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Posted by on Jul 2, 2012

Health Care Ruling Leaves Many Questions About Grants

Just a quick note regarding the Supreme Court ruling on the health care act and its potential impact on federal grants.

Part of the decision expressly addresses the issue of whether Congress has the authority to set conditions upon the receipt of grants. The short answer is: yes, it can, as long as those conditions do not constitute “coercion.”

The Court said that in this case, the threat of withholding 100% of Medicaid funding from states that did not want to participate in the expanded coverage program was coercion and was therefore unconstitutional. However, it did not clarify if withholding lesser amounts was coercion or simply “persuasion” — which is permissible. (The Court indicated that “persuasion” was permissible when it ruled that Congress had the authority to withhold highway construction funding — which totaled about 5% of state funding — from states that did not raise the drinking age to 21).

So the Court’s health care decision leaves a lot of room for discussion, interpretation and perhaps even future legal challenges. At what point does “persuasion” become “coercion?” Does this logic apply to all grants and cooperative agreements or just certain essential services? And so forth.

We’ll be taking a closer look at this issue in our Federal Grants Update 2012 course.

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