In theory, state participation in Medicaid is voluntary; practically, no state can leave Medicaid because its residents’ federal taxes would continue to help fund the program in all other states. Moreover, opting out of Obamacare’s expanded Medicaid would leave millions of poor people without affordable care. So Obamacare leaves states this agonizing choice: Allow expanded Medicaid to devastate your budgets, or abandon the poor.
The Constitution created a federal government of limited and enumerated powers and promptly strengthened this with the 10th Amendment. The Supreme Court has held that the states therefore retain “a residuary and inviolable sovereignty” incompatible with federal “commandeering” of states’ legislatures and executives. Under Obamacare’s Medicaid expansion, states are dragooned for the furtherance of federal objectives.
In 1987, the court upheld a federal law denying a portion of federal highway funds to states that refused to implement a drinking age of 21. The court held that the threatened loss of funds — only 5 percent — was a “relatively small” inducement and hence “not so coercive as to pass the point at which pressure turns into compulsion.” The court thereby said the federal government cannot behave like Don Corleone, making offers states cannot refuse. At some point, government crosses the threshold of unconstitutional compulsion.