Crossing the Constitutional Line in Spending From Persuasion to Compulsion: A Reply to Gillian Metzger

In her remarks at the 2011 Annual Meeting of the Association of American Law Schools (AALS), Professor Gillian Metzger of Columbia University Law School offered an interesting critique of the Spending Clause claim now being pursued by a majority of the states in the United States in the constitutional challenge to health care reform. The states claim that the changes to Medicaid are beyond the power of Congress to effect constitutionally under the Spending Clause of the United States Constitution because the changes are coercive and also violate the general restrictions identified by the Supreme Court of the United States in South Dakota v. Dole. Professor Metzger\u27s overriding point that the Spending Clause claim will be a very hard sell has subsequently been borne out by Judge Roger Vinson. Though holding the individual mandate to be unconstitutional, Judge Vinson also ruled against the states\u27 Spending Clause claim in Florida ex rel. Bondi v. U.S. Department of Health & Human Services on January 31, 2011. When Professor Metzger made her remarks on January 7, 2011, days before Judge Vinson\u27s decision (the first decision on the merits of that claim by any court hearing a challenge to health care reform), she correctly predicted the general outcome of the first judicial review of the states\u27 Spending Clause claim. Professor Metzger argued that the coercion claim is undermined factually to the extent the costs of Medicaid\u27s changes will be disproportionately shouldered by the federal government, not the states. Professor Metzger also suggested that the final design of health care reform reflected compromises that in some ways acceded to state interests and federalism, even if the states were not at the table. As to the latter point, however, she did not articulate specifically how health care reform acceded to state interests-perhaps because, with twenty-six states suing in this action alone, that is a tough case to make

Introduction to a Panel on the Modernization of Financial Regulation: What Is the Governmental Role in Finance, Anyway?

On January 8, 1998, at the annual meeting of the Association of American Law Schools, a program sponsored by the Section on Financial Institutions and Consumer Financial Services was held, What Is the Governmental Role in Finance, Anyway? Three distinguished panelists made presentations outlining core concerns that the panelists argued should guide future governmental regulation of banking and finance. The following papers are based on the panelists\u27 presentations at the conference and offer insights into the thinking of some of the most prominent figures in financial regulation today. The papers are evidence of the rich mix in financial regulation of the theoretical and the practical, the historical and the futuristic, the political and the economic, the bureaucratic and the entrepreneurial--an eclectic array of forces that all line up to be counted in the legal calculus. The papers also implicitly acknowledge the general social importance of finance, as well as the sheer difficulty of any attempts to adjust the systematic character of financial regulation

Health Care Reform, the Spending Clause, and Dole\u27s Restrictions

I am here to discuss a constitutional problem with the Health Care Reform Act that so far has gotten little attention and that has not yet been discussed by our other panelists. The question is whether the federal government\u27s expansion of Medicaid is a coercive exercise of federal power in violation of the Spending Clause of the United States Constitution. This is one of the two main arguments being pressed by the twenty states87 in the Florida litigation challenging the constitutionality of health care reform. It is an argument that I think you\u27re likely to hear more of in the future. Although I am a deputy special attorney general for Georgia in that case, I speak here in my personal capacity as a constitutional law professor at Mercer University, and my views do not necessarily reflect those of any party. Let me begin by outlining how Medicaid is being transformed by health care reform. Basically, eligibility for Medicaid under the Act is being expanded by millions of people and now will reach people who are substantially above the federally-specified poverty line. Medicare is exclusively a federal program; Medicaid, on the other hand, is a joint program with the states. It is the occasion for the single largest slug of federal funding going to the states.90 It is a sum that is larger than federal funding to the states for transportation and education combined. Under the Health Care Reform Act, the federal funding for Medicaid appears likely to soon be more than half of all federal funding to the states (it had been about 40% before health care reform). In 2010 Medicaid cost the federal government about $289 billion according to the federal government\u27s own estimates-more than an 11% increase from 2009, and these costs were incurred even before some of the costliest changes to Medicaid go into effect in 2014. So far health care reform seems to have had no dampening effect on Medicaid costs. Meanwhile, Medicaid is also a large and growing part of the typical state\u27s own budget. On average in 2006, even before recent increases in the costs of Medicaid, states were spending about 17% of their own state revenues each year to fund their share of Medicaid. Under health care reform, Medicaid\u27s expansion will initially be funded by the federal government, but even if Medicaid were otherwise staying level (not growing by more than 10% a year because of lack of cost controls in the classic system), states will soon be spending more of their own revenues to fund 10% of the expansion or possibly more in six years, whatever that expansion turns out to be