[Congressional Record Volume 157, Number 193 (Thursday, December 15, 2011)]
[Senate]
[Pages S8670-S8671]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           HEALTH CARE REFORM

  Mr. GRASSLEY. Mr. President, in the past 3 weeks I think I have come 
to the floor three times to discuss the case on the President's health 
care reform bill: one time to discuss the constitutionality of the 
individual mandate and another time to deal with the severability 
clause. I come now to speak about the unconstitutionality of the 
massive expansion of Medicaid. Those are three of four issues that the 
Court is going to deal with. My colleagues probably remember the Court 
has extended the period of time they normally deal with arguments 
before them from 1 hour to 5\1/2\ hours because this is such a very 
important case.
  Today I wish to talk about the far-reaching implications of this 
mandate, but also about the constitutionality of the Medicaid 
expansion. If the Supreme Court rules the individual mandate 
unconstitutional, it will have the effect of striking down this new law 
that has not been fully implemented. If the Supreme Court rules that 
the Medicaid expansion and the Affordable Care Act is unconstitutional, 
it has the potential to cause significant changes in a program that has 
been in operation for the last 46 years.
  Just to remind everybody about Medicaid, it was created in 1965 at 
exactly the same time Medicare was created. Where Medicare was created 
to provide health care coverage for our senior citizens, Medicaid was 
created as a safety net for low-income individuals. Medicare is run 
exclusively by the Federal Government. Medicaid is a Federal-State 
partnership. The Federal Government sets the parameters of the Medicaid 
Program. It pays at least half of the program in every State but then 
turns the functional operation of the Medicaid Program over to the 
States.
  In the 46 years since both programs were created, eligibility for the 
Medicare Program has been essentially unchanged. On the other hand, 
eligibility for the Medicaid Program has expanded significantly through 
the years and, with that, the program has grown dramatically as well.
  Medicaid, when it was created, covered fewer than 5 million. Today, 
the Medicaid Program currently covers nearly 57 million. The program 
spends more than $300 billion each year.
  Medicaid has expanded so dramatically for two reasons. First, at 
various points in the last 46 years Congress has mandated that the 
States increase eligibility and services for the program. Second, 
Congress has also given the States the option to expand their 
eligibility. When Congress gives States the option of expanding their 
eligibility, States can expand and the Federal Government will still 
provide its proportionate share of Federal dollars.
  For instance, one of the programs I helped get passed with Senator 
Kennedy from Massachusetts when he was a Member of the Senate was a 
program that allowed some help for families who had particularly high 
health care costs for kids--something that was just catastrophically 
high. That is just one example.
  The decision to expand is up to the States. When Congress mandates 
the States expand eligibility, States can either expand their programs 
or forfeit all Federal funds for the program.
  Now, this is what we call an all-or-nothing requirement. It has been 
used in every expansion of the program. The all-or-nothing requirement 
on States has not only been used to expand eligibility within the 
Medicaid Program, but it has been used to expand services and require 
changes in the administration of the program.

  If the Federal Government wants States to cover podiatrists in 
Medicaid, the Federal Government can mandate States to do so. If a 
State doesn't do it? Withhold all Federal dollars to that State. If the 
Federal Government wants States to implement a secondary payer program 
to ensure that services are being properly paid by private dollars, the 
Federal Government can mandate States to do so and withhold every 
Federal dollar if that State refuses to go along.
  It has been a staple of the program for 46 years that the Federal 
Government can require States to do certain things in Medicaid. Now 
comes along the Affordable Care Act. That act requires States to expand 
their Medicaid Program to cover all individuals up to 133 percent of 
the poverty level. It is the first expansion of Medicaid's mandatory 
eligibility groups since the all-or-nothing expansion in the bills of 
1989 and 1990. Those were both reconciliation acts.
  It is this all-or-nothing requirement that States are challenging and 
that the Supreme Court will consider next year and has given a certain 
portion of the 5\1/2\ hours just to debate this issue. So I think that 
means the Supreme Court thinks this is a very significant issue they 
are being asked to consider.
  So I would like to describe the arguments being made by the States 
that this is an unconstitutional use of congressional power. The States 
argue that the 10th amendment limits the power of Congress to coerce 
States to accept Federal funds as opposed to providing inducements. The 
States argue that a restriction on Federal funds compels rather than 
induces if its burdens and losses as they affect vital ordinary State 
functions are too burdensome and costly. So I quote from their 
position:

       By conditioning all of the States Federal Medicaid 
     funding--for most States, more than a billion dollars each 
     year--upon agreement to substantially expand their Medicaid 
     programs, the Affordable Care Act passes the point at which 
     pressure turns into compulsion and achieves forbidden direct 
     regulation of the States.

  The part of the quote which says it is at the point where pressure 
turns into compulsion makes the act unconstitutional because it has 
always been a principle that the Federal Government can put certain 
conditions on States, but if it reaches a point where the State has to 
do it, in this case the States say: You have really gone too far.
  The Affordable Care Act withholds all Federal dollars, then, from 
States that refuse to submit to the policy dictates of the Congress. 
Medicaid accounts for more than 40 percent of all Federal funds that 
States receive. States spend on average 20 percent of their State 
budget on Medicaid. Federal funds cover, on average, 57 cents of each 
dollar spent on the program because previously I said the Federal 
Government gives every State at least 50 percent, but the average of 
all 50 States is 57 percent of the Medicaid dollars coming from Federal 
dollars.
  In my State of Iowa, for instance, I think it is 63 percent from the 
Federal Government and 37 percent of State funds. So the loss of all 
Federal Medicaid funding would obviously be devastating to the States.
  The States maintain that the law's expansion of Medicaid was 
deliberately designed to force the States to agree to expand the 
program because of the threat that a State's entire Federal funding 
stream would be cut off if they decided not to go along with decisions 
made in Congress. In the harshest terms, they were made an offer they 
could not refuse. Further quoting from the States' argument:

       The Affordable Care Act essentially holds the States 
     hostage based on their earlier decision to establish a 
     Medicaid infrastructure and accept federal funds subject to 
     different conditions.
       The Affordable Care Act uses the States' decision to accept 
     earlier federal inducements against them, and, in doing so, 
     presents states with no real choice: they must abandon 
     completely the existing Medicaid system and funding or accept 
     the radical new conditions. This amounts to a massive bait-
     and-switch.

  The States are arguing to the Supreme Court that there is no way the 
States can turn down a Federal inducement as massive as all Medicaid 
funding.
  This is especially true because the effect of declining is that the 
State's own taxpayers have to pay the full cost of providing health 
care for the neediest citizens of the State and, at the same time, 
provide the Federal Government taxes for Medicaid funds that would be 
distributed to pay for the program, including expansion in the other 49 
States.
  Since no State could make taxpayers fund the State and Federal 
portions of Medicaid, while also taxing their citizens to pay for 
Medicaid in the other 49 States, it is a phony choice, not a real 
choice, for the States to turn down the money to expand their Medicaid 
Programs. In other words, the States are being compelled to do so.
  The States argue that giving notice of the coercion they face does 
not make the choice any less coercive, and they argue that when States 
originally accepted Medicaid, they were not

[[Page S8671]]

warned that their participation would put them at the mercy of any 
future unpredictable congressional demands.
  The States are arguing Congress can change Medicaid, and Congress can 
condition the funding for those changes on State agreement to them.
  But it cannot force changes on the States by threatening them with 
the loss of the entirety of Federal funds.
  Although the Federal Government will pay the vast majority of the 
cost of expansion, the States also point out that coercion turns on the 
financial inducement that Congress offers, not the amount a State is 
coerced to spend.
  The critical issue is what is referred to as the ``coercion 
doctrine.'' The coercion doctrine protects the States' decision whether 
the inducement is worth the cost.
  Among the controlling cases is South Dakota v. Dole in 1987. The 
Supreme Court there upheld a Federal law that threatened States with 
the loss of 5 percent of Federal highway funds if they did not raise 
their drinking age to 21.
  Remember, that was only 5 percent of their road funds, not 100 
percent of their road funds, as in the case of the all-or-nothing in 
the case of Medicaid, where if you do not go along, you are going to 
lose everything.
  So in that Dole case, writing for the majority, Chief Justice 
Rehnquist noted:

       Our decisions have recognized that, in some circumstances, 
     the financial inducement offered by Congress might be so 
     coercive as to pass the point at which ``pressure turns into 
     compulsion.''

  In the years since the Dole decision, Federal courts have yet to 
establish a clear test for coercion. I assume that is what could happen 
if they would overturn Congress's decision; that there would be a 
clearer test of coercion in this Affordable Care Act.
  The Supreme Court will be challenged in this affordable care act case 
to determine where the limits of Federal coercion, if any, lie.
  It is difficult to overstate the potential implications of this 
particular aspect of the affordable care act in the case that is being 
appealed.
  There are three specific ways this decision could have a profound 
impact on Federal policy if the Supreme Court rules in favor of the 
States.
  A ruling for the States could affect future Medicaid policy, current 
Medicaid policy, and broader Federal-State partnerships.
  The expansion of Medicaid in the Affordable Care Act was written to 
minimize the cost to the States. The Federal Government pays for 100 
percent of the cost of the Medicaid expansion in the first few years, 
before transitioning to an approximately 92-percent share of the cost 
of the expansion.
  If the Federal Government cannot require expansion of the Medicaid 
Program and pick up 92 percent of the tab, what can the Federal 
Government require? Would a mandatory expansion be constitutional if 
the Federal Government permanently paid for 100 percent of the cost? 
Could the Federal Government mandate future expansions if they were 
much smaller in scope, such as in the 1989 and 1990 mandatory 
expansions under those reconciliation bills?
  If the Federal Government wanted to require States to cover 
podiatrists or implement a secondary payer program, could it do so 
using Federal funds as leverage to require it?
  A ruling in favor of the States would raise those questions.
  Further, if the current mandatory expansion of Medicaid is 
unconstitutional, what does that imply for previous expansions and 
policies?
  In the 1989 and 1990 acts, when Congress required States to expand 
eligibility for women and children, Congress did so without providing 
any additional funding to the States beyond their normal share, which 
in the case of Iowa today would be 63 percent Federal, 37 percent 
State.
  If the Supreme Court rules in favor of the States, will previous 
mandatory expansions to Medicaid be subject to challenge? Will a State 
be able to challenge the existing enforcement mechanism of withholding 
Federal dollars if a State wants to ignore a service requirement or an 
antifraud provision? These questions will then have to be answered.
  Finally, a Supreme Court ruling on a coercion test necessarily has 
broader implications for all Federal-State partnerships. The original 
Dole case was about transportation funding.
  A Supreme Court ruling in favor of the States will necessarily bring 
into question every agreement between the Federal Government and the 
States where the Federal Government conditions 100 percent of the 
Federal funds on States meeting requirements that are determined in 
Washington, DC.
  It is certainly possible that such a Supreme Court ruling could 
require future Congresses to carefully consider a coercion test in 
designing legislation.
  A Supreme Court ruling in favor of the States in this case could not 
only jeopardize the mandated Medicaid expansion in the Affordable Care 
Act but could challenge the fundamental structure of Medicaid and have 
broader implications outside health care.
  One may ask: Does the Supreme Court have this case before it--and why 
does it have it before it?--a case with such broad and far-reaching 
implications? It is because of a massive restructuring of our health 
care system in a partisan fashion, using nearly every procedural tool 
at the majority party's disposal in accomplishing the goal of passage.
  The constitutionality of this law has been challenged in numerous 
courts throughout the country. These challenges will soon be heard 
before the Supreme Court. While most people want to focus on the 
individual mandate, it is important we do not forget the potential 
consequence of the Medicaid question before the Court.
  It could, obviously, strike the expansion in the Affordable Care Act. 
It could hamstring future Congresses as they consider potential 
policies for the Medicaid Program in the future. It could threaten the 
fundamental structure of the Medicaid Program by bringing into question 
all the requirements on the States in the program today. It could 
require future Congresses to consider the structure of every Federal-
State partnership.
  We are here discussing this because the White House and the 
Democratic majority put their partisan goals ahead of collaboration 
with Republicans and States to build legitimate public policy--contrary 
to how most social policy in this country has been devised: Social 
Security, bipartisan; Medicare, Medicaid, bipartisan; civil rights 
laws, bipartisan--but not this Affordable Care Act, a partisan 
document.
  Now we see that far more than this one specific policy is threatened. 
If the Supreme Court accepts the States' argument, a host of 
constitutional questions will surround the operation of many Federal 
funding streams to the States. It would be difficult to overstate the 
significance of such a ruling. I have outlined it was not necessary for 
the Congress to have taken action that might produce that result.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. RUBIO. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Bennet.) Without objection, it is so 
ordered.

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