By Rob Natelson

Deep within the Patient Protection and Affordable Care Act are little-noticed provisions allowing federal bureaucrats to force huge tax increases on states deemed insufficiently cooperative.

The Obamacare rules — referred to as the “Medicaid mandates”— have not attracted as much attention as the mandate forcing individuals to buy government-approved health insurance. Both are now under review by the U.S. Supreme Court.

What few people know is that the Medicaid mandates are, if anything, even more constitutionally dubious than the individual mandate. That’s why Colorado’s Independence Institute has taken the unusual step of filing a brief urging the court to overturn them.

Here are the issues in a nutshell:

Our constitution divides power between the federal government and the states, just as it divides power among the three branches of the federal government. The reasons for this split sovereignty are to improve government decision-making and to protect liberty.

For split sovereignty to work, both the states and the feds must be able to make independent decisions within their respective spheres. The federal government must be free from state coercion, and the states must be free from federal coercion. The founders who adopted the constitution told us this, and the courts have repeatedly reaffirmed it.

Obamacare attempts to crack the constitution by directing and empowering administrators in the U.S. Department of Health and Human Services (HHS) to effectively bankrupt any state that makes Medicaid decisions different from those approved by Obamacare.

There are two parts to this. First, Obamacare imposes new requirements on states for Medicaid spending, overriding any state choice to the contrary. The new requirements are very costly. The federal government has promised to pick up some of the tab, but given the disastrous federal financial situation, it is unclear how or whether this will happen. Whether or not it does, the feds will be unloading huge new expenses onto state taxpayers.

What happens if a state balks? That is where the second part of the Medicaid mandates comes in to play. If a state does not comply with federal instructions to the letter, Obamacare gives HHS virtually unrestrained authority to stop any and all Medicaid funds to that state. How much to withhold is entirely up to the federal bureaucrats. They may deny just a portion of the funds, or they may deny all of them. If the bureaucrats do not choose a lesser sum, then the state loses all funding.

Medicaid is not some minor state-federal program. It is the largest item in most states’ budgets. So HHS retaliation would throw a state into financial havoc.  The state’s citizens would see billions they pay in federal taxes diverted to other states. Further, their own state officials would have to fund substitute health programs for the poor, paying for them with huge hikes in income, sales and property taxes.

In a long string of cases — most quite recent — the U.S. Supreme Court has found this sort of federal bullying to be unconstitutional. Again and again, the court has struck down congressional efforts to commandeer state legislatures, executives and courts.

To be sure, the court has recognized that the federal government may impose some conditions on its grants to state governments. However, those conditions must be mild enough that they are not “coercive.” For example, the court has recognized that Congress may withhold 5 percent of federal highway aid to a state with a drinking age under 21. But the court has never upheld the power of Congress to force states into bankruptcy. Quite the contrary.

The Independence Institute’s brief is one of the few filed on the Medicaid issue. It reviews for the Supreme Court the constitutional principles involved, and shows how the founders and earlier cases have applied those principles.

Fortunately, if the Supreme Court follows its own precedents, the Medicaid mandates will soon be history.

Rob Natelson, formerly professor of constitutional law at the University of Montana, is senior fellow in constitutional studies at the Independence Institute, a free market think tank in Denver.