Right Is Wrong to Think It Won on Health Care

Some conservatives have convinced themselves that last month’s ruling by the Supreme Court upholding key parts of President Barack Obama’s health-care overhaul contained a great victory in the battle for constitutionally limited government. They are mistaken.

The Obama plan, as written by Congress and signed by the president, tells states they must expand their Medicaid programs or lose all their federal funding. (The federal government provides about half the program’s money.) Seven justices of the Supreme Court held that this threat to cut off funding was an act of unconstitutional coercion.

Conservatives have been volubly unhappy with the rest of Chief Justice John Roberts’s decision in the health-care case, but have mostly agreed with this ruling. Some conservatives have even claimed that it sets the stage for a revival of federalism.

Jay Cost, in the Weekly Standard, calls the court’s move a “major victory for conservatives who cherish our system of dual sovereignty.” Michael Barone writes that the court has embraced “a principle that could work powerfully against big-government policies. Medicaid has been vastly expanded over the years in this manner. Now the court seems to be saying that that game is over.”

Conditions Apply

These hopes are very likely to be dashed. For one thing, the court didn’t announce a clear rule for distinguishing between run-of-the-mill conditions that the federal government can attach to its grants to the states and impermissible coercion. Instead of following a rule, the justices will apparently decide case by case whether the federal government is being so overbearing as to offend their sensibilities. That’s not much of a constitutional doctrine, or even the beginnings of one.

In partial defense of the justices, how could anyone draw a line and claim, with a straight face, that it comes from the Constitution? There is no line of principle here, let alone a constitutional one. Conservatives fought hard to require state governments receiving federal welfare money to force the beneficiaries to seek work. And they were not violating any obvious principle of federalism in doing so: States are not entitled to federal money with no strings attached.

The court could in theory use its malleable new precedent to strike mighty blows against federal programs. In practice, it probably won’t. The court hasn’t struck down a major federal program since the 1930s -- a streak Roberts has just left unbroken. If a future majority of the court wanted to act more boldly, it wouldn’t need this precedent to do so.

The present ruling does little to limit government. Roberts ruled that if states decline to expand their Medicaid programs, the federal government may withhold only the portion of its funding that would have aided the expansion. Some fans of Obama’s health-care plan have noted that the federal government is still giving the states a Medicaid offer they can’t refuse. If Virginia expands its program but Texas doesn’t, the government will tax Texans to aid Virginia’s move. The only way for Texans to get their money back is to expand the program.

Warped Incentives

It is this very dynamic that has caused Medicaid to grow so relentlessly. States that offer better benefits to more people have gotten more federal dollars, and thus have been encouraged. Medicaid has not, for the most part, grown in the manner Barone describes: The federal government hasn’t kept ordering the states to expand the program. Instead, it has enabled that expansion with money. Sixty percent of Medicaid spending is “optional,” rather than mandated.

This arrangement ought to raise serious concerns. It includes obvious incentives to overspend, and it makes accountability elusive: The states can always blame the federal government if the program is unsatisfactory, and vice versa. A court that sees federalism as a matter of accommodating the interests of state governments and respecting their dignity will, however, be blind to these problems. State officials are perfectly happy with being able to direct more money to their constituents than they have to raise in taxes from them. The problem with Medicaid isn’t that the terms of the deal are bad for the states. It’s the very structure of the deal.

We would probably have a smaller government if the federal government just took over the whole program, as President Ronald Reagan proposed. That would better fit the constitutional template of divided powers that the founders gave us. Politicians, not justices, have to do most of the work of fixing our fiscal federalism. The court’s health- care decision doesn’t advance this goal at all.

(Ramesh Ponnuru is a Bloomberg View columnist and a senior editor at National Review. The opinions expressed are his own.)

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To contact the author of this column: Ramesh Ponnuru at rponnuru@bloomberg.net

To contact the editor responsible for this column: Timothy Lavin at tlavin1@bloomberg.net

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