Spending Power Bargaining after Sebelius

Abstract

In the wake of the Supreme Court’s Affordable Care Act (ACA) decision, it’s easy to get lost in debate over the Chief Justice’s stated theory of the commerce power, or what precedential effect it will have under the Marks doctrine (given that his only supporters wrote in dissent). Still, the practical implications for existing governance is likely to be small, at least in the foreseeable future. After all, much of the debate over the individual mandate focused on how unprecedented it was: despite months of trying, nobody produced a satisfying example of this particular Congressional tool used in previous health, environmental, or any other kind of federal law.

By contrast, the most immediately significant portion of the ruling — and one with far more significance for most regulatory governance — is the part of the decision limiting the federal spending power that authorizes Medicaid. Congress uses its spending power to persuade states to engage in programs of cooperative federalism all the time, ranging from environmental programs under the Clean Air Act to cooperative management of the national highway system. Last month’s decision represents the first time the Court has ever invalidated a congressional act for exceeding its power under the Spending Clause, and the decision has important implications for the way that many state-federal regulatory partnerships work.

This very short essay, based on a blog published in the immediate wake of the decision, offers both criticism and praise for different elements of the Chief Justice’s plurality opinion. After explaining the spending bargaining enterprise, it critiques the unprecedented and unworkable imposition the new decision creates on legislative authority to modify these bargains over time. After Sebelius, Congress can never modify a spending power program without potentially creating two tracks — one for states that like the change and another for those that prefer the original (and with further modifications, three tracks, ad infinitum). The decision fails to distinguish permissible modifications from new-program amendments, leaving every bargain improved by experience vulnerable to legal challenge. That said, the decision also exposes an important problem in spending power bargaining that warrants our attention: that is, how the analysis shifts when the states are not opting in or out of a cooperative federalism program from scratch, but after having developed substantial infrastructure around a long-term regulatory partnership.