Neal Katyal on the Federal Government’s “Pyrrhic Victory” in the Health Care Decisions

Georgetown law professor Neal Katyal is a highly respected liberal constitutional law scholar. He also argued several of the individual mandate cases for the Obama administration in the lower courts. In this recent New York Times op ed, he suggests that the result may well have been a “Pyrrhic victory” for federal power:

The obvious victor in the Supreme Court’s health care decision was President Obama, who risked vast amounts of political capital to pass the Affordable Care Act….

But there was a subtle loser too, and that is the federal government. By opening new avenues for the courts to rewrite the law, the federal government may have won the battle but lost the war….

The health care decision also contains the seeds for a potential restructuring of federal-state relations. For example, until now, it had been understood that when the federal government gave money to a state in exchange for the state’s doing something, the federal government was free to do so as long as a reasonable relationship existed between the federal funds and the act the federal government wanted the state to perform.

In potentially ominous language, the decision says, for the first time, that such a threat is coercive and that the states cannot be penalized for not expanding their Medicaid coverage after receiving funds….

This was the first significant loss for the federal government’s spending power in decades….

Of equal concern is the court’s analysis of the constitutionality of the individual mandate. While the court upheld the mandate, it did so by rejecting the federal government’s claim that it was regulating commerce.

Obviously, Katyal and I disagree on the merits of the two cases. For example, I think he is wrong to suggest that “until now, it had been understood that when the federal government gave money to a state in exchange for the state’s doing something, the federal government was free to do so as long as a reasonable relationship existed between the federal funds and the act the federal government wanted the state to perform.” The Supreme Court had indicated that “coercive” conditional grants are unconstitutional as far back as the 1930s, and reiterated that point in South Dakota v. Dole (1987), the leading modern precedent on conditional grants.

But we do agree that both the Medicaid decision and the individual mandate ruling contain potentially important gains for those who want stricter enforcement of constitutional limits on federal power. Indeed, Katyal’s pessimism on this score is probably greater than my optimism. I think that he underrates the significance of Chief Justice Roberts’ overexpansive interpretation of the Tax Clause.

Interestingly, Katyal points to yesterday’s Stolen Valor Act decision as an additional indication that both the Court and the public are willing to support judicial overruling of federal statutes. The case is very different from the mandate and Medicaid rulings in many ways. But I can to some extent see his point.

I would not go so far as to say that Katyal’s side of the debate over the scope of federal power has “won the battle, but lost the war.” Far from it. But it is clear that yesterday’s decisions give supporters of limits on federal power some useful ammunition, despite also dealing us a painful defeat. At the very least, the “war” is far from over.