Donald Verrilli then approached the bar again, and almost immediately, Justice Scalia asked, “What did we mean” when the Court said coercion could exist. The Chief Justice, too, pushed hard for an example. Mr. Verrilli stumbled about and never gave a specific example, prompting Justice Scalia to remark, “I couldn’t think of one, so I’m not blaming you for thinking of one” either.
Talk then turned to the power for the Secretary to revoke preexisting Medicaid funding. Chief Justice Roberts wanted to know if it was common for an “unrelated threat” to be made in association with new funding. Mr. Verrilli cited an example of one in Arizona.
Justice Kagan then did as she had yesterday, effectually making one of Mr. Verrilli’s points for him. She noted that the Secretary may have this power, but she doesn’t want to use it, as it would take away healthcare for poor, ill people. Thus, she’ll sit down with the states, they’ll work out the kinks they don’t like in the plan, and they won’t lose their funding. This is in direct contrast with Mr. Clement’s argument that simply possessing that power is coercive.
However, Chief Justice Roberts made a key distinction that hinted at his willingness to deem the expansion coercive. He noted the “fiscal reality” that the government may revoke some of their now-promised Medicaid funding in the future. At the moment, the states are only on the hook for 10% of the new Medicaid funding. But he postulated that in the future, budgetary constraints on Congress could lead them to take away more of that funding, thereby leaving the states on the hook for perhaps 20% of those costs.
He then turned to the relevant precedent, South Dakota v. Dole, and pointed out that the federal funding South Dakota was suing for was just 7% of their highway funding. It’s a trivial amount, especially when compared to the amount at stake with Medicaid.
The Justices seemed less skeptical of the coercion charge than previously anticipated. Even Justice Kennedy noted that the states had “no real choice” but to accept the money. It’s hard to imagine they’ll use this as the defining limit of the coercion test laid out in Dole. But it’s certainly not impossible.