The Constitutionality Of A Special Health Care Deal For Alaska

Senator Bill Cassidy is trying to buy the key vote of his Alaska colleague, Senator Lisa Murkowski, for his Obamacare repeal bill. He has made various promises to Alaska to get it:

· The draft of the bill that was released last Wednesday exempted certain low-density states, namely Montana and Alaska, from various spending caps.

· On Tuesday, a National Review editor noticed that the financial projections from co-sponsor Bill Cassidy’s office gave Alaska (and only Alaska) nearly 50 percent more funding than other state in per capita funding.

· This Wednesday, Cassidy’s office said that states with low-population density (states with less than 15 residents per square mile) and whose health care costs were 20 percent or more above the national average would get a cash bump; this would benefit only North Dakota—and Alaska.

· On Thursday, Cassidy’s office said that under a new draft of the bill, Alaska, this time with Hawaii, would continue to receive Obamacare tax credits to help low-income citizens purchase insurance (though citizens in other states could not), would not be subject to particular spending caps, and would receive increased federal match-funding.

Are any of these constitutional? Georgetown law professor Brian Galle points out keeping premium tax credits for Alaska probably runs afoul of the so-called Uniformity Clause of the Constitution, which says “all Duties, Imposts and Excises shall be uniform throughout the United States.” While the requirement has been weakened over time, Galle convincingly argues that it still has enough of a bite to create a problem for any premium tax credits deal that gives Alaska an inexplicable benefit.

But there is another principle that might render any unreasonable largesse for Alaska’s vote unconstitutional—the so called “equal sovereignty” principle. Even a few years ago, this suggestion would have been met with skepticism. Congress has generally been free to burden and benefit states as it sees fit after they are admitted to the Union. Courts summarily dismissed attempts by states to complain about unequal treatment as a general matter—such as Nevada’s effort to remove a nuclear waste facility from its borders.

Then came Chief Justice Roberts’s 2013 opinion in Shelby County v. Holder, striking down a key requirement of the Voting Rights Act (VRA). This “preclearance provision” required certain states, all with an extraordinary history of discriminatory voting laws, to get approval from the federal Department of Justice before changing their voting requirements.

The Chief Justice struck down this requirement. His opinion announced that the Constitution contained an “equal sovereignty” requirement that demanded that Congress treat states equally. “A statute’s … burdens must be justified by current needs, and any disparate [treatment among states] must be sufficiently related to the problem that it targets.” The VRA’s preclearance requirement flouted this “equal sovereignty” requirement, he concluded, because the provision forces some states and not others to “beseech the Federal Government for permission to implement laws that they would otherwise have the right to enact and execute on their own.”

The reach of this protean “equal sovereignty” requirement is untested. It could be that some burdens (like preclearance) diminish state sovereignty, but others (like nuclear waste facilities) do not. But the year before Shelby County was decided, the Chief Justice suggested in another momentous case that at least the healthcare arrangements that states make with the federal government are an exercise of state sovereignty.

In the first of the Obamacare cases to reach the Supreme Court, National Federation of Independent Businesses v. Sebelius, the Chief Justice struck down the federal government’s attempt to force states to expand Medicaid. He explained that the law did not give the states a proper choice as to whether they wanted to accept federal funds and expand Medicaid, or reject both the funds and Medicaid expansion. But if the states have a genuine choice, he noted, they can “act” like “separate and independent sovereigns” and reject the deal with the federal government—or, presumably, accept the arrangement. If the healthcare deals that states strike with the federal government are an exercise of their sovereignty, then the principle of “equal sovereignty” means that Congress should treat these exercises of sovereignty equally.

Cassidy might respond that the goodies for Alaska simply account for the fact that Alaska has higher healthcare costs than the average state. But this is irrational. Take Wednesday’s proposal that benefits only Alaska and North Dakota. Why focus only on low-density states (states which, on average, have less than 15 residents per square mile) when other states have high costs for a myriad of other reasons, such as cost of living? Alaska’s health costs are the highest—38 percent above the national average. But after Alaska comes Massachusetts at 31 percent, Delaware and Vermont at 27 percent, Connecticut, and then North Dakota in fifth place, at 22 percent. (New York clocks in sixth at 21.5 percent). Indeed, why should 20 percent be the cutoff? Why should Maine, New Hampshire, and Rhode Island lose out because they come in all around 19 percent above average? And indeed, why should Georgia and Arizona, whose costs are nearly 20 percent below average, get the same amount per capita as any other state? Shouldn’t all states receive money proportional to their costs if equal sovereignty is being respected?

What clearly happened, of course, is that Cassidy wanted to give Alaska a bump to get Murkowski’s vote and retrofitted a formula that would achieve just that. But this is precisely the behavior that the Chief Justice found lacking in Shelby County, critically noting that “the formula [for determining preclearance jurisdictions] is ‘reverse-engineered’: Congress identified the jurisdictions to be covered and then came up with criteria to describe them.”

While it’s hard to read the tea leaves when it comes to newly minted constitutional principles, and no argument is a slam dunk, a special deal for Alaska is legally vulnerable, at the very least. Senator Murkowski has consistently rejected any bill that would lose Alaska money. Without Cassidy’s bump, Alaska stands to lose billions. But accepting the deal would be a risk which no actuary would advise. She would do well to walk away.

Update: Christopher Robertson over at Bill of Health has characteristically insightful commentary, querying what my approach would mean for the Section 1115 Medicaid waiver program. As he points out, one response could be that “all states are treated equally in their right to apply for such waivers, under several explicit statutory vehicles ... On the other hand, some of these waivers were very much the result of politically-charged negotiations.”

I was wondering about the waiver question—which definitely would present an issue if my argument above is correct. My sense is that no waiver creates inequality as blatant as this. And in theory, at least, if Kansas wanted to apply for the same waiver that Indiana got through political graft, CMS might be hard pressed to say why Kansas couldn’t get it. Here, Alaska’s “waiver” is written into statute. That said, I’m no Medicaid expert, so perhaps my suggestions are naive.