[ceejayoz]

You absolutely can. States did exactly that with Medicaid expansion funding; https://en.wikipedia.org/wiki/Medicaid_coverage_gap

This would be an even bigger waste than that, given the relatively small condition being applied, but opting out for ideological reasons is clearly doable.

[Spivak]

You're making a thing that's grey out to be black and white. You can impose conditions on money that is deemed by a court to actually be feasible to decline which is why medicaid expansion was ruled constitutional but tying those conditions to medicaid funding in its entirety would have likely been slapped down based on the opinions after the case.

And with this court who has an axe to grind with expansion of federal power I expect the bar is much lower now.