Two More Points on Federalism in King v. Burwell: A Response to Ilya Somin

And the storm rolls on… Ilya Somin has now responded to my response to him, and he correctly notes that I failed to confront his core point. (I was more focused on responding to Rick Hills and Jon Adler.) Ilya’s beef with the application of the anti-coercion argument (via the avoidance canon) in King is that he views it as nonsensical to apply anti-coercion in a way that expands federal power and limits state choice. In Ilya’s view, the plaintiffs’ interpretation in King is the one that better preserves state freedom because it allows states to pick the federal regulatory bundle that they like better. The IRS’s interpretation, by contrast, imposes a uniform regulatory bundle throughout the nation, and leaves the states free to choose only with respect to some relatively minor details of exchange implementation and management. I respond to this line of thinking at length in the JALSA brief, arguing several reasons that states’ freedom to choose under plaintiffs’ interpretation fails to mitigate the constitutional difficulties.

But in a grander sense, Ilya’s perspective is (to put it mildly) simply inconsistent with constitutional federalism doctrine (as he seems to admit). Constitutional federalism is not the same thing as states’ rights or devolution. Of course, since Lopez, the Commerce Clause no longer grants plenary regulatory power to the federal government, so there are limits on the form, and perhaps the substance, of preemptive federal regulations. The federal government cannot dictate every single aspect of substantive law that applies within a given state’s borders. But Ilya is not here arguing that the federal government has exceeded its substantive regulatory powers. He doesn’t argue that either of the regulatory bundles that Obamacare would offer to the states under plaintiffs’ reading would be unconstitutional under the Commerce Clause or the taxing power or any other Article I, § 8 limitation on federal power. Presumably he believes that the federal government has the constitutional authority to impose either set of insurance market regulations to which plaintiffs’ interpretation would give rise (guaranteed-issue and community-rating with mandates or guaranteed-issue and community-rating without mandates). Either bundle, Ilya seems to believe, would be constitutionally permissible if imposed uniformly.

So far so good. The question in this case, though, is whether the federal government has clear constitutional authority to create two different regulatory bundles in a single statute and then to declare that the applicability of one or the other bundle within a given state is contingent on that state’s willingness to do the federal government’s bidding. Given Justice Kennedy’s apparent line of thinking, the most important part of that question is the last part: Can the federal government make the applicability of federal regulations contingent on a state’s willingness to do the federal government’s bidding?

What’s at stake in coercion theory is not the states’ freedom to dictate the substantive regulations that apply within their borders. There is no question, given the Supremacy Clause, that the federal government may trump states’ regulatory freedom. The states do not have a constitutional right to self-determination. What’s at stake in anti-coercion law is the states’ freedom to use their regulatory powers to pursue their own policy priorities rather than the federal government’s. And the anti-coercion problem with the plaintiffs’ interpretation is not that it gives states a choice between two regulatory bundles; it’s that it makes the states’ choice contingent on their willingness to transition some of their own resources to the implementation of federal rather than state policy priorities.

Under the plaintiffs’ interpretation, Obamacare does not say, “States, we offer you a choice between regulatory bundle A and regulatory bundle B. You pick which one applies within your borders.” (As the JALSA brief argues, even that structure might be unconstitutional under Shelby County, a point that seemed to concern Justice Kennedy much less than the coercion point.) Instead, plaintiffs’ interpretation says, “States, we order you to establish exchanges because we, the federal government, think that exchanges are good. If you agree to expend your own time and energy on establishing an exchange for us, then you get regulatory bundle A. If you refuse or fail to establish an exchange, then you get regulatory bundle B. (And, by the way, we’ve designed regulatory bundle B to be extremely unattractive and damaging.)”

In that structure, the constitutional problem is that the federal government is trying to convince the states to do its bidding, and it is doing so through the communication of an extreme and transparently coercive threat. As Rick argued, no believer in anti-coercion doctrine should be able to make a straight-faced argument that the structure plaintiffs urge is clearly constitutionally permissible. So why does Ilya seem to be arguing along those lines? Ilya’s problem with the argument is not that it’s a bad doctrinal argument; it’s that he is not a believer in anti-coercion doctrine. That’s fine for academic work. But NFIB is law, and through the avoidance canon, it applies in King.

This brings me to another point that has surfaced a few times throughout this debate, including in a recent post by David Oedel: whether it should matter to the anti-coercion argument that some states appear unlikely to acquiesce in the federal command even if the plaintiffs win King. In other words, some states look like they will not be coerced by the application of a destructive regulatory bundle within their borders because they are continuing to argue (as they did in NFIB) that they want a mandate-free Obamacare. Indeed, 7 states joined two amici briefs on the plaintiffs’ side in King, arguing that they wanted the freedom to choose a mandate-free regulatory regime.

I answer that question in footnote 8 of the JALSA brief with the following two questions, both of which are unresolved in anti-coercion doctrine: First, does the constitutionality of a threat depend on Congress’s coercive intent or its coercive effects? As I say in the brief, “If Congress intended to make a coercive offer but miscalculated some states’ preferences, the offer might nevertheless be unconstitutional.” That possibility is simply not addressed in any of the Court’s (very small number of) anti-coercion cases. Second, is a threat unconstitutional if any state is incapable of refusing, if every state is incapable of refusing, or if an objectively reasonable state is incapable of refusing? Oedel adds another dimension to that sticky and unresolved question: If a headcount of actually coerced states matters to the constitutional analysis, how should the Court go about determining which states will and will not be capable of refusing the coercive offer? States often refuse federal offers for a time, only to accept them down the road. Are those states coerced? If so, then it will be impossible for the Court to get an accurate head count when challenges arise early in a statute’s life.

Both of these questions are extremely difficult conceptual questions, and both are unanswered in the current doctrine. Oedel argues on that basis that the Court should not address the constitutional merits in this case, and I totally agree. But the difficulty and novelty of these constitutional questions is a compelling reason for the Court to apply the avoidance canon to disfavor the plaintiffs’ interpretation in King. That is, after all, the canon’s purpose: to allow the Court to avoid confronting difficult constitutional questions.

Finally, I want to respond briefly to Ilya’s point about New York. As I argue at length in my prior post, there are many, many ways to distinguish the provision at issue in the relevant part of New York from the provisions at issue in Dole and NFIB, without reference to the distinction between offers to state governments and regulations of state citizens. Given that the anti-coercion constraint grows out of Steward Machine—a case that involved direct regulation—and given that there is no practical difference between threats to the sovereign and impositions on its citizens, there is no doubt in my mind that the one sentence from New York on which Ilya relies would fall by the wayside if King were being decided on the constitutional merits. The stack of law is against that one line in New York. Fortunately, however, the Court is not deciding the constitutional merits in this case, and the troubling line in New York just adds another dimension of difficulty to the constitutional questions that justify application of the avoidance canon.

UPDATE: Ilya responds to this post in an update to his. In his response, Ilya continues to insist that coercion doctrine must be about state choices and that the government’s interpretation in King more severely limits state choices than the plaintiffs’ interpretation. But his sense of the doctrine here is a little bit like the following argument: “Roe v. Wade is a doctrine about women’s freedom to choose. The income tax severely restricts women’s freedom to choose what they do with their money, so the income tax is unconstitutional under Roe.” This argument, like Ilya’s sense of coercion doctrine, ignores a fundamental limitation on the set of choices that is doctrinally relevant. Roe governs only a woman’s right to choose whether to terminate a pregnancy, and NFIB governs only a state’s right to choose whether it will mobilize its own sovereign machinery and expend its own political capital on the implementation of federal (rather than state) policy.

Ilya argues that this limitation is excessively formalistic because preemptive federal regulations are equally intrusive on the states’ freedom to choose how they spend their resources. After all, Ilya notes, preemptive federal regulations cost money, and the federal government’s money comes from the same finite pot as the state governments’ money: citizens’ resources collected through taxation. That a good point. And the same is of course true for abortion; a 100% income tax would effectively eliminate a woman’s right to choose an abortion because she would no longer be able to afford one. Perhaps if economists were in charge of constitutional law, Roe and NFIB would both require scrutiny of federal income taxes. But that’s just not the way doctrine currently works. In the end, Ilya’s argument is academically interesting and might even be sensible, but it is not consistent with the Court’s current approach.

In King, the government’s interpretation might leave the states with less overall choice as to the shape of the statute that applies within their borders because it prohibits the states from choosing a mandate-free ACA. But the government’s interpretation leaves the states with a meaningful choice in the only arena that matters to anti-coercion doctrine: whether or not they will answer Congress’s call to establish exchanges. At least for some states (like Virginia), the plaintiffs’ interpretation eliminates that choice. Under current doctrine, the elimination of that choice is, at least plausibly, unconstitutional.

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