Nebraska's sweet deal on healthcare reform could lead to lawsuit

Under a healthcare reform deal struck by Sen. Ben Nelson, Nebraska would be the only state that wouldn't have to pay for new Medicaid recipients. South Carolina's attorney general is threatening to file a legal challenge if the proviso is part of the final healthcare bill.

South Carolina Attorney General Henry McMaster is threatening to file a constitutional challenge to Congress's healthcare reform effort unless a special provision favoring Nebraska at the expense of all other states is stripped from the law.

In a news conference at the National Press Club Wednesday, Attorney General McMaster said he has the support of 14 other attorneys general who agree that the Nebraska amendment raises significant constitutional concerns.

Democratic leaders inserted a special measure into the Senate healthcare bill in December that would exempt Nebraska from having to pay its usual share for coverage of new Medicaid participants. Instead, the federal government would pick up Nebraska’s share of the cost, estimated at $100 million over 10 years, while the rest of the states would continue to pay their part.

Nebraska Sen. Ben Nelson had been on the fence over whether to vote for the Senate version of the healthcare bill. After inclusion of the Nebraska Medicaid provision, he provided the critical 60th vote that helped insulate the legislation from a Republican filibuster.

Critics of the maneuver are calling it the “Cornhusker Kickback.”

Constitutional challenge

But McMaster and his colleagues are not raising questions about illegal bribes or kickbacks, and there is no evidence that Senator Nelson received any private, personal gain in exchange for his vote. Instead, the McMaster effort is asking a more fundamental question: Whether the legislative deal violates congressional power under Article I of the Constitution.

The Constitution assigns broad spending authority to Congress, he said, but national spending may not be arbitrary and capricious.

McMaster, a Republican, is running for governor of South Carolina. He said he opposes the healthcare bill as presently written, but that his actions in challenging the constitutionality of the bill were guided by his responsibility as South Carolina’s chief legal officer.

“This bill is something that will put a financial burden on my state from Nebraska at a time when we can barely keep the lights on,” he said, referring to state budget cuts.

He said the Nebraska deal was evidence of “a culture of corruption and excess that has taken root in Washington.”

Florida taking aim at healthcare bill, too

McMaster’s effort is similar to an examination underway in the office of Florida Attorney General Bill McCollum. He and a group of similar allied attorneys general are investigating the constitutionality of one of the centerpieces of the healthcare bill: the individual mandate. The Florida examination focuses on whether Congress has the constitutional authority to order Americans to buy a certain product or service (like health insurance) or face a penalty.

McMaster expressed his constitutional concerns about the Nebraska deal in a Dec. 30 letter to Senate majority leader Harry Reid and House Speaker Nancy Pelosi.

“In addition to violating the most basic and universally held notions of what is fair and just, we also believe [the Nebraska provision] is inconsistent with protections afforded by the United States Constitution against arbitrary legislation,” he wrote.

The letter cites a 1937 US Supreme Court case in which the justices warned that Congress may not wield the power of the purse in an arbitrary manner. “The spending power of Congress includes authority to accomplish policy objectives by conditioning receipt of federal funds on compliance with statutory directives, as in the Medicaid program,” he wrote. “However, the power is not unlimited and must be in pursuit of the general welfare.”

The letter added: “The provision of the bill that relieves a single state from [a] cost-sharing program appears to be not only unrelated, but also antithetical to the legitimate federal interests in the [health care] bill.”

McMaster told the lawmakers that unless Nebraska provision was deleted it might also raise due process, equal protection, and other constitutional claims.

McMaster said he had not received a reply from Senator Reid or Speaker Pelosi, and that he did not expect to meet with them during his current trip to Washington.


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