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Broad Implications For Court’s Ruling On Medicaid Expansion

Although the Supreme Court’s validation of the health law’s individual mandate dominated the reports on the decision, the court’s ruling on the Medicaid expansion could have just as broad an impact. The court said that if state leaders decide to forgo the infusion of federal money to extend Medicaid – a joint federal-state financed program – to more people, their existing federal Medicaid dollars cannot be withheld as a penalty. Under the plan, the federal government initially would pay 100 percent of the cost for those new participants but that would fall to 90 percent in 2020.

Photo by Marxchivist via Flickr

Already, Republicans in four battleground states are considering rejecting the Medicaid expansion dollars: Florida, Ohio, Pennsylvania and Colorado. Additionally, governors in Kansas, Nebraska and South Carolina said they would have trouble coming up with even 10 percent of the total cost to put more people on the Medicaid rolls.

Bloggers are breaking down what implications the moves could have for health care coverage in America:

Kevin Russell, at SCOTUSblog, explains the justices’ bottom line: “(1) Congress acted constitutionally in offering states funds to expand coverage to millions of new individuals; (2) So states can agree to expand coverage in exchange for those new funds; (3) If the state accepts the expansion funds, it must obey by the new rules and expand coverage; (4) but a state can refuse to participate in the expansion without losing all of its Medicaid funds. Instead the state will have the option of continue the its current, unexpanded plan as is” (6/28).

Michael Cannon writes in the CATO@Liberty blog that the ruling severely limits the Medicaid expansion. The ruling effectively gives “states the green light to refuse to expand their Medicaid programs” helping to put the law in “a very precarious position,” Cannon writes (6/29).

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Frederick Hess, at the AEIdeas blog, writes that the ruling on Medicaid could have broader implications in other policy as well: “In their legal challenge, 26 states argued that the federal government’s decision to make expanding Medicaid the condition for receiving any federal Medicaid funding had the practical consequence of coercing them to comply. … it strikes me that the Court has this generally right. Anybody who has spent much time working with state and local officials knows that, once conditional federal funds have been baked into place, the resulting constituencies and budget realities make it incredibly difficult to pry them out. So, as it stands, the ruling could prove a useful constraint on Congress’s ability to dictate ed policy to states.” (6/29).

Still Jordan Weissmann, at The Atlantic, quotes University of Michigan law professor Samuel Bagenstos, who filed an amicus brief with the court in favor of the expansion. Bagenstos says, “My initial reaction is it probably isn’t going to mean a whole lot for the Medicaid expansion in the Affordable Care Act, because the Medicaid expansion is such a good deal for the states. You’ll probably hear a lot of complaining about it, and then quiet acceptance by the complaining states. The $64,000 question as to Medicaid is how many states are going to decide that they don’t want to cover this expanded population, even with the very substantial financial incentive” (6/28).

Bob Laszewski, at the Health Care Policy and Marketplace Review blog, writes that since the federal law makes the Medicaid expansion available to people who earn up to 133 percent of poverty, if their state decides to not expand Medicaid to them, people who make between 100 percent and 133 percent of poverty could still get federal subsidies to help afford private insurance. The benefit for them, however, would be a mixed bag. “But they would have to pay 2% of their income in premiums—$600 a year if they make $30,000 a year. And, unlike Medicaid, they would be subject to standard deductibles and copays—perhaps an upfront $1,000 deductible per person” (6/28).

Sarah Kliff at The Washington Post’s Wonkblog: “Poorer Americans—those who live below the poverty line—could be caught in a sort of ‘no man’s land.’ They’re not eligible” the the federal subsidies that are part of the overhaul “because the law worked with the assumption that they would fall under the Medicaid plan” (7/2).

Avik Roy, at his Forbes blog, writes that the decision could dramatically increase the deficit: “Democrats structured the law this way because Medicaid is much less expensive, on a per-person basis, than are the subsidized exchange plans. In addition, Medicaid is partially funded by the states. However, now that states can opt out of the law’s Medicaid expansion, states that currently cover people above 100 percent of FPL with Medicaid now have a significant financial incentive to shrink Medicaid eligibility down to 100 percent of FPL, and let the federal government (read: taxpayers in other states) pay for the rest. This, again, will lead to substantially higher costs for the federal government, because exchange subsidies are much more generous than Medicaid is” (6/28).