ACA Subsidies and Blackmail

Contractual duress, unconstitutional conditions, and blackmail have long been puzzling. The puzzle is why these doctrines sometimes condemn threatening lawful action to induce agreements, but sometimes do not. This article provides a general solution to this puzzle. Such threats are unlawfully coercive only when they are contrived, meaning the threatened action would not have occurred if no threat could be made. I show that such contrived threats can be credible because making the threat strongly influences whether the threatened action occurs. When such threats are uncontrived warnings, meaning the threatened action would have occurred even if no threat could be made, they are not coercive and can only benefit the agreeing parties. However, sometimes (as with blackmail) agreements produced by uncontrived warnings are also unlawful on the different grounds that they harm third parties. The contrived-threat test explains why the Medicaid defunding threat in Obamacare was unconstitutional and why (in the pending Supreme Court case) interpreting Obamacare as threatening to withhold tax credits from States that do not create insurance exchanges should either be rejected under the canon of avoidance or result in constitutional invalidation of that threat.