In Gill v. OPM, Massachusetts v. HHS, among the arguments raised by the parties in District Court and throughout the appeals was a claim made by Massachusetts that the Defense of Marriage Act violated the Tenth Amendment and the Spending Clause of the U.S. Constitution (Article I, section 8 Clause 1.) As summarized by the First Circuit Court of Appeals in its decision striking down DOMA, Massachusetts argued thus:
The Commonwealth brought a companion case, Massachusetts v. DHHS, No. 10-2204, concerned that DOMA will revoke federal funding for programs tied to DOMA's opposite-sex marriage definition -- such as Massachusetts' state Medicaid program and veterans' cemeteries.
By combining the income of individuals in same-sex marriages, Massachusetts' Medicaid program is noncompliant with DOMA, and the Department of Health and Human Services, through its Centers for Medicare and Medicaid Services, has discretion to rescind Medicaid funding to noncomplying states. Burying a veteran with his or her same-sex spouse removes federal "veterans' cemetery" status and gives the Department of Veterans' Affairs discretion to recapture all federal funding for the cemetery.
Massachusetts decided to include same-sex couples in its Medicaid program, and the government concluded that it would pull the state's funding because of their lack of compliance with the rules set forth by the Defense of Marriage Act's impact on the program. The Spending Clause does not allow the federal government to coerce or commandeer the states through placing impossible conditions on states that want to receive federal funding for certain programs. In this case, the First Circuit, relying on existing precedent, found that there was no violation under the Spending Clause or Tenth Amendment because, it said in part:
Supreme Court interpretations of the Tenth Amendment have varied over the years but those in force today have struck down statutes only where Congress sought to commandeer state governments or otherwise directly dictate the internal operations of state government. Printz v. United States, 521 U.S. 898, 935 (1997); New York v. United States, 505 U.S. 144, 188 (1992). Whatever its spin-off effects, section 3 governs only federal programs and funding, and does not share these two vices of commandeering or direct command.
The decision did note however that Congress had pushed its limitations by putting "a thumb on the scales" in order to get the states to comply:
However, the denial of federal benefits to same-sex couples lawfully married does burden the choice of states like Massachusetts to regulate the rules and incidents of marriage; notably, the Commonwealth stands both to assume new administrative burdens and to lose funding for Medicaid or veterans' cemeteries solely on account of its same-sex marriage laws. These consequences do not violate the Tenth Amendment or Spending Clause, but Congress' effort to put a thumb on the scales and influence a state's decision as to how to shape its own marriage laws does bear on how the justifications are assessed.
Precedent until that point had concerned the internal operations of states and while a theory existed that the federal government could go too far in exerting pressure to gain a state's compliance, the Supreme Court had never held that states were unduly coerced. Although Section 3 of DOMA governs funding grants of certain programs -- like Medicaid -- to the states, there was no precedent suggesting a state has a right to the funding even if it doesn't accept new circumstances brought by a change in the law.
The First Circuit, of course, did strike down DOMA on other grounds. And it did include federalism concerns in its rational basis review, since the case directly implicates issues of federalism and state sovereignty. Precedent did not allow the appeals court to strike down the law because it violated the Tenth Amendment or the Spending Clause, but precedent was much clearer in its suggestion that laws which impact minorities that face Congressional animus should be reviewed very carefully, so the First Circuit reached its decision through that equal protection analysis.
But this week, the Supreme Court decided the health care case, National Federation of Independent Business v. Sebelius. Most of the public concern was over the mandate and the fate of the law as a whole, but the Court also decided the fate of the Patient Protection and Affordable Care Act's expansion of Medicaid. Congress had expanded the Medicaid program to reach more people, and they did so with a law -- part of the PPACA -- that said states can either comply with the expansion or they could face the loss of all of their Medicaid funding. This was challenged as too coercive.
The Supreme Court held that the part of the expansion that forced states to comply or lose every bit of their funding went too far and must be applied to read that states that don't accept the conditions won't get access to the funding, but they won't lose the previous Medicaid funds; the Court viewed the expansion as a "new" program and the previous funds as "old" funds the states are entitled to even when changes are made.
Here is how the Court put it:
Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system. "[W]here the Federal Government directs the States to regulate, it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision." Id., at 169. Spending Clause programs do not pose this danger when a State has a legitimate choice whether to accept the federal conditions in exchange for federal funds. In such a situation, state officials can fairly be held politically accountable for choosing to accept or refuse the federal offer. But when the State has no choice, the Federal Government can achieve its objectives without accountability, just as in New York and Printz. Indeed, this danger is heightened when Congress acts under the Spending Clause, because Congress can use that power to implement federal policy it could not impose directly under its enumerated powers.
We have upheld Congress's authority to condition the receipt of funds on the States' complying with restrictions on the use of those funds, because that is the means by which Congress ensures that the funds are spent according to its view of the "general Welfare." Conditions that do not here govern the use of the funds, however, cannot be justified on that basis. When, for example, such conditions take the form of threats to terminate other significant independent grants, the conditions are properly viewed as a means of pressuring the States to accept policy changes.
In this case, the financial "inducement" Congress has chosen is much more than "relatively mild encouragement"--it is a gun to the head. Section 1396c of the Medicaid Act provides that if a State's Medicaid plan does not comply with the Act's requirements, the Secretary of Health and Human Services may declare that "further payments will not be made to the State." 42 U. S. C. § 1396c. A State that opts out of the Affordable Care Act's expansion in health care coverage thus stands to lose not merely "a relatively small percentage" of its existing Medicaid funding, but all of it.
The Supreme Court here seems to be suggesting that states are constitutionally entitled to funding of programs like Medicaid once the funding exists and is given to the states. I'm not alone in thinking this - here is how the situation was explained by a lawyer and featured writer at Daily Kos:
"Understand the argument, once the federal government creates a program that gives states money, the states now have a constitutional right to that money in perpetuity."
For the first time, the Court says a state has a right to funds even if conditions or laws change. And in Massachusetts, before marriage equality existed, there was no question that the state was entitled to Medicaid funds. Then Congress passed DOMA and years later the Massachusetts Supreme Judicial Court held that the state may not deny marriage to same-sex couples. Then and only then did the federal government have an issue with allowing the state to continue receiving its funding.
How would the First Circuit have ruled on the Spending Clause question if it had this precedent to rely on? We can't be sure. But I think the argument flows logically from Chief Justice Roberts' opinion in NFIB. It seems like it's an argument that is at least worthwhile to raise in briefing before the Supreme Court -- where the case is headed now since the Bipartisan Legal Advisory Group (BLAG) -- defending the law -- petitioned the Court for certiorari on Friday. If the Court accepts the case, perhaps this new precedent will be useful.