Clear Notice for Conditions on Spending, Unclear Implications for States in Federal Healthcare Programs

Nicole Huberfeld, University of Kentucky College of Law

Abstract

This article explores an important case from the 2005-06 Supreme Court term, Arlington Central School District Board of Education v. Murphy. Murphy is a benchmark for Spending Clause jurisprudence, as the new Roberts Court adopted what was the dissenting view for years, but its significance has gone largely unnoticed. Additionally, Murphy has critical implications for the next front in the federalism revolution and for the country’s largest healthcare programs. These broad implications are focused in this article by the example of the Clawback Provision, a new Medicaid requirement that has been challenged by New Jersey, Texas, Maine, Missouri, and Kentucky. The Supreme Court recently denied original jurisdiction, but the states are likely to proceed in district court (they stand to lose millions of dollars under the Clawback Provision). This article finds that the Murphy analysis alters long-standing Spending Clause doctrine in a way that is likely to narrow Congress’ ability to place conditions on federal funds. Also, if the Court was seeking to strengthen the states’ position regarding conditions on federal spending, it missed the mark because it ignores the reality of long-standing spending programs and states’ inability to reject federal conditions in such programs (as with the Clawback Provision). This piece also observes that Congress could not have anticipated the clarity required by Murphy when drafting the Medicare and Medicaid statutes and that this new standard could have far-reaching effects on these forty-year-old healthcare programs. Ultimately, the article calls for a fresh look at spending power jurisprudence in light of both Murphy and long-entrenched spending programs such as Medicare and Medicaid.