Massachusetts’ highest court ruled Thursday that the state must offer the same level of subsidized insurance to legal immigrants as to citizens. The decision affects roughly 40,000 residents and could cost the state at least $150 million per year.

In 2009, state legislators in Massachusetts were facing a large budget gap and rising health care costs. After reviewing a number of choices, they opted to trim state subsidized health coverage for legal immigrants who have not been naturalized as citizens. Since the federal government doesn’t share the cost of care for this group, lawmakers reasoned, the state was justified in scaling back its commitment. Health Law Advocates sued, arguing that legal immigrants are entitled to the same health care benefits as citizens are. On Thursday, in a unanimous decision, the Massachusetts Supreme Judicial Court agreed. 

“It is a wonderful day in the Commonwealth of Massachusetts. Justice has prevailed,” says Amy Whitcomb Slemmer, the executive director at Health Care for All. 

Legal immigrants are also celebrating. The insurance plan the state created just for them limited where they could get care, had higher co-pays and fewer benefits. Hector Brito and his wife Cesario Reynoso ended up almost $3,000 in debt for lab tests and appointments that weren’t covered.

“This is a relief for me and everybody now,” says Brito. “They know” continues Brito, referring to other legal immigrants, “that in the future they don’t have that kind of problems. They will be covered.”

Well, maybe. Gov. Deval Patrick’s administration estimates the minimum cost of adding 40,000 people to the state’s subsidized insurance plan at $150 million a year. State tax revenues aren’t meeting expectations because of the economic downturn, so finding the money will be difficult. 

The state has a several choices: It can look at new taxes or fees to fund coverage for legal immigrants. It can cut other programs. Or it can make subsidized insurance less generous for everyone. Jay Gonzalez, the state’s secretary for administration and finance, says he hopes that won’t happen, but it’s an option he can’t rule out. 

“The place we’re at right now,” says Gonzalez, pausing, “is needing to weigh all those options, assess them and come to some decisions.”

Gonzalez is putting the final touches on the fiscal year 2013 budget that Patrick will file in a few weeks.  It will have to include coverage for legal immigrants. 

One large lingering question is: Will this decision that legal immigrants are entitled to the same health benefits as full citizens affect other government assistance programs that treat legal immigrants and citizens differently?

Gonzalez says “our lawyers are looking at this decision and what the potential impacts might be if it were applied to other places, but the direct impact is on providing health insurance. That’s the immediate challenge we have now, the one we have to face.”

It will be several months at least before these immigrants are enrolled in Commonwealth Care. The decision does not apply to illegal immigrants who are not eligible for state subsidized insurance. If the Affordable Care Act is still in place in 2014, there will be some federal assistance for coverage for legal immigrants.