versus republican libertarian or conservative versus moderate or progressive issue purely. the 26 states that is to say the 26 republican officials senior officials representing states are on one side, but there are -- there's a really excellent amicus curiae brief filed by 13 democratic states including some very large ones. so that the populations represented by the two sides are probably more equal than 26 to 13. but that's not really relevant. that brief details why the medicaid expansion in the nca and nca itself is enormously ben fs official to states. i think we should bear that in mind. this is a very serious and

genuine philosophical policy, political debate, but it is really not a debate between the states or state interests and the feds. as i said, i have to disagree with a great deal of how these, use were characterized by my friend here. as you might expect. but i do agree -- about the way in which roger and i think tim stated that, the basic simple issue. medicaid expansion in the aca has a number of aspects, but the main thing is very simple. it expands eligibility to all adults up to 138% of the federal poverty line from where it was before and roger and tim both appropriately described the existing pre aca eligibility standard.

and the aca provides that states don't have to accept this expansion, but if they reject the expansion they only do so by withdrawing from medicaid altogether and thereby losing all their existing medicaid fund. now, just up front, let me just say why this is important. this theory, this coercion theory, this is a theory that choice that is posed by the aca to the states constitutes unconstitutional quote unquote coercion. if it's accepted or to the extent that it's accepted that could topple long standing programs on a truly massive scale on a scale as i said before much broader than with the collateral impact of accepting the claim against the individual mandate.

and for that basic proposition i want you to know that this is not just some deranged liberal chimera. you would be interested to know that the radical impact of the claim that is being made against the medicaid expansion provisions provoked i think the only significant defection from within senior republican ranks on these issues. on december 15th none other than senator charles grassly took to the senate floor and delivered it. he didn't just put it in the record. he delivered a speech which devastates every single legal argument that his republican colleagues from the 26 states

are making about the medicaid expansion. for all the reasons that i'm going to identify. and for all the reasons that those who support the medicaid expansion in court adduce. senator grassly said among many other things i'm going to quote a supreme court ruling in favor of the states will necessarily bring into question every agreement between the federal government and the states where the federal government conditions 100% of the federal fund on states meeting requirements that are determined in washington. now laws within the cross hairs of that forecast would include not just the expansion of medicaid, but all of medicaid. it would include all federal aid to education programs and all requirements that are tied to those programs. that would mean for example, title six of the civil rights act which requires recipients of federal fund to abide by a whole

set of familiar anti-discrimination guarantees. it would include title nine which of course is the reason why we have women's collegiate sports intramural and intercollegiate. it would include a whole raft of requirements for assuring equal access to people with disabilities, which are of immense significance. it would affect foster care programs. it would affect the solomon amendment which some of you may know requires that all universities receiving federal funds grant equal access to military recruiters. which was itself the subject of a supreme court case not too long ago. it would affect anti-abortion strings on the receipt of

federal funds. so the impact of siding with the states or even changing the law or stating what the law is in ways that reflect a great deal of the state's argument or the arguments that roger and tim have ably put just now would have an enormous domino consequences for all these programs. you know roger i enjoy going one against three. and i am going to try to get that -- but please do something if i start to run over my time. tim was very brief. there's an awful lot that i'd like to respond to. i'm going to have to go out of my rap and respond to one thing. one thing about the wonderful

power point presentation is that i think i'm not an economist and i wasn't quite sure what i was looking at entirely. i think that a lot of that scary looking nearly vertical line that was going up to represent states' costs -- >> you weren't sure? >> it was like this. it went up very sharply. i think however accurate or not accurate it is, i'm sure it's substantially accurate, a large amount of those costs you should understand are not relevant to the constitutional issue of coercion at all. the fact that the affordable

care act may or may not encourage people who are now eligible for medicaid to enroll in medicaid has nothing whatsoever to do with whether or not the medicaid expansion choice that the states now face about increasing eligibility has nothing to do with whether or not that choice is constitutional or coercive or whatever. what i am going to do is very briefly, run through as briefly as i can, run through the hodgepodge of legal theories that -- that the republican states have come up with. and they are -- it is come up with. because -- the law is very clear -- there haven't been a lot of cases -- there have been some cases recently, tim, in which, in which the court has

reaffirmed on the spending power. there haven't been many. there is really no law out there for the challengers to hang on to. so they really are making it up as they go along. here's what they made up. there are at least five theories that i can count in their brief. the first -- the first point really is that this expansion is different from -- medicaid expansions because it's uniquely onerous. in fact the opposite is the case. this expansion of medicaid is uniquely not onerous compared to past expansions of medicaid. tt average federal share of state medicaid spending now is 59%, which i didn't know before but i'll take it for granted.

for this expansion of medicaid, the federal government is undertaking to pay 100% of what it will cost to pay for newly eligible people through 2016 and after that the percentage drops to 90% until 2020 and it is made permanent at 90%. so the federal government is covering much more of the shared costs of funding medicaid for this expansion than it has for any of the past expansions. so the argument that this is uniquely onerous as a constitutional matter is simply nonsense. three minutes left. the rest of the arguments. next argument -- they have actually said this over and over again. never before has the federal government done this when it's expanded medicaid. never before has it said if you don't accept the new requirements, then you can only do that by withdrawing from

medicaid altogether and losing all your existing funding. that's simply completely not true. almost every past expansion of medicaid has been done in exactly the same way. this is not just a debater's point, it means were the court to accept this argument, it would call into question the entire medicaid program because all of these past expansions would then become vulnerable to challenge. the third argument is what i would call sort of the i want my cake and i want to be able to eat it too argument which you've already heard and that is states are coming up and saying, well, we want you, supreme court, to say we can keep -- we have a constitutional right to keep the very large amount of federal funds now going into medicaid, the hundreds of billions of dollars going into medicaid, as a matter of fact, and not accept any new strings that a majority of the national congress wants to impose. in other words, they're basically saying we want to have

a constitutionally -- we want to turn medicaid into a constitutionally imposed block grant program, which is -- i can see why it would be an aspiration but it hardly is the law. i have one minute left. finally, there's an argument that the mandate is an act of commandeering to get the states -- to recruit the states to help fund implementation of the individual mandate and i think tim outlined this argument. the problem is that anyone poor enough to qualify for medicaid, even the new standards for medicaid, will be exempt from the penalties to comply -- for noncompliance with the mandate, so it's very hard to argue as a constitutional matter that this -- that the medicaid expansion amounts to a commandeering in support of the mandate.

i guess -- no, i'm not going to bother you with that. i only probably have a few seconds left? >> mm-hmm. >> okay. so there's really much more to say and there are many points here that i would really like to respond to, but i think i'm just going to point out one, and that is that tim -- that this case is really completely different from the dole case. the dole case did not hold -- was really not about the 5% number. it was true that under the statute involved in dole the penalty for not going along with the requirement of lowering the

drinking age was to lose 5% of your highway funds. but the dole case was not really about coercion, as i think you probably know. there are four criteria the court has established to determine whether or not an exercise of the spending power is constitutional. none of which happened to have -- to be about coercion. one of which is whether or not the condition that is at stake is sufficiently germane to the purpose of the grant. and so the issue in that case was whether or not requiring states to enact another law lowering the drinking age was sufficiently germane to receiving highway funds to meet that germaneness requirement, and a couple of justices thought it wasn't but the majority thought it was. there was just a little reference to coercion as a possible thing that might come up in some case off to the side. it really is not appropriate to compare that to this case because there's no doubt that the conditions being complained about here are absolutely central to the purpose of the medicaid program and the grants involved.

and i'll leave it at that. >> okay. thank you. [ applause ] thank you very much, simon. >> let me address your point that it was 3-1. we try to be very even-handed here at cato. jagadeesh is here simply as a numbers cruncher today to put forth the numbers that any reasonable economist could predict could be projected from this very large bill. i am here as a moderate, which means i have to be as neutral as is possible for me to be. and so that means it's you and tim that are going at each other in the legal capacity. so before we open it up to questions from the floor, let me ask the three of you, if you'd like to respond to anything that's been said so far.

do you have anything -- yes, jagadeesh. >> just one point -- there are several points. one point, your emphasis that the federal medicaid expansion is not onerous seems to be based on just a partial understanding of what i presented. i admit that the newly eligible individuals that would enroll into medicaid would be 90% plus funded but the individual mandate is the interaction of medicaid expansion with the individual mandate. and the mandate will induce additional enrollments by -- those were eligible and that cost, that match rate is still 59%, which means a bigger share of the cost must be paid for by the states and that's the source of the vertical line. >> i understand that. i just meant to say that that -- that those -- the now eligibles who will sign up in addition are not relevant to the constitutional issue, jagadeesh.

that's all. >> that's not my concern. >> that's not your department. >> they may not be relevant to the constitutional issue, but they are relevant to the structure of the bill, is that not your point, namely it is the mandate that drives these people -- >> absolutely. >> -- to medicaid who are otherwise not on medicaid. you are perhaps the only person that's brought that point out in the actual structure. >> i would add that economic laws have nothing to do with constitutionality or nonconstitutionality, they will still affect how people behave and that will be detrimental. >> tim? >> well, i think the main point that i would want to emphasize is contrary to the characterization earlier, this isn't where the states are making a whole bunch of different arguments that aren't connected. what's actually happening is the question of whether or not this is voluntary. how do we determine whether something is voluntary? in your ordinary life, how would you determine whether a contract is voluntary?

it's sort of a totality of the circumstances analysis, right? you would say there's all these different aspects involved in the deal to determine whether it's voluntary or not. here you have the individual map -- mandate combined with the increase in eligibility. you have the prohibition for states setting up alternatives if they opt out. the statute itself has no provisions providing for an alternative if states decide not to take the money and agree to the conditions. there's nothing in the statute as to what to do about that. the statute locks into place the states' current medicaid eligibility requirements even if they already exceed federal standards. so, for example, my wife is an attorney in arizona. arizona recently enacted -- increased eligibility for medicaid beyond what was federally required. well, here comes the aca and locks it in at that current rate that was above what the federal government had previously

required and now states can't change their minds even though that would have been perfectly legal to do so prior to that. of course as i said before, if states were to opt out, they would lose out on this money and still have to send their tax dollars to washington, d.c. when you add in all of those things, i think that's why these different factors, you put them altogether and what you have is something that is not a voluntary system but is a fundamental transformation of medicaid into a system where states are acting basically as arms of the federal government. >> can i respond to that? >> sure. >> and i think the basic simple point that i was making in response to what tim is saying is that the theories about why this is a quote -- unconstitutionally, quote, coercive choice apply equally to every past expansion of medicaid and a whole raft of other major programs, which i ticked off. so it really -- it's just not as simple as that.

and this is really a not very covert effort to repeal a lot of what has been done with the spending power in this country since the 1930s. and i would have gone to say it's not very covert. there is actually an explicit passage in the republican states' brief that states that the threat here -- the real threat here is not that invalidating the aca's massive medicaid expansion will endanger other federal programs, but that approving it will endanger what the brief calls our basic federalist structure. of course our basic federalist structure is completely incompatible really with what the structure that we have had in place, at least since 1937. and frankly it's completely incompatible with the structure

that the framers thought they were putting together. >> that's a remarkable concession. >> it seems to me -- >> he just said the constitution is incompatible with what's happened since the 1930s. well, we agree with that. >> i said it's incompatible, tim, with your version of what the constitution ought to mean. and i think that's true. many of the most distinguished people who have been associated with cato, my law school classmate richard epstein, for example, have been very explicit about that, randy barnett, probably roger have been very explicit about that. it's very honorable to have the view the law ought to be changed in a major way. if that weren't true, we would never have had brown versus the board of education. the fact is, it is a radical change in what the law is. >> simon, you seem to be saying that it is not coercive for congress to say to a state that we're going to give back the

money that we have extracted from your taxpayers if you will do this, that or the other thing. it seems to me that is the nub of the matter. we're taking your taxpayers money, we're going to give it back to you if you will do this, that and the other thing with it. that strikes me as not very far removed from the mugger who says your money or your life. and the state says, look, we would prefer to keep the money ourselves in our state and do it our own way rather than to send it to you, the feds, and then have you turn around and give it back to us with strings attached. >> can i respond to that? >> surely. i don't know that there is a response. >> i'm glad you made that remarkable point in just the form you did make it, because nothing could be further at odds with the framers -- what the

constitution itself says and what the framers core objectives were when they gathered in philadelphia in 1787 to write the convention, and that was if they had any central aim, it was to create a federal -- a national government, robust and in particular financially independent enough to be successful both in terms of governing the 13 colonies and their people and in surviving in a hostile world dominated by britain and france. so nothing was more important than assuring that the federal government clearly had the power to tax and spend, tax citizens directly without any interference from the states and spend to provide for the general welfare of the united states.

and the experience that the colonial army had in being dependent upon handouts from the states to survive seared general washington and his colleagues. and so this power is enormously significant and that's why the word "tax" and similar words is all through the constitution. so i have to say, roger, this whole business about how somehow the state governments have first dibs in some way or another on the financial resources of their citizens and have some ability to veto what federal -- the federal government is going to do with federal tax dollars really couldn't be more antithetical to what the constitution says and what was intended to mean. >> what you said is perfectly correct when it comes to national defense. all right. let's go to the audience. please identify yourself and any affiliation you may have. >> hi. my name is melissa ortiz, which rhymes with quiz not to be confused with ortiz.

i am the founder of the common sense approach to disability issues. i have a couple of questions. my first question for everybody on that platform is did you or did you not read the legislation in its purest form, all 2,000 pages of it? >> no. >> no. >> absolutely not. >> nor did anyone in congress. >> well again, let me state that my name is melissa ortiz, and i did, all 2,000 pages of it. and frankly, i am bothered by the fact that not only are we not discussing some things that need to be discussed -- i mean not just medicaid, medicare, that individual mandate, we need to be discussing why our

government is allowed -- why people in our government are allowed to write legislation that focuses on outside issues instead of sticking with the main issue that they start out to write the legislation about. if you look at all 2,000 pages of the bill, there are things stuck in there that have nothing to do with health care but everything to do with the loss of individual freedom. and so i just want to challenge all of you to go read the legislation. so that being said, would you address -- let's see, let me address this idea. and i want to add to something that you said, mr. lazarus. it's also a comparison between living in a socialist country and being free individuals in a free country. and i, for one, choose the latter. i can't say what anyone else in this room would choose. i want to be free. i don't want a government telling me every little thing i can do. and my question is this. with all of the county health programs out there, all of the charity clinics, doctors who if you ask are willing to help people that can't afford to pay

for things, who maybe don't have insurance for whatever reason, doesn't this -- doesn't the overreach of obamacare duplicate a lot of those things? why or why not? >> i think that's directed to you, simon. >> it's directed to everybody. >> well, i'm not -- there's a lot of questions there so i don't know exactly how to proceed. but you made a remark that you prefer to live in a free country, not a socialist country. and i guess that was about the individual mandate or what was it about? >> it's a comment -- over reaching comment about the state of affairs of the country today but specifically individual mandate, they can tell me -- that i have to buy health insurance, that i have to go to this doctor or that doctor. a free market economy i can choose where i can go and it takes decisions out of my hands. >> i'll respond to that one. i don't feel that i can be responsible for the state of affairs in the country

generally. but i think that the problem with that point of view, which obviously a lot of people have an i understand it, is that every social insurance program, whether it's social security or medicare or similar programs that exist in other countries, whether they require -- whether they have government insurance or they require people to have -- or fund people to have private insurance, whatever, they have to have some system for making sure that virtually all people who are ultimately going to draw on the pool of funds contribute regularly to it up front. otherwise it doesn't work. and so obviously we pay medicare taxes through our working lives in order to become eligible to take advantage of our funds when we retire.

i haven't retired, but i am on medicare. now, in the affordable care act, the decision was made, actually as judge brett cavanaugh said in his rather interesting opinion in the d.c. circuit phase of this litigation that the affordable care act actually is moving in the direction of somewhat privatizing the social safety net and moving toward a universal insurance system but using private insurance market and building on what we already have rather than simply extending medicare to everyone under 65 or doing something else to have a government insurance program. and once you do that, you still have this problem of insuring that eventual beneficiaries contribute to the pool. so that's what the mandate does. it really is no different from medicare taxes except if anything it's less coercive and it's really congress