Coercion, Volition, and Consent: Did the Supreme Court’s Decision Limiting Congress’s Ability to Cut Off Medicaid Funds Signal a New Sensitivity to the Realities of What Counts as a “Free” Choice?

Posted in: Constitutional Law

The political and media firestorm surrounding the Supreme Court’s decision in last month’s Affordable Care Act (ACA) case has now mostly subsided.  With the central question of the case—whether President Obama’s signature policy achievement would be struck down as unconstitutional—now answered, scholars and lawyers are left asking how the various elements of the Court’s decision can and will be used in the future.

Will litigants and legislatures find themselves merely navigating a different set of rhetorical hurdles, or will the ACA decision set new Constitutional boundaries that will change the substantive outcomes affecting people’s lives in the future?  Even if the ACA itself is not the watershed Constitutional law case that some thought it might be, does it signal a new direction, or an acceleration in the current direction, for the Court’s jurisprudence?

The most contentious, and potentially the most volatile, question revolves around the future of the Commerce Clause.  With five Justices having agreed that there is an essential difference between activity and inactivity, for Commerce Clause purposes, we will soon see whether this is the harbinger of an aggressive new initiative on the part of the Court’s five conservatives to strike down more laws for exceeding Congress’s power to regulate interstate commerce.

The Court will surely also spend a great deal of time over the next few years sketching out the limits of the ACA decision’s discussion of the taxing power.  It is difficult to imagine that Chief Justice Roberts will consistently allow the taxing power simply to substitute for the power to regulate commerce, as he essentially did in his controlling opinion in the ACA case.

The Chief Justice’s balancing test—limiting Congress’s taxing power only to situations in which the choice between complying or paying a tax (or what could reasonably have been described as a tax)—raises the interesting question of what constitutes too much coercion under the Constitution.

Similarly, the one part of the ACA that the Court struck down—via a 7-2 decision to prohibit Congress from conditioning continued federal funding for a state’s Medicaid program on the state’s agreement to expand Medicaid coverage—was explicitly based on the idea that, sometimes, what looks like a choice is effectively no choice at all.

In the rest of this column, I will discuss the nature of the free choice that the Court’s majority adopted in the ACA case.  The Court’s reasoning is actually rather surprising in its breadth.  If that reasoning were to be extended to other areas of the law, in fact, this new and expanded concept of coercion-versus-consent could revolutionize the American legal system.

I do not, in fact, expect that the Court’s reasoning will be so broadly construed, either by the Court itself in the future, or by the lower federal courts.  My point here is, instead, simply that there are many areas of life in which we act as if people are free to make choices in a meaningful sense, but where those choices are much more seriously constrained than in the situations that the Court confronted in the ACA case.

If we were to expand our understanding of the limits upon free choices, therefore, the ACA was an odd place to begin.  Yet we work with what the Court gives us.  At least for the moment, there are some new directions in which legal reasoning might move after the ACA decision, as I will explain.

Holding Guns to People’s Heads, and All That: What Is a Truly Free Choice?

In a society that professes to have great respect for people’s right to make their own decisions, it is of surpassing importance that we understand when a person’s decision truly reflects her free will, in contrast to her agreeing to do something simply for lack of any meaningful alternative.

This tension is most easily captured in the classic rhetorical question: “Was someone holding a gun to your head?”  That question, of course, is framed to make us reject only those putatively free decisions that were the result of the most extremely coercive situations.  In the book “Sophie’s Choice,” the title character is a mother of two who is ordered by a Nazi soldier to decide which of her children will live, while the other will be taken and shot to death.  If she refuses to make that choice, both children will be killed immediately. We have long recognized the fraught nature of people’s choices under such extreme coercion.  Does Sophie truly “choose” that one of her children die?  Of course not.

As a formal matter, of course, people in such situations do retain some element of choice.  A person with a gun literally pointed at his head can nonetheless decide not to do what is being asked, just as Sophie could refuse to make the impossible choice between saving the life of her son or that of her daughter.  No one, however, seriously believes that this is really a choice, in any meaningful sense that is consistent with the kind of freedom that our society values and protects.

The problem, however, is that recognizing the nature of not-really-free choices is one of the slipperiest of slopes.  Recognizing that people must, by the very nature of the limitations on human activity, make choices that are not their first choice, we know that any situation can be described as “not truly free.”  If a person would have preferred a different, more appealing set of constraints—such as having a higher income, before choosing how much to pay for a new car (or choosing which new car to buy)—how seriously should we take that person’s possible objection that the choice was not truly free?

Modern legal systems have tried, with varying levels of success to develop notions of personal volition that walk the very difficult line that separates (1) forcing people to live with the consequences of coerced choices, and (2) allowing people too easily to walk away from choices to which they have committed themselves.

As I will describe below, the United States has generally adopted a rather parsimonious set of rules to deal with potentially coercive situations.  That is, our rules are much closer to the end of the continuum where we recognize and give legal force to all but the most extremely limited choices—not choices quite as limited as having a gun literally held to one’s head, to be sure, but certainly choices that do not reflect a broad notion of coercion.  That is why the Court’s reasoning in the ACA case was so notable, in expanding what counts as “not really a free choice at all.”

The History of Medicaid and the Choices That Congress Imposed Under the ACA: Seven Justices Adopt a Puzzling Form-Over-Substance Approach in Striking Down Part of the Statute

In the ACA case, the Supreme Court announced that Congress had exceeded its powers by trying to “coerce” states into agreeing to expand their Medicaid programs.  Understanding why this logic was so surprising requires some background information regarding the Medicaid program and its expansion under the ACA.

Under the law as it existed before the ACA, Medicaid had long been a joint state-federal program, with more than half of the funding coming from the federal government.  Medicaid exists to provide health care to the poorest Americans (unlike Medicare, which is an entirely federal program that provides benefits to nearly all older American, no matter their economic status).  Each year, Congress and the various state governments would choose whether to continue the program, whether to change any of the existing rules, and whether to change funding levels.  States retained the option of dropping out of the program, and Congress apparently retained the right to discontinue the program as well.

The ACA attempted to fill in some longstanding gaps in Medicaid.  Many poor people, especially those who are not parents, received no coverage at all in many states.  Many not-quite-impoverished working poor people were in the terrible situation of being unable to afford health insurance, but not being poor enough to qualify for Medicaid.  Congress thus decided to expand Medicaid coverage to nearly everyone with annual incomes up to 133% of the official poverty line.

Because Medicaid is jointly funded, Congress had to make a decision about how to pay for this expansion.  Rather than relying on states to continue their current levels of funding nearly half of the program, Congress specified that states could join the program at no cost for three years, and then pay increasing amounts for the next three years, topping out at 10% of the total cost thereafter.  If states did not agree to this plan, however, they would lose their funding for the already existing part of their Medicaid programs.

The Court’s five conservative Justices were joined by Justices Breyer and Kagan in striking down the choice that the ACA gave to the states.  I continue to believe that Justice Ginsburg had the better argument in her dissent (joined by Justice Sotomayor), where she pointed out that the majority had suddenly imposed an oddly formalistic method of reasoning, amounting to requiring Congress to continue to fund what would amount to “Old Medicaid,” while allowing Congress the latitude only to create “New Medicaid” for the expanded coverage.  Only if states chose to join “New Medicaid” would they be seen to agree to fund their tiny part of the whole, starting in the fourth year of the program.

Yet, Congress could apparently have repealed all of Medicaid, and then adopted an entirely new program that would have replicated what Congress wanted to achieve through its amendments to Medicaid in the ACA.  This was, therefore, a case of the Court adopting a form-over-substance approach—which was especially odd, given that the Court’s holding regarding Congress’s taxing power was driven entirely by a clear-eyed sense that substance should dominate over form.

Labels should not matter, and judicial decisions should not set up mere obstacle courses based on invoking the correct magic words to achieve a purpose that would be prohibited when Congress fails to utter those magic words.

What Was the Coercion in the Medicaid Expansion in the ACA Case?  The Court’s Surprisingly Expansive Notion of What Counts as Too Much Coercion

I completely agree with Justice Ginsburg’s reasoning regarding the Medicaid aspect of the case.  (Indeed, I agree with her opinion in its entirety.)  Given that her better view did not prevail with her colleagues, however, what can we say about the Court’s reasoning?

The Chief Justice’s decision reads like a brief for the idea that we need to be much more realistic about how much coercion exists in real life.  Sure, he suggests, Congress could, as a formal matter, give states the “choice” to join New Medicaid or lose Old Medicaid, but this is not a meaningful choice at all.  Citing a case from the 1930’s, Roberts states confidently that there is a point where “pressure turns into compulsion.”

This is amazing, not because the notion of passing a threshold beyond which free choice is no longer free is novel to U.S. law, but because of the majority’s rather cavalier assertion that the constraints on free choice that are implicit in the ACA’s Medicaid expansion are beyond the pale.  No state would ever realistically choose not to participate under the ACA’s terms, the majority suggests, and that is all we need to know about what makes this unacceptably coercive.

Why does this break new ground?  In part, it is because the very opinion that the majority quotes, the Court’s 1937 decision in Steward Machine Co. v. Davis, draws its analogy from the notion of “undue influence.”  As the Chief Justice put it, it is essential that the Court “ensure that Congress is not using financial inducements to exert a ‘power akin to undue influence.’ ”

Those who are familiar with contract law will recall that the doctrine of undue influence is an equitable doctrine, under which only the most extreme types of “over-persuasion” will be recognized as a defense to abiding by a contract.  One of the classic cases that is reprinted in some contracts casebooks recounts the case of a man who had been arrested, questioned for hours, and deprived of sleep—only to return home to be confronted by his employer, who immediately asked the man to agree to resign from his job (rather than to face the embarrassing publicity of his arrest, which had been for engaging in “homosexual behavior”).

Even with those extreme facts, the state court that decided to apply the doctrine of undue influence went to great lengths to explain just how limited that doctrine would be.  It was not enough that the person had agreed to do something that was against his economic self-interest.  He also had to be so overwhelmed by the circumstances that he could not effectively think straight.

Surely, however, there are other doctrines that recognize situations of pure economic desperation.  Indeed, the equitable doctrine of “economic duress” is also broadly recognized in this country.  Again, however, courts have generally been quite stingy in describing the reach of the doctrine.  Essentially, only when there is a life-or-death decision for a business firm—the financial equivalent of a gun to the head—will courts excuse performance under a “coercive” contract.

How does the choice that the states face under the ACA compare to those cases where people and companies have been deemed to lack effective choice?  It is not even a close call.  The Roberts majority takes an entire state government and treats it as being bullied by what is really nothing more than a “hard deal.”  States might not want to face the consequences of losing funding for Old Medicaid, but doing so would not bankrupt the state.  The state would still have many choices open to it: reducing coverage, moving funds from elsewhere in the budget, or increasing taxes to make up the difference.

It is true that no politician would like to be faced with those choices, but that aversion is hardly what the law in the United States has ever recognized as the threshold for “no real choice.”  Indeed, even those of us who generally would like to see an expansion of various equitable doctrines, to become more sensitive to the realities of effective coercion of weaker parties in various negotiating situations, have rarely, if ever, dared to imagine the kind of expansion of the notion of coercion that the Court announced in the ACA case.

What Would Happen If We Took the Court’s Expanded Notion of Duress and Coercion Seriously?  A Few Examples of How the Law Might Change

As I noted above, contract law in the United States has been exceedingly grudging in its recognition of situations in which people’s nominally free choices are actually quite coerced.  If anything, however, other areas of the law are even more stingy in this regard.

Consider the area of plea agreements.  As an editorial in Tuesday’s New York Times correctly noted, most plea deals are less like a true negotiation and more like something “closer to coercion.”  Indeed, the criminal law is filled with situations in which people are deemed to be “free” to make choices, and yet in which any reasonable person would not feel anything resembling free will.

For example, the Supreme Court’s search-and-seizure doctrine includes some astonishing decisions that describe people as being “free to leave” a police officer’s presence, when no one in their right mind would actually feel free to do so.

In one instance, a person was sitting on a bus, and police officers boarded the bus.  An officer started to question the person, who later argued that he was not free to leave.  The Court held, bizarrely, that because the officer was not literally blocking the person from standing up and walking down the aisle of the bus to the door, then he was free to leave.

Other areas of the law adopt similarly narrow notions of coercion.  Indeed, we can find countless examples in immigration law, sexual harassment law, labor law, and many others, in which the courts (including the Supreme Court) have recognized only the most limited situations in which a choice is deemed, under the law, to be tantamount to compulsion.

Will the Court’s solicitude toward state governments (which the Justices root in federalism concerns, but which nevertheless ultimately relies on a massive broadening of the definition of coercion) begin to affect other areas of the law?  It seems doubtful, but it could begin to happen.  If so, and if the Court’s conservatives do not like where this reasoning might move the law, they are surely capable of finding ways to curtail the reach of their logic in the ACA case.

If that happens, however, we should not forget just how far the Court had to go to describe Congress’s actions under the ACA as crossing the line into coercion.  If the Court does act to prevent its logic from being applied more broadly, it will reveal that it was not truly motivated by concerns over compulsion at all.