The Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA) with one notable exception: it struck down the provision that threatened to remove preexisting federal Medicaid funding from states that refused to accept an expansion of Medicaid, on the ground that this threat “crossed the line distinguishing encouragement from coercion.” This constitutional standard has been condemned as amorphous and meaningless. Because the standard explicitly incorporates contract-law concepts, we might hope to find clear guidance in the underlying contract law. But contract law makes the legality of threats that induce contractual agreements turn on whether the threats are “improper” or in “bad faith,” conclusory labels that themselves have been deemed incoherent and meaningless. Nor could the Court find useful guidance from the general unconstitutional-conditions doctrine because it has been deemed conclusory, incoherent, and “infamously inadequate.”
Indeed, the Supreme Court seems to have given up even trying to define a coherent doctrine, openly admitting both in the Medicaid- defunding-threat case and a subsequent unconstitutional- conditions case that it could not articulate the line dividing con- stitutional conditions from unconstitutional ones, although it was nonetheless—somehow—confident that the conditions it was considering were over the line. This Article solves these doctrinal puzzles with a coherent theory that is normatively attractive and descriptively fits current legal results.
For analytical clarity, it is important to exclude some cases that lie outside these puzzles. If a threatened action by a government or private party were independently unconstitutional or illegal, there would be no difficulty condemning the threat. Likewise, sometimes even an uncoerced agreement to a condition or contract would be independently illegal or unconstitutional, usually because it would harm third parties or violate equal protection norms. In these cases, the independent doctrine of illegality or unconstitutionality does all the work.
Other times, whether the agreement was coerced is irrelevant because the threatener has a power to compel without any agreement, such as when the government has a power to order the relevant action because the individual or state has no consti- tutional right against such compulsion. Whenever direct coercion is permissible, that fact moots the issue of when threats of otherwise-lawful action should be deemed coercive, because they would be permissible either way. But in these cases the work is done by the independent legal doctrines that create a power to coerce.
The cases of interest involve situations in which a threat to engage in otherwise-lawful action (like a termination of funding) induces an agreement that is otherwise lawful, but the threat is nonetheless deemed too coercive to enforce the induced agreement. Those threats are the ones for which we could use some coherent principle to explain why they are sometimes condemned and sometimes allowed.
This Article provides a simple principle for resolving this puzzle.