to advance its policy objectives through the use of the spending power. See id. at 22. HHS maintains the expansion of Medicaid is a valid use of this very power. See id. at 25. It argues that the expansion states clear objectives with which states must comply in order to receive funding from the federal government. See id. at 24–25.
Medicaid Expansion as use of Spending Power
Florida contends that provisions in the Health Care Act that expand Medicaid exceed the limitations on the spending power of Congress. See Brief for Petitioner at 32–33. Florida maintains that although under the spending power Congress can place conditions on the funding it provides, Congress cannot use that power to coerce the states into a course of action. See id. at 25, 27. Florida contends that conditions on federal funding are only valid when a state can voluntarily accept or reject the terms and the funding. See id. at 27. Florida argues that by enacting both the Medicaid expansion and the individual mandate at once, Congress has clearly set forth a mandatory course of action for each state. See id. at 33. Florida maintains that the individual mandate requires all individuals to have health insurance, but the only program through which they can obtain it is Medicaid. See id. As a result, Florida argues, the very existence of needy individuals in each state forces states to accept the Medicaid expansion, and the conditions on federal funding in order to comply with the individual mandate. See id.
HHS argues that the expansion of Medicaid merely fills gaps in the original act that created the Medicaid program. See Brief for Respondent at 23. Because the initial Medicaid act fell within Congress’s spending power, HHS maintains that the content of the Health Care Act’s Medicaid eligibility extension falls within it as well. See id. at 23–24. HHS argues that this extension is set forth in clear, unambiguous terms, complying with the requirement for exercising the spending power set forth in Dole. See id. at 24. HHS asserts that the expansion set forth in the Health Care Act is not unprecedented. See id. at 26–27. HHS contends that Congress retained the ability to expand, contract, or otherwise alter Medicaid. See id. at 39–40. Congress has exercised this right several times throughout the history of Medicaid. See id. at 26–27.
Florida argues that a lack of any alternative to compliance with the new Medicaid conditions reveals that Congress did not intend to give the states a meaningful choice in determining whether they would comply with the Medicaid expansion, in violation of Dole. See Brief for Petitioner at 34. Florida asserts that in other provisions in the Health Care Act, Congress has offered a meaningful choice to states whether to comply with its conditions and receive federal funding, for example by providing mechanisms to create a federal ‘health benefit exchange’ if the states decided not to create one. See id. at 35. Florida argues there is no meaningful choice with respect to the Medicaid expansion. See id. at 34. First, Florida contends that Congress did not intend for there to be a viable alternative to participation in the Medicaid expansion. See id. at 33–34. Florida maintains that Medicaid is the only program under which a needy individual forced to acquire health insurance can obtain such insurance. See id. at 34. Second, Florida argues that states electing not to participate in expansion will forego a sum of federal funding that will create significant budgetary problems. See id. at 39–40. Further, Florida asserts that, if a state wishes to refuse Medicaid expansion, it must refuse Medicaid altogether, thereby relinquishing funding that it already had been receiving under the old Medicaid program. See id. Florida argues that the lack of a serious alternative to compliance with the Medicaid expansion, coupled with the large amount of federal funding at stake effectively forces states to comply with its terms by threatening them with certain bankruptcy otherwise. See id.
In contrast, HHS maintains that the size of the program, the lack of an alternative funding source, and the amount of funding in question do not have any bearing on the constitutionality of the Health Care Act as an exercise of Congress’s spending power. See Brief for Respondent at 33–34. HHS argues that the determinative factor is whether the states have a legal choice to turn down federal funding. See id. at 25. HHS contends that this choice allows individual states to reject the federal program if it is against that state’s interest. See id. at 35. HHS contends that the size of the federal grant should not serve to limit the conditions Congress can place on funding. See id. at 36–38. Rather, the unusually large size of the federal grant attached to Medicaid expansion merely increases the incentive for states to participate in the program. See id. at 36. HHS asserts that Florida does not dispute that the states are legally free to opt out of the Medicaid program. See id. at 25. As a result, HHS contends that Florida’s coercion argument, that state representatives would face angry citizens because health care costs for needy individuals would rise if they turned down federal funding, is not the type of coercion the Court should be worried about. See id. at 35–36. HHS asserts that anti-coercion measures aim to protect against congressional acts that commandeer state governments to achieve what Congress itself cannot, not acts that give states a legal choice whether or not to participate. See id. at 21–22, 35–36. HHS argues that the lack of a specific alternative to Medicaid participation is not a dispositive indication of coercion, rather it is a reflection of the fact that all fifty states have taken part in Medicaid for many years, and there was no reason for Congress to believe that states would opt out, especially given how much of the expansion is funded by the federal government. See id. at 49–50. HHS contends that federal funding will cover all newly eligible enrollees for the first three years of the program extension. See id. This fact underscores the congressional intent that this program extension not create a burden for the states. See id. at 27.
Severability of the Medicaid Extension from the ACA
HHS argues that, if the Court determines the Medicaid expansion to be unconstitutional, it should not invalidate the remainder of the Health Care Act. See Brief for Respondent at 52. The Medicaid expansion is within the Social Security Act, which includes a severability clause, allowing the remainder of the Health Care Act to stand. See id. at 39, 53. Additionally, HHS argues that there is no indication that, if one part of the Medicaid expansion were found to be invalid, that the whole expansion would fall. See id. at 53. HHS contends those states that consent to the expansion should be permitted to participate and receive federal funds. See id.
Alternatively, Florida argues that invalidation of the Medicaid expansion should invalidate the entire Health Care Act. See Brief for Petitioner at 54–55. Florida contends that, because the Medicaid extension is such an integral part of the Health Care Act, and especially the individual mandate, it cannot be severed. See id. Finally, Florida asserts that in order to achieve the Healthcare Act’s goal of near universal coverage, the Medicaid expansion will be necessary to insure half of newly insured individuals under the Health Care Act. See id. This fact reveals its importance, and, in turn, the Congressional intent that the Health Care Act should not survive without the Medicaid expansion. See id.
Florida argues that the Supreme court should reaffirm the limits on the Congressional spending power by declaring the Medicaid expansion of the Health Care Act unconstitutional. Florida contends that the spending power must not be used as tool to subvert the sovereignty of the states and coerce them into action. Florida argues that, because of the size of the program and the amount of funding at stake, states do not have a realistic choice to turn down participation in the program. In contrast, HHS argues that Congress’s spending power is necessarily broad. HHS maintains that, because the states may legally opt out of the program, the Medicaid expansion is not coercive and can be enacted by Congress pursuant its spending power. HHS contends that the size of the program and the amount of funding at issue should have no bearing on the constitutionality of the Medicaid expansion. The Supreme Court’s decision will affect access to health care for needy individuals, the financial burden undertaken by states to provide that care, and the extent to which states have a say in the terms on which they participate in Medicaid.
Edited by: Kelly Halford