It looks increasingly likely that several states will challenge the constitutionality of a key element of Congress’ financing of the new Medicare prescription drug benefit (also known as Medicare Part D).
To help fund the massive new Medicare drug benefit, Congress mandated that state governments send monthly checks to the federal treasury. The so-called “clawback” – amounting about $100 billion over the next ten years – is intended to cover a big chunk of the drug costs of dual eligibles.
In addition to being an unprecedented exercise of federal power that many experts believe is unconstitutional on its face, the clawback raises a mix of troubling policy issues. For example, it means state governments must pay for costs of federal beneficiaries in a federally created and operated entitlement. States are already grumbling that, because of a long history of federal cost shifting to state taxpayers, over 40 percent of state Medicaid spending this year will go to cover the health care costs of federal Medicare beneficiaries.
As a matter of law, states cannot let the clawback go unchallenged. Regardless of the many positive aspects of the new Medicare drug benefit, the clawback simply raises too many fundamental issues to be left unexamined by the Supreme Court.