Medicaid Expansion: The "Other Issue" in the Supreme Court's Health Reform Case Is a Big Deal, Too

Supreme CourtThe United States Supreme Court will hear arguments later this month on constitutional challenges to aspects of the nation’s health reform law, the Patient Protection and Affordable Care Act (ACA). The issue that gets the most attention concerns the “individual mandate,” which involves whether the Constitution allows the federal government to impose a tax penalty on people who fail to buy affordable health insurance. 

But there is another issue of immense importance that the justices will decide. They will rule on the constitutionality of the ACA’s expansion of Medicaid to cover all of the country’s lowest income people. Half of the 32-million-person reduction in the uninsured promised by the ACA will come from this guarantee of coverage for the poor under Medicaid.

Medicaid is a cooperative federal-state program. The federal government offers significant funding to the states to cover low income people—no less than half the cost, and much more than that in many states. States that opt into the program must comply with the federal rules about who gets covered. States know in advance that Congress may expand Medicaid, and Congress has done so many times since 1965. However, Medicaid has never covered all poor people. Instead it specifies coverage only for certain categories of poor people: children, parents, people over 65, and disabled people.

Under the ACA, Congress expanded Medicaid to cover everyone with incomes under 133% of the federal poverty level. It provides 100% federal funding for this expansion for several years, and permanently provides 90% funding for the expansion into the future. This simple step will cover 16 million Americans. It is a part of the overall strategy of the ACA to bring down the cost of the health care system by featuring prevention, early detection, wellness, care coordination, health information technology, and avoidance of unnecessary emergency room visits and acute care episodes. All of these benefits are fostered when people have a relationship with a regular doctor, which is made possible by insurance coverage.

The briefs have been filed in the Supreme Court on the challenge to the Medicaid expansion. The states that oppose the expansion of the Medicaid program under the ACA lost on this issue in the Eleventh Circuit federal appeals court, so they are the petitioners in the Supreme Court. Their claim is that the ACA gives the states no choice but to implement the Medicaid expansion and that this violates Congress’s power under the Constitution’s “Spending Clause” (Article I, Section 8) to attach strings to the money that the federal government offers to states by effectively depriving the states of any choice to turn it down. The petitioners make this claim with two main arguments.

First, they contend that Congress knows of the immense importance of Medicaid funds to the states and, even though Congress will fully fund the Medicaid expansion, it has effectively deprived states of any choice to decline to expand the program. They argue that their states would have to decline to participate in Medicaid altogether in order to decline the expansion. This cannot be a “voluntary acceptance,” the argument goes, and this imbalance of power is an impermissible coercion of the states into an “all-or-nothing choice”: abide by the federal requirements and expand Medicaid, or lose all Medicaid funding.

Second, the petitioners construe the ACA to impose a “universal mandate” that everyone have health insurance. They reason that, since the ACA does not provide the states with another federal mechanism to cover the health insurance of the state’s neediest citizens, the ACA forces the states to participate in Medicaid in order for their citizens to comply with the “mandate.”

The government, in its brief defending the ACA and the lower court ruling upholding the Medicaid expansion, points out that the Supreme Court has already decided that Congress has the power to attach strings to the money it offers to the states; this is well-settled law.

Further, the strings attached to the expansion are not onerous, since the federal government will ultimately assume 90% of the cost of the Medicaid expansion under the ACA (starting with 100% for the first few years). All of the states accepted the Medicaid deal knowing that the average federal contribution to Medicaid is 57%, and knowing that Congress reserved the right to change or expand the program, which it has done repeatedly since 1965. By assuming a higher funding burden for the expansion, which the federal government was not required to do under the terms of the Medicaid deal that all the states accepted, Congress avoided any sense of taking unfair advantage of the deal.

Second, in the government’s view, the states seem to be arguing that the more money that Congress provides to the states, the less say that Congress should have over how the states may use those funds; this is contrary to common sense.

Finally, in response to the argument that Medicaid is necessary to fulfill the ACA individual mandate, the government notes that the ACA has exceptions from the individual mandate for certain low-income individuals (including those who would be eligible for Medicaid under the ACA expanded criteria). Therefore, it is simply not true that Medicaid is “required” to comply with the individual mandate; the people who are covered under the ACA-Medicaid expansion would most likely qualify for waivers from the individual mandate, if necessary.

The Shriver Center is an amicus curiae in this case and supported a “friend of the court” brief written for the Center and other amici by the National Health Law Program. The brief goes into greater detail about the history of the Medicaid program, stressing that the ACA’s Medicaid expansion is well within the arrangement that all states have accepted in choosing to participate in the program.

The outcome of this case will affect millions of uninsured people and impact the ACA’s overall strategy to improve the nation’s health and bring down the cost of the health care system. Moreover, it could significantly alter the power of the federal government to attach strings to federal money that it offers to states in many varieties of programs beyond Medicaid, such as transportation, education, social services, and many more.

The Court will hear arguments on this issue later in March and will rule by mid-summer.

This blog post was co-authored by Brandon Jordan.


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