Transcript: SCOTUS Affordable Care Act oral argument of Paul Clement on day 3 – session #2

Florida v. Department of Health and Human Services

Transcript of the oral argument of Paul Clement before the U.S. Supreme Court on March 28, 2012: 

ORAL ARGUMENT OF PAUL D. CLEMENT ON BEHALF OF THE PETITIONER


MR. CLEMENT: Mr. Chief Justice, and may it please the Court:

The constitutionality of the Act’s massive expansion of Medicaid depends on the answer to two related questions.

First, is the expansion coercive?

And, second, does that coercion matter?

JUSTICE KAGAN: Mr. Clement, can I ask you just a matter of clarification? Would you be making the same argument if, instead of the Federal Government picking up 90 percent of the cost, the Federal Government picked up 100 percent of the cost?

MR. CLEMENT: Justice Kagan, if everything else in the statute remained the same, I would be making the exact same argument.

JUSTICE KAGAN: The exact same argument. So that really reduces to the question of why is a big gift from the Federal Government a matter of coercion? In other words, the Federal Government is here saying, we are giving you a boatload of money. There are no -­ there’s no matching funds requirement, there are no extraneous conditions attached to it, it’s just a boatload of federal money for you to take and spend on poor people’s healthcare. It doesn’t sound coercive to me, I have to tell you.

MR. CLEMENT: Well, Justice Kagan, let me — I mean, I eventually want to make the point where, even if you had a stand-alone program that just gave 100 percent, again, 100 percent boatload, nothing but boatload, why there would still be a problem.

JUSTICE KAGAN: Yes. I mean, you do make that argument in your brief, just a stand-alone program, a boatload of money, no extraneous conditions, no matching funds, is coercive?

MR. CLEMENT: It is. But before I make that point, can I simply say that you built into your question the idea that there are no conditions. And, of course, when you first asked, it was what about the same program with 100 percent matching on the newly eligible mandatory individuals, which is how the statute refers to them, and that would have a very big condition.

And the very big condition is that the States, in order to get that new money, they would have to agree not only to the new conditions, but the government here is — the Congress is leveraging their entire prior participation in the program -­

JUSTICE KAGAN: Well, let me give you a hypothetical, Mr. Clement.

MR. CLEMENT: Sure.


JUSTICE KAGAN: Now, suppose I’m an employer, and I see somebody I really like, and I want to hire that person. And I say, I’m going to give you $10 million a year to come work for me. And the person says, well, I — you know, I’ve never been offered anywhere approaching $10 million a year. Of course, I’m going to say yes to that.

Now we would both be agreed that that’s not coercive, right?

MR. CLEMENT: Well, I guess I would want to know where the money came from. And if the money came from -­

JUSTICE KAGAN: Wow. Wow. I’m offering you $10 million a year to come work for me, and you are saying that this is anything but a great choice?

MR. CLEMENT: Sure, if I told you, actually, it came from my own bank account. And that’s what’s really going on here, in part. And that’s why it’s not —

JUSTICE KAGAN: But, Mr. Clement -­

MR. CLEMENT: — simply a matter of saying -­

JUSTICE KAGAN: Mr. Clement, can that possibly be? When a taxpayer pays taxes to the Federal Government, the person is acting as a citizen of the United States. When a taxpayer pays taxes to New York, a person is acting as a citizen of New York. And New York could no more tell the Federal Government what to do with the Federal Government’s money than the Federal Government can tell New York what to do with the moneys that New York is collecting.

MR. CLEMENT: Right. And if New York and the United States figured out a way to tax individuals at greater than 100 percent of their income, then maybe you could just say it’s two separate sovereigns, two separate taxes; but, we all know that in the real world, that to the extent the Federal Government continues to increase taxes, that decreases the ability of the States to tax their own citizenry, and it’s a real tradeoff.

JUSTICE SOTOMAYOR: Is that a limit on the Federal Government’s power to tax?

MR. CLEMENT: What’s that?

JUSTICE SOTOMAYOR: Are you suggesting that at a certain point, the States would have a claim against the Federal Government raising their taxes because somehow the States will feel coerced to lower their tax rate?

MR. CLEMENT: No, Justice Sotomayor, I’m not. What I’m suggesting is that it’s not simply the case that you can say, well, it’s free money, so we don’t even have to ask whether the program’s coercive.

JUSTICE SOTOMAYOR: Now, counsel, what percentage does it become coercive? Meaning, as I look at the figures I’ve seen from amici, there are some states for whom the percentage of Medicaid funding to their budget is close to 40 percent, but there are others that are less than 10 percent.

And you say, across the board this is coercive because no state, even at 10 percent, can give it up. What’s the percentage of big gift that the federal government can give? Because what you’re saying to me is, for a bankrupt state, there’s no gift the federal government could give them ever, because it can only give them money without conditions.

No matter how poorly the state is run, no matter how much the federal government doesn’t want to subsidize abortions or doesn’t want to subsidize some other state obligation, the federal government can’t give them 100 percent of their needs.

MR. CLEMENT: And, Justice Sotomayor, I’m really saying the opposite, which is not that every gift is coercive, no matter what the amount, no matter how small. I’m saying essentially the opposite, which is there has to be some limit. There has to be some limit on coercion.

And the reason is quite simple, because this Court’s entire spending power jurisprudence is premised on the notion that spending power is different, and that Congress can do things pursuant to the spending power that it can’t do pursuant to its other enumerated powers precisely because the programs are voluntary. And if you relax that assumption that the programs are voluntary, and you are saying they are coercion, then you can’t have the spending power jurisprudence -­

JUSTICE SOTOMAYOR: What makes them coercive; that the state doesn’t want to face its voters and say, instead of taking 10, 20, 30, 40 percent of the government’s offer of our budget and paying for it ourselves and giving up money for some other function? That’s what makes it coercive -­

MR. CLEMENT: Well -­

JUSTICE SOTOMAYOR: — that the state is unwilling to say that?

MR. CLEMENT: Maybe I can talk about what makes it coercive by talking about the actual statute at issue here and focusing on what I think are the three hallmarks of this statute that make it uniquely coercive.

One of them is the fact that this statute is tied to the decidedly nonvoluntary individual mandate. And that makes this unique, but it makes it significant, I think.

I will continue. I thought you had a question. I’m sorry.

The second factor, of course, is the fact that Congress here made a distinct and conscious decision to tie the state’s willingness to accept these new funds, not just to the new funds but to their entire participation in the statute, even though the coverage for these newly eligible individuals is segregated from the rest of the program. And this is section 2001A3 at page 23A of the appendix to the blue brief.

JUSTICE GINSBURG: Isn’t that true of every Medicaid increase? That each time — I mean, and this started quite many years ago, and Congress has added more people and given more benefits — and every time, the condition is, if you want the Medicaid program, this is the program, take it or leave it.

MR. CLEMENT: No, Justice Ginsburg, this is distinct in two different directions. One is, in some of the prior expansions of the program, but not all, Congress has made covering newly eligible individuals totally voluntary. If the states wants to cover the newly eligible individuals, they will get the money; but, if they don’t, they don’t risk any of their existing participation programs.

The 1972 program was a paradigm of that. It created this 209(b) option for states to participate. This court talked about it in the Gray Panthers case.

There were other expansions that have taken place, such as the 1984 expansions, where they didn’t give states that option; but, here’s the second dimension in which this is distinct, which is, here, Congress has created a separate part of the program for the newly eligible mandatory individuals. That’s what they called them.

And those individuals are treated separately from the rest of the program going forward forever. They are going to be reimbursed at a different rate from everybody who’s covered under the preexisting program. Now, in light of that separation by Congress itself of the newly eligible individuals from the rest of the program, it’s very hard to understand Congress’s decision to say, look if you don’t want to cover these newly eligible individuals, you don’t just not get the new money, you don’t get any of the money under the -­

JUSTICE BREYER: Where does it say that? I’m sorry, where does it say that?

MR. CLEMENT: It says — well, it — where does it say what, Justice Breyer?

JUSTICE BREYER: What you just said. You said, Congress said, if you don’t take the new money to cover the new individuals, you don’t get any of the old money that covers the old individuals. That’s what I heard you say.

MR. CLEMENT: Right.

JUSTICE BREYER: And where does it say that?

MR. CLEMENT: It says it — there’s two places where it says it.

JUSTICE BREYER: Yeah, where?

MR. CLEMENT: The 2001A3 makes it part of my brief.

JUSTICE BREYER: Where is it in your brief?

MR. CLEMENT: That’s at page 23 A -­

JUSTICE BREYER: In the blue brief?

MR. CLEMENT: Blue brief.

JUSTICE BREYER: 23A. Okay. Thank you.

MR. CLEMENT: And this makes not the point about the funding cutoff. This makes the point just that these newly eligible individuals are really treated separately forevermore. 

JUSTICE BREYER: I want the part about the funding cutoff.

MR. CLEMENT: Right. And there, Justice Breyer -­

JUSTICE BREYER: And that cite section is what?

MR. CLEMENT: I don’t have that with me -­

JUSTICE BREYER: Well, I have it in front of me.

MR. CLEMENT: Great. Perfect. Thank you.

JUSTICE BREYER: And I will tell you what I have, what I have in front of me, what it says.

MR. CLEMENT: Right.

JUSTICE BREYER: And it’s been in the statute since 1965.

MR. CLEMENT: Exactly.

JUSTICE BREYER: And the cite I have is 42 U.S.C. Section 1396(c). So are we talking about the same thing?

MR. CLEMENT: If that’s the — if that is the provision that gives the secretary -­

JUSTICE BREYER: Yeah, okay.

MR. CLEMENT: — among other things -­

JUSTICE BREYER: And here’s what it says at the end.

MR. CLEMENT: — the authority to cut off all participation in the program, yes.

JUSTICE BREYER: It says, “The secretary shall notify the state agency” — this is if they don’t comply — “that further payments will not be made to the state or, in his discretion, that payments will be limited to categories under or parts of the state plan not affected by such failure, which it repeats until the secretary is satisfied that he shall limit payments to categories under or parts of the state plan not affected by such failure.”

So, reading that in your favor, I read that to say, it’s up to the secretary whether, should a state refuse to fund the new people, the secretary will cut off funding for the new people, as it’s obvious the state doesn’t want it, and whether the secretary can go further. I also should think — I could not find one case where the secretary ever did go further, but I also would think that the secretary could not go further where going further would be an unreasonable thing to do, since government action is governed by the Administrative Procedure Act, since it’s governed by the general principle, it must always be reasonable. So I want to know where this idea came from that should state X say, “I don’t want the new money,” that the secretary would or could cut off the old money?

MR. CLEMENT: And, Justice Breyer, here’s where it comes from, which is from the very beginning of this litigation, we’ve pointed out that what’s coercive is not the absolute guarantee that the secretary could cut off every penny, but the fact that she could.

JUSTICE BREYER: All right. Now, let me relieve you of that concern, and tell me whether I have. That a basic principle of administrative law, indeed, all law, is that the government must act reasonably.

And should a secretary cut off more money than the secretary could show was justified by being causally related to the state’s refusal to take the new money, you would march into court with your clients and say, “Judge, the secretary here is acting unreasonably, and I believe there is implicit in this statute, as there is explicit in the ADA, that any such cut-off decision must be reasonable.”

Now, does that relieve you of your fear?

MR. CLEMENT: It doesn’t for this reason, Justice -­

JUSTICE BREYER: I didn’t think it would.

MR. CLEMENT: Well, but here’s the reason. Here’s the reason, Justice Breyer, it doesn’t.

One is, I mean, I don’t know the opinion to cite for that proposition.

Second is, we have been making in this litigation since the very beginning this basic point, the government has had opportunities at every level of this system, and I suppose they will have an opportunity today to say, “fear not, States, if you don’t want to take the new conditions, all you will lose is the new money.”

JUSTICE BREYER: And I said — I said because it could be, you know, given the complexity of the act, that there is some money that would be saved in the program if the States take the new money, and if they don’t take the new money there is money that is being spent that wouldn’t otherwise be spent. There could be some pile like that.

It might be that the secretary could show it was reasonable to take that money away from the states, too.

JUSTICE SCALIA: Mr. Clement -­

JUSTICE BREYER: But my point is, you have to show reasonableness before you can act.

JUSTICE SCALIA: — do you agree — do you agree that the government has to act reasonably? Do we strike down unreasonable statutes? My God!

MR. CLEMENT: And, Justice Scalia, I mean -­

JUSTICE SCALIA: The executive has to act reasonably, that’s certain, in implementing a statute; but, if the statute says, in so many words, that the secretary can strike the whole — funding for the whole program, that’s the law, unreasonable or not, isn’t it?

MR. CLEMENT: That’s the way I would read the law, Your Honor.

JUSTICE BREYER: Yeah, but I have a number — all right.

MR. CLEMENT: And if I could just add one thing just to the discussion is the point that, you know, this is not all hypothetical. I mean, in — there was a record in the district court, and there is an Exhibit 33 to our motion to summary judgment. It is not in the joint appendix. We can lodge it with the Court if you’d like. But it’s a letter in the record in this litigation, and it’s a letter from the secretary to Arizona, when Arizona floated the idea that it would like to withdraw from the CHIP program, which is a relatively small part of the whole program.

And what Arizona was told by the secretary is that if you withdraw from the CHIP program, you risk losing $7.8 billion, the entirety of your Medicaid participation. So this is not something that we’ve conjured up -­

JUSTICE BREYER: All right.

JUSTICE KAGAN: Mr. Clement -­

JUSTICE BREYER: To make you feel a little better, I want to pursue this for one more minute.

There are cases, and many, of which Justice Scalia knows as well, which uses the Holly Hill, uses the same word as this statute: In the Secretary’s discretion. And in those cases, this Court has said, that doesn’t mean the Secretary can do anything that he or she wants; but, rather, they are limited to what is not arbitrary, capricious, and abuse of discretion, in interpreting statutes, in applying those statutes, et cetera.

End of my argument; end of my question.

Respond as you wish.

(Laughter.)

MR. CLEMENT: Well, Justice Breyer, I’m not sure that the Court’s federalism jurisprudence should force States to defend on how a lower court reads Holy Hill. I think that, really, right here, what we know to an absolute certainty is that this Secretary — this statute gives the Secretary the right to remove all of the State’s funding under these programs. And think about what that is, just -­

JUSTICE SOTOMAYOR: Mr. Clement, do you think that the Federal Government couldn’t, if it chose, Congress, say, the system doesn’t work. We are just simply going to rehaul it. It’s not consistent with how — what we want to accomplish. We’re just going to do away with the system and start a new health care plan of some sort. And, States, you can take the new plan, you can leave them. We are going to give out 20 percent less, maybe 20 percent more, depending on what Congress chooses.

Can Congress do that? Does it have to continue the old system because that is what the States are relying upon, and it’s coercive now to give them a new system?

MR. CLEMENT: Justice Sotomayor, we are not saying we have a vested right to participate in the Medicaid program as it exists now. So, if Congress wanted to scrap the current system and have a new one, I’m not going to tell you that there is no possibility of a coercion challenge to it; but, I’m not going to say that it -­

JUSTICE SOTOMAYOR: That’s what I — I want to know how I draw the line, meaning -­

MR. CLEMENT: Well, can -­

JUSTICE SOTOMAYOR: — I think the usual definition of coercion is, I don’t have a choice. I’m not sure what — why it’s not a choice for the States. They may not pay for something else. If they don’t take Medicaid, and they want to keep the same level of coverage, they may have to make cuts in their budget to other services they provide. That’s a political choice of whether they choose to do that or not.

But when have we defined the right or limited the right of government not to spend money in the ways that it thinks appropriate?

MR. CLEMENT: Well, Justice Sotomayor, before — I mean, I will try to answer that question, too. But the first part of the question was, you know, what if Congress just tried to scrap this and start over again with a new program?

Here’s why this is fundamentally different and why it’s fundamentally more coercive, because Congress is not saying, we want to scrap this program. They don’t have a single complaint, really, with the way that States are providing services to the visually impaired and the disabled under pre-existing Medicaid.

And that’s why it’s particularly questionable why they are saying that if you don’t take our new money, subject to the new conditions, we are going to take all of the money you have previously gotten, that you have been dependent on for 45 years, and you are using right now to serve the visually impaired and the disabled -­

JUSTICE GINSBURG: Mr. Clement, may I — may I ask you — question another line. You represent, what, 26 States?

MR. CLEMENT: That’s right, Justice Ginsburg.

JUSTICE GINSBURG: And we are also told that there are other States that like this expansion, and they are very glad to have it.

The relief that you are seeking is to say the whole expansion is no good, never mind that there are States that say, we don’t feel coerced, we think this is good.

You are — you are saying that because you represent a sizeable number of States, you can destroy this whole program, even though there may be as many States that want it, that don’t feel coerced, that say — think this is a good thing?

MR. CLEMENT: Justice Ginsburg, that’s right, but that shouldn’t be a terrible concern because, if Congress wants to do what it did in 1972 and pass a statute that makes the expansion voluntary, every State that thinks that this is a great deal can sign up. What’s telling here, though, is 26 States, who think that this is a bad deal for them, actually are also saying that they have no choice but to take this because they can’t afford to have their entire participation in this 45-year-old program wiped out, and they have to go back to square one and figure out how they are going to deal with the visually impaired in their State, the disabled in their State -­

JUSTICE SCALIA: Mr. Clement, I didn’t take the time to figure this out, but maybe you did. Is there any chance that all 26 States opposing it have Republican governors, and all of the States supporting it have Democratic governors? Is that possible?

MR. CLEMENT: There’s a correlation, Justice Scalia.

JUSTICE SCALIA: Yes.

(Laughter.)

JUSTICE GINSBURG: Let — let me ask you another thing, Mr. — Mr. Clement. Most colleges and universities are heavily dependent on the government to fund their research programs and other things, and that has been going on for a long time. And then Title IX passes, and a government official comes around and say — says to the colleges, you want money for your physics labs and all the other things you get it for, then you have to create an athletic program for girls.

And the recipient says, I am being coerced, there is no way in the world I can give up all the funds to run all these labs that we have, I can’t give it up, so I’m being coerced to accept this program that I don’t want.

Why doesn’t your theory — if your theory is any good, why doesn’t it work any time something -­someone receives something that is too good to give up?

MR. CLEMENT: Well, Justice Ginsburg, there is two reasons that might be different. One is, this whole line of coercion only applies — is only relevant, really, when Congress tries to do something through the spending power it couldn’t do directly.

So if Congress tried to impose Title IX directly, I guess the question for this Court would be whether or not Section 5 of the 14th Amendment allowed Congress to do that. I imagine you might think that it did, and I imagine some of your colleagues might take issue with that; but, that’s — that’s the nature of the question.

So one way around that would be, if Congress can do it directly, you don’t even have to ask whether there is something special about the spending power. That’s how this Court resolved, for example, the Ferra case about funding to — to colleges.

JUSTICE GINSBURG: I’m trying to understand your coercion theory. I know that there are cases of ours that have said there is a line between pressure and coercion, but we have never had, in the history of this country or the Court, any Federal program struck down because it was so good that it becomes coercive to be in it.

MR. CLEMENT: Well, Justice Ginsburg, I’m going — to say the second thing about my answer to your prior question, which is just I also think that, you know, it may be that spending on certain private universities is something, again, that Congress can do, and it doesn’t matter whether it’s coercion. But when they are trying to get the States to expand their Medicaid programs, that’s -­

JUSTICE GINSBURG: Let’s take — let’s take public colleges.

MR. CLEMENT: Okay. Then there — then there may be some limits on that, I mean, but, again, I’m not sure, even in that context, there might not be some things Congress can do. It’s a separate question.

But once we take the premise, which I don’t think there is a disagreement here, that Congress could not simply, as a matter of direct legislation under the commerce power or something, say, States, you must expand your Medicaid programs, if we take that as a given, then I think we have to ask the question of whether or not it’s coercive.

Now, you — in your second question, you asked, well, you know, I mean, where’s the case that says that we’ve crossed that line? And this is that case, I would respectfully say -­

JUSTICE BREYER: And isn’t the covenant going to apply, as well, to the 1980 extension to children 0 to 6 years old, 1990 requiring the extension for children up to 18? All those prior extensions, to me, seem just as big in amount, just about as big in the number of people coming on the rolls, and they all are governed by precisely the same statute that you are complaining of here, which has been in the law since ’65.

MR. CLEMENT: Justice Breyer, I don’t think that our position here would necessarily extend to say the 1984 amendments, and let me tell you why. You know, I’m — I’m not saying that absolutely that’s guaranteed that’s not coercive, but here’s reasons why they’re different.

The one major difference is the size of the program. I mean, the expansion of Medicaid since 1984 is really breathtaking. Medicaid, circa 1984, the Federal spending to the States was a shade over $21 billion. Right now, it’s $250 billion, and that’s before the expansion under this statute.

JUSTICE KAGAN: Well, if you are right, Mr. Clement, doesn’t that mean that Medicaid is unconstitutional now?

MR. CLEMENT: Not necessarily, Justice Kagan. And, again, it’s because we are not here with a one trick pony. And this — one of the factors — we point you to three factors that make this statute uniquely coercive. One of them is the sheer size of this program.

And, you know, if you want a gauge on the size of this program, the best place to look is the government’s own number. Footnote 6, page 73 -­

JUSTICE KAGAN: So, when does a program become too big? I want you to — give me a dollar number.

MR. CLEMENT: $3.3 trillion over the next 10 years. That’s — that -­

JUSTICE KAGAN: I thought $1 trillion.

JUSTICE BREYER: I’ll tell you this number, which I did look up, that the amount, approximately, if you look into it — as a percentage of GDP, it’s big, but it was before this somewhere about 2-point-something percent, fairly low, of GDP. It’ll go up to something a little bit over 3 percent of GDP. And now go look at the comparable numbers, which I did look at, with the expansion that we’re talking about before.

The expansion from 0 to 18 or even from 0 to 6.  And while you can argue those numbers, it’s pretty hard to argue that they aren’t roughly comparable as a percentage of the prior program or as a percentage of GDP.

If I’m right on those numbers or even roughly right — I don’t guarantee them — then would you have to say, well, indeed, Medicaid has been unconstitutional since 1964.

And if not, why not?

MR. CLEMENT: The answer is no, and that’s because we’re here saying there are three things that make this statute unique.

JUSTICE SCALIA: What are your second and third? I’m on pins and needles to hear your second -­

(Laughter.)

MR. CLEMENT: One is the sheer size. Two is the fact that this statute uniquely is tied to an individual mandate which is decidedly nonvoluntary. And three is the fact that they’ve leveraged the prior participation in the program, notwithstanding that they’ve broken this out as a separately segregated fund going forward, which is not -­

JUSTICE KAGAN: So, on the third — on the third, suppose you had the current program and Congress wakes up tomorrow and says we think that there’s too much fraud and abuse in the program, and we’re going to put some new conditions on how the States use this money so we can prevent fraud and abuse, and we’re going to tie it to everything that’s been there initially.

Unconstitutional?

MR. CLEMENT: No, I think that is constitutional because I think that’s something that Congress could do directly. It wouldn’t have to limit that to the spending program. And I think 18 U.S.C. 666 is — is a statute — you know, it may — it’s in the criminal code. It may be tied to spending, but I think that’s — that’s a provision that I don’t think is constitutionally called into question.

JUSTICE KAGAN: I guess I don’t get the idea. I mean, Congress can legislate fraud and abuse restrictions in Medicaid, and Congress can legislate coverage expansions in Medicaid.

MR. CLEMENT: Well, Justice Kagan, I think there’s a difference, but if I’m wrong about that and the consequence is that Congress has to break Medicaid down into remotely manageable pieces as opposed to $3.3 trillion over 10 years before the expansion, I don’t think that would be the end of the world. But I really would ask you to focus on specifically what’s going on here, which is they take these newly eligible people — and that’s a massive change in the way the program works.

These are people who are healthy, childless adults who are not covered in many States. They say, okay, we’re going to make you cover those. We’re going to have a separate program for how you get reimbursed for that. You get reimbursed differently from all the previously eligible individuals. But if you don’t take our money, we’re going to take away your participation in the program for the visually impaired and disabled.

If I may reserve the balance of my time.

CHIEF JUSTICE ROBERTS: Well, I’m — I’m not sure my colleagues have exhausted their questions, so -­

JUSTICE SOTOMAYOR: I guess my greatest fear, Mr. Clement, with your argument is the following:

The bigger the problem, the more resources it needs. We’re going to tie the hands of the Federal Government in choosing how to structure a cooperative relationship with the States. We’re going to say to the Federal Government, the bigger the problem, the less your powers are. Because once you give that much money, you can’t structure the program the way you want. It’s our money, Federal Government. We’re going to have to run the program ourself to protect all our interests.

I don’t see where to draw that line. The uninsured are a problem for States only because they, too, politically, just like the Federal Government, can’t let the poor die. And so, to the extent they don’t want to do that, it’s because they feel accountable to their citizenry. And so, if they want to do it their way, they have to spend the money to do it their way, if they don’t want to do it the Federal way.

So, I just don’t understand the logic of saying, States, you can’t — you don’t — you’re not entitled to our money, but once you start taking it, the more you take, the more power you have.

MR. CLEMENT: Well, Justice Sotomayor, a couple of points. One is, I actually think that sort of misdescribes what happened with Medicaid. I mean, States were, as you suggest, providing for the poor and the visually impaired and the disabled even before Medicaid came along. Then all of a sudden, States -­ the Federal Government said, look, we’d like to help you with that, and we’re going to give you money voluntarily. And then over time, they give more money with more conditions. And now they decide they’re going to totally expand the program, and they say that you have to give up even your prior program, where we -­ first came in and offered you cooperation, we’re now going to say you have to give that up if you don’t take our new conditions.

Secondarily, I do think that our principle is not that when you get past a certain level, it automatically becomes coercive per se. But I do think when you get a program and you’re basically telling States that, look, we’re going to take away $3.3 trillion over the next 10 years, that at that point, it’s okay to insist that Congress be a little more careful that it not be so aggressively coercive as it was in this statute.

And I would simply say that — we’re not here to tell you that this is going to be an area where it’s going to be very easy to draw the line. We’re just telling you that it’s exceptionally important to draw that line, and this is a case where it ought to be easy to establish a beachhead, say that coercion matters, say there’s three factors of this particular statute that make it as obviously coercive as any piece of legislation that you’ve ever seen, and then you will have effectively instructed Congress that there are limits, and you will have laid down some administrable rules.

JUSTICE SCALIA: Mr. Clement, the Chief has said I can ask this.

CHIEF JUSTICE ROBERTS: He doesn’t always check first.

(Laughter.)

JUSTICE SCALIA: As I recall your — your theory, it is that to determine whether something is coercive, you look to only one side, how much you’re threatened with losing or offered to receive. And the other side doesn’t matter.

I don’t think that’s realistic. I mean, I think, you know, the — the old Jack Benny thing, Your Money or Your Life, and, you know, he says “I’m thinking, I’m thinking.” It’s — it’s funny, because it’s no choice. You know? Your life? Again, it’s just money. It’s an easy choice. No coercion, right? I mean — right?

Now, whereas, if — if the choice were your life or your wife’s, that’s a lot harder.

Now, is it — is it coercive in both situations?

MR. CLEMENT: Well, yes. It is.

(Laughter.)

JUSTICE SCALIA: Really?

MR. CLEMENT: I would say that.

JUSTICE SCALIA: It’s a tough choice. And — and -­

JUSTICE KENNEDY: I thought you were going to say that it’s your money and your life.

(Laughter.)

MR. CLEMENT: And, well — it is. But I mean — I might have missed something, but both of those seem to be the hallmarks of coercion.

(Laughter.)

JUSTICE SCALIA: No, no, no. To say — to say you’re — when you say you’re coerced, it means you’ve been — you’ve been given an offer you can’t refuse. Okay? You can’t refuse your money or your life.  But your life or your wife’s, I could refuse that one.

(Laughter.)

JUSTICE SOTOMAYOR:  Mr. Clement, he’s not going home tonight.

(Laughter.)

JUSTICE SCALIA: I’m talking about my life. I think — take mine, you know?

(Laughter.)

MR. CLEMENT: I wouldn’t do that either, Justice.

JUSTICE SCALIA: I won’t use that as an example. Forget about it.

CHIEF JUSTICE ROBERTS: That’s enough frivolity for a while.

But I want to make sure I understand where the meaningfulness of the choice is taken away. Is it the amount that’s being offered, that it’s just so much money, of course you can’t turn it down, or is it the amount that’s going to be taken away if you don’t take what they’re offering?

MR. CLEMENT: It’s both, Your Honor. And I think that that’s — I mean, there really is — there really is, you know, three strings in this bow. I mean, one is the sheer amount of money here makes it very, very difficult to refuse, because it’s not money that, you know, that’s come from some — you know, China or, you know, from the — the — you know, the export tariffs like in the old day. It’s coming from the taxpayers. So, that’s part of it.

The fact that they’re being asked to give up their continuing participation in a program that they’ve been participating in for 45 years as a condition to accept the new program, we think that’s the second thing that’s critical -­

CHIEF JUSTICE ROBERTS: Well, why isn’t that a consequence of how willing they have been since the New Deal to take the Federal Government’s money? And it seems to me that they have compromised their status as independent sovereigns because they are so dependent on what the Federal Government has done, they should not be surprised that the Federal Government, having attached the — they tied the strings, they shouldn’t be surprised if the Federal Government isn’t going to start pulling them.

MR. CLEMENT: With all due respect, Mr. Chief Justice, I don’t think we can say that, you know, the States have gotten pretty dependent, so let’s call this whole federalism thing off. And I just think it’s too important, because, again, the consequence -­if you think about it — if — the consequence of saying that we’re not going to police the coercion line here shouldn’t be that well, you know, it’s just too hard, so we’ll give the Federal Congress unlimited spending power.

The consequence ought to be, if you really can’t police this line, then you should go back and reconsider your cases that say that Congress can spend money on things that it can’t do directly. Now, we’re not asking you to go that far. We’re simply saying that, look, your spending power cases absolutely depend on there being a line between coercion -­

JUSTICE SOTOMAYOR: But could you tell me -­

MR. CLEMENT: — and voluntary action.

JUSTICE SOTOMAYOR: I don’t understand your first answer to Justice Kagan. You don’t see there being a difference between the Federal Government saying we want to take care of the poor; states, if you do this, we’ll pay 100 percent of your administrative costs.

And you said that could be coercion. All right? Doesn’t the amount of burden that the State undertakes to meet the Federal obligation count in this equation at all?

MR. CLEMENT: It — it certainly can, Justice Sotomayor. I didn’t mean to suggest, in answering Justice Kagan’s question, that my case was no better than that hypothetical. I mean, but it’s in the nature of things that I do think the amount of the money, even considered alone, does make a difference, and it’s precisely because it has an effect on their ability to raise revenue from their own citizens. So it’s not just free money that they are turning down if they want to; it really is -­

JUSTICE SOTOMAYOR: Counsel, if we go back to the era of matching what a State pays to what a State gets, Florida loses. It’s citizens pay out much less than what they get back in Federal subsidies of all kinds. So you can’t really be making the argument that Florida can’t ask for more than it gives, because it’s really giving less than it receives.

MR. CLEMENT: Well, then I’ll make -­

JUSTICE SOTOMAYOR: You don’t really want to go back to that point, do you? 

MR. CLEMENT: Well, then I’ll make that argument on behalf of Texas.

(Laughter.)

MR. CLEMENT: But it’s not — it’s not what my argument depends on, and that’s the critical thing. It’s one aspect of what makes this statute uniquely coercive.

And I really think if you ask the question, what explains the idea that if you don’t take this new money, you are going to lose all your money under what you have been doing for 45 years to help out the visually impaired and the disabled, nobody in Congress wants the States to stop doing that. They are just doing it, and it’s purely coercive, to condition the money. It’s leverage, pure and simple.

JUSTICE KENNEDY: If the inevitable consequence of your position was that the Federal Government could just do this on its own, the Federal Government could have Medicaid, Medicare, and these insurance regulations, assume that’s true, then how are the interests of federalism concerned? How are the interests of federalism concerned if, in Florida or Texas or some of the other objecting States, there are huge Federal bureaucracies doing what this bill allows the State bureaucracies to do?

I know you have thought about that. I would just like your answer.

MR. CLEMENT: I have, and I would like to elaborate that the one-word answer is “accountability.”

If the Federal Government decides to spend money through Federal instrumentalities, and the citizen is hacked off about it, they can bring a Federal complaint to a Federal official working in a Federal agency.

And what makes this so pernicious is that the Federal Government knows that the citizenry is not going to take lightly the idea that there are huge, new Federal bureaucracies popping up across the country.

And so they get the benefit of administering this program through State officials, but then it makes it very confusing for the citizen, who doesn’t like this.

Do they complain to the State official because it’s being administered by a State official in a State building, or do they -­

JUSTICE KAGAN: But, Mr. Clement, that is very confusing because the idea behind cooperative Federal/State programs was exactly a federalism idea. It was to give the States the ability to administer those programs. It was to give the States a great deal of flexibility in running those programs. And that’s exactly what Medicaid is.

MR. CLEMENT: Well, that’s exactly what Medicaid was. The question is, what will it be going forward?

And I absolutely take your point, Justice Kagan. Cooperative federalism is a beautiful thing. Mandatory federalism has very little to recommend it because it poses exactly the kind of accountability -­

JUSTICE KAGAN: Cooperative federalism does not mean that there are no Federal mandates and no Federal restrictions involved in a program that uses 90 percent here, 100 percent Federal money. It means there is flexibility built into the program subject to certain rules that the Federal Government has about how it wishes its money to be used.

It’s like giving a gift certificate. If I give you a gift certificate for one store, you can’t use it for other stores; but, still, you can use it for all kinds of different things.

MR. CLEMENT: I absolutely agree that if it’s cooperative federalism and the States have choices, then that is perfectly okay. But when — that’s why voluntariness in coercion is so important. Because if you force a State to participate in a Federal program, then — I mean, as long as it’s voluntary, then a State official shouldn’t complain if a citizen complains to the State about the way the State’s administering a Federal program that it volunteered to participate in.

But at the point it becomes coercive, then it’s not fair to tell the citizen to complain to the State official, they had no choice.

But who do they complain to at the Federal level? There’s nobody there, which would be — I’m not saying it’s the best solution to have Federal instrumentalities in every State, but it actually is better than what you get when you have mandatory federalism, and you lose the accountability that is central to the federalism provisions in the Constitution.

CHIEF JUSTICE ROBERTS: Thank you, Mr. Clement.

REBUTTAL ARGUMENT OF PAUL D. CLEMENT ON BEHALF OF THE PETITIONERS

MR. CLEMENT: Thank you, Mr. Chief Justice and may it please the Court:

Just a few points in rebuttal. First of all we talked a lot about the sort of hallmark of coercion, your money or your life, with somebody with a gun.  I would respectfully suggest that it is equally coercive or certainly not uncoercive if I say your money or your life — and by the way, I have discretion as to whether or not I will shoot the gun. I don’t think that eliminates the coercion.

I also don’t think this is a discretion that the Secretary would ever be able to exercise. And the reason is, we disagree on the details, but the Solicitor General and I agree that, over the years, Congress has had different approaches to expanding Medicare.

Sometimes, as in 1972, it makes the expansion voluntary; that’s also by the way what happened with the stimulus funds, which were voluntary funds. You didn’t lose all your Medicaid funds, which is why 17 States could say no. Sometimes, they take the voluntary approach. Sometimes, as in 1984, they take the mandatory approach. If the Secretary exercised the discretion to say, you know what, it really isn’t reasonable for you to have to give up your funding for the visually impaired and the disabled, just to cover these newly eligible people, so we will make it voluntary; we’ll make that discretionary — that would essentially be creating -­ converting a 1984 amendment approach to a 1972 amendment approach, and I just don’t think that is the kind of discretion that the Secretary has, with all due respect.

Now, moving on to the next point,Justice Alito, your hypothetical, I think, aptly captures the effect on this, based on the fact that these tax dollars are being taken from the State’s tax base, and it’s not like Steward Machine, where the Federal Government would say, and oh, by the way, if you don’t take the option we are giving you, we are going to have a Federal substitute that will go in, and we will take care of the unemployed in your States.

Here, if you don’t take this offer we are giving you, your tax dollars will fund the other 49 States, and you will get nothing.

But of course, this situation is much more coercive, even in your hypothetical, because it is tied directly to the mandate. It’s also tied to the — to participation in the preexisting program. So it is as if there was yet another program for post-secondary education; they gave them exactly your option -­ option — and then they also said, oh, and by the way; you not only — not get these funds, but you lose the post-secondary fund as well.

It’s really hard to understand tying the preexisting participation in the program as anything other than coercive. The Solicitor General makes a lot of the fact that there are optional benefits under this program. Well, guess what? After the Medicaid expansion there will be a lot less opportunity for the States to exercise those options, because one of the things that the expansion does — precisely because the expansion is designed to convert Medicaid into a program that satisfies the requirement of the minimum essential coverage of the individual mandate, things that used to be voluntary will no longer be voluntary.

The perfect example is prescription coverage. It’s a big part of the benefits that some States but not all provide voluntarily now. It will no longer be voluntary after the expansion because the Federal Government has deemed that prescription drugs to be part of the minimal essential health coverage that everybody in this country must have under the mandate. So that option that the State has is being removed by the expansion itself.

The Chief Justice made the point -­

JUSTICE GINSBURG: Mr. Clement, may I ask one question about the bottom line in this case? It sounds to me like everything you said would be to the effect of, if Congress continued to do things on a voluntary basis, so we are getting these new eligibles, and say, States, you can have it or not, you can preserve the program as it existed before, you can opt into this.

But you are not asking the Court as relief to say, well, that’s how we — we — that’s how we cure the constitutional infirmity; we say this has to be on a voluntary basis. Instead, you are arguing that this whole Medicaid addition, that the whole expansion has to be nullified; and moreover, the entire health care act. Instead of having the easy repair, you say that if we accept your position, everything falls.

MR. CLEMENT: Well, Justice Ginsburg, if we can start with the common ground that there is a need for repair because there is a coercion doctrine and this statute is coercion, then we are into the question of remedy. And we do think, we do take the position that you describe in the remedy, but we would be certainly happy if we got something here, and we got a recognition that the coercion doctrine exists; this is coercive; and we get the remedy that you suggest in the alternative.

Let me just finish by saying I certainly appreciate what the Solicitor General says, that when you support a policy, you think that the policy spreads the blessings of liberty. But I would respectfully suggest that it’s a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not. And it’s a very strange conception of federalism that says that we can simply give the States an offer that they can’t refuse, and through the spending power which is premised on the notion that Congress can do more because it’s voluntary, we can force the States to do whatever we tell them to. That is a direct threat to our federalism.

Thank you.

CHIEF JUSTICE ROBERTS: Thank you, Mr. Clement.

###

Learn More:

 

2 Comments on “Transcript: SCOTUS Affordable Care Act oral argument of Paul Clement on day 3 – session #2

  1. Pingback: Supreme Court upholds health care law, affirms coverage mandate | What The Folly?!

  2. Pingback: Transcript: SCOTUS Affordable Care Act oral argument of Donald Verrilli on day 3 - session #2 | What The Folly?!

Leave a Reply

Your email address will not be published.