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Health-Care Ruling Has Implications for Education Spending

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The part of the U.S. Supreme Court's historic decision upholding the new federal health-care law which also held that its Medicaid expansion was unduly coercive on the states likely has implications for federal education spending programs.

In fact, just as they did at oral arguments in March over the Affordable Care Act, the justices in their opinions on Thursday raised several education laws and cases, making comparisons between the federal health insurance program for the poor and the Elementary and Secondary Education Act, for example. Some of the justices most critical of the health law also appeared concerned about an ever-expanding federal role in education.

On the central question in the health-care case, the court ruled 5-4 that the individual health insurance mandate that is a linchpin of the law could be upheld under Congress' taxing power.

On the Medicaid issue, the court effectively ruled 7-2 that the Medicaid expansion violates the U.S. Constitution by threatening the states with the loss of their existing Medicaid funding if they decline to comply with the expansion.

Congress put "a gun to the head" of the states to force them to to add a much larger pool of the poor to the Medicaid rolls, Chief Justice John G. Roberts Jr. said in his main opinion in National Federation of Independent Business v. Sebelius (Case No. 11-393). Medicaid funding accounts for over 20 percent of the average state's total budget, with federal funds covering anywhere from 50 to 83 percent of those costs, he noted.

"Congress may use its spending power to create incentives for states to act in accordance with federal policies," the chief justice said. "But when pressure turns into compulsion, the legislation runs contrary to our system of federalism."

Roberts said, though, that the Medicaid expansion could be saved by allowing funds to be withheld only for violations stemming from the expansion itself, not from existing funding.

Justices Stephen G. Breyer and Elena Kagan joined Roberts's opinion on this point, while Justices Antonin Scalia, Anthony M. Kennedy, Clarence Thomas, and Samuel A. Alito Jr. wrote an opinion that said the Medicaid expansion—along with the rest of the health-care law—was unconstitutional. (Thus, they helped make up a majority for the limitation on the Medicaid expansion.)

In a dissent solely on the Medicaid issue, Justice Ruth Bader Ginsburg said that the majority "for the first time ever finds an exercise of Congress' spending power unconstitutionally coercive" and that "a majority of the court ... buys the argument that prospective withholding of funds formerly available exceeds" the spending power.

Ginsburg's dissent, joined by Justice Sonia Sotomayor, discussed several high court rulings on federal education spending for the idea that Congress's authority to condition federal funds "is not confined to spending programs as first launched."

She noted that in a 1985 case, Bennett v. Kentucky Department of Education, the court upheld the U.S. Secretary of Education's efforts to recapture Title I funds after Kentucky in 1974 violated a spending condition that Congress added in 1970 to the ESEA, which was adopted in 1965.

"We held that the Commonwealth suffered no surprise after accepting the federal funds," Ginsburg said. "Kentucky was therefore obliged to return the money." Court precedents demand "that conditions on federal funds be unambiguously clear at the time a state receives and uses the money—not at the time, perhaps years earlier, when Congress passed the law establishing the program," Ginsburg said.

Spending Clause Concerns

The opinion jointly authored by Justices Scalia, Kennedy, Thomas, and Alito (all of whom said they would overturn the entire ACA) includes its own discussion of federal education spending.

The four begin with a general warning about the scope and potential misuse of Congress' spending power. The opinion cites language from a dissent by Justice Kennedy in a 1999 case, Davis v. Monroe County Board of Education, that set the parameters on when schools could be sued for sexual harassment under Title IX of the Education Amendments of 1972.

"The Spending Clause power, if wielded without concern for the federal balance, has the potential to obliterate distinctions between national and local spheres of interest and power by permitting the federal government to set policy in the most sensitive areas of traditional state concern," Kennedy wrote in that 1999 dissent.

Another part of the joint dissent reflects a hypothetical question raised at the March oral argument in the case by Justice Alito.

"Suppose, for example, that Congress enacted legislation offering each State a grant equal to the State's entire annual expenditures for primary and secondary education," the joint opinion states. "Suppose also that this funding came with conditions governing such things as school curriculum, the hiring and tenure of teachers, the drawing of school districts, the length and hours of the school day, the school calendar, a dress code for students and rules for student discipline."

The state could turn down the grant, the opinion suggests, but its residents would still have to pay federal taxes and an equivalent amount in state taxes. "If the state gave in to the federal law, the state and its subdivisions would surrender their traditional authority in the field of education," the opinion says.

Having said that, Justices Scalia, Kennedy, Thomas, and Alito did note that Medicaid is by far the largest federal program of aid to the states, followed by federal aid for elementary and secondary education.

"The offer that the ACA makes to the states—go along with a dramatic expansion of Medicaid or potentially lose all federal Medicaid funding—is quite unlike anything that we have seen in a prior spending-power case," the four justices said.

Ultimately, the four justices did not like Chief Justice Roberts's solution to the constitutional problem of "rewriting the Medicaid expansion so as to allow states that reject it to retain their pre-existing Medicaid funds."

Photo: Supporters celebrate the Supreme Court ruling upholding the Affordable Health Act in front of the U.S. Supreme Court in Washington, DC. (Alex Wong/Getty Images)

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