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Summer 2012




Loyala University Chicago, School of Law




The Supreme Court will decide two major Medicaid cases this term that raise major questions about the program and the tensions it creates between the federal government and the states. The Court heard oral arguments on October 3d in Douglas v. Independent Living Center, a dispute between California and its Medicaid providers regarding reimbursement cuts due to California’s budget crisis. The Medicaid providers argue that these proposed cuts are so extreme as to violate federal law and thus the Supremacy Clause. Their contention hinges on the Equal Access Provision of the Medicaid Act, which commands states to pay healthcare providers that participate in Medicaid “sufficient[ly]” to ensure that Medicaid enrollees have thesame access to medical care as other citizens in their geographic area. This provision is at the heart of Medicaid’s aspirational design, which is meant to mainstream impoverished patients into the American healthcare system, and enforcement of this provision will be crucial for the success of the Medicaid expansion in 2014. But, the position that the United States has taken in Douglas is highly deferential to states’ decisions regarding Medicaid and goes so far as to argue that only the Centers for Medicare and Medicaid Services can enforce the terms of the Medicaid Act, a radical view that is contested by former HHS administrators and by members of Congress.

On the other hand, the United States effectuated a broad view of federal power when it expanded Medicaidto everyone up to 133% of the federal poverty level in the Patient Protection and Affordable Care Act. I have written elsewhere that this is a major philosophical shift for Medicaid, and one that partially federalizes a program that has historically been deemed an exercise in cooperative federalism. The Court recently granted certiorari in Florida v. Department of Health and Human Services, and though much of the conversation has focused on the constitutionality of the individual mandate, the first question in this petition was whether theMedicaid expansion constitutes impermissible coercion under the South Dakota v. Dole test for constitutional conditions on federal spending. Thus, the greatest change to the Medicaid program since its inception may be reversed by the Supreme Court as a matter of Spending Clause interpretation because the federal government is boldly exercising broad power to influence the states, regardless of their uncooperative attitude.

This essay focuses on the tension between the arguments being made by the United States in Douglas and in Florida v. HHS. Douglas has the potential to close the courthouse doors to Medicaid enrollees and Medicaid providers because the Unites States has taken such a deferential stance toward the states. In contrast, the federal government has advocated a very broad interpretation of federal authority under the spending power to modify and expand Medicaid as it sees fit, regardless of the states’ lack of enthusiasm regarding the federalized elements of Medicaid. This paper will evaluate the dichotomous positions before the Court and suggest how to resolve them. (I address the larger constitutional questions in these cases in a separate project.)

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