NCPA - National Center for Policy Analysis

Health Reform's Medicaid Mandates Are Unconstitutional

March 29, 2012

Deep within the Patient Protection and Affordable Care Act (ACA) are little-noticed provisions allowing federal bureaucrats to force huge tax increases on states deemed insufficiently cooperative, says Rob Natelson, a senior fellow in constitutional studies at the Independence Institute.

The rules -- referred to as the "Medicaid mandates" -- have not attracted as much attention as the mandate forcing individuals to buy government-approved health insurance.  Both are now under review by the U.S. Supreme Court.

What few people know is that the Medicaid mandates are, if anything, even more constitutionally dubious than the individual mandate.

Here are the issues in a nutshell:

  • Our constitution divides power between the federal government and the states, just as it divides power among the three branches of the federal government.
  • For split sovereignty to work, both the states and the feds must be able to make independent decisions within their respective spheres.
  • The ACA attempts to crack the constitution by directing and empowering administrators in the U.S. Department of Health and Human Services (HHS) to effectively bankrupt any state that makes Medicaid decisions different from those approved by the federal government.

There are two parts to this.

  • First, the ACA imposes costly new requirements on states for Medicaid spending, overriding any state choice to the contrary. The federal government has promised to pick up some of the tab, but given the disastrous federal financial situation, it is unclear how or whether this will happen. Whether or not it does, the feds will be unloading huge new expenses onto state taxpayers.
  • Second, if a state does not comply with federal instructions to the letter, the ACA gives HHS virtually unrestrained authority to stop any and all Medicaid funds to that state.

Medicaid is not some minor state-federal program.  It is the largest item in most states' budgets.  So HHS retaliation would throw a state into financial havoc.

Source: Rob Natelson, "Health Reform's Medicaid Mandates Are Unconstitutional," Solutions, March 14, 2012.

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