SCOTUS limitation on Medicaid expansion matters more in principle than practice

June 28, 2012

Health Care at the Supreme CourtMy last post only covered the individual mandate and severability portions of this morning’s Supreme Court health care ruling (National Federation of Independent Business v. Sebelius).

However, the issues of the Medicaid expansion and the Anti-Injunction Act are pretty significant in the ruling, too, and they both deserve some attention.

First up: Medicaid.

As complicated as the individual mandate ruling was, the Medicaid expansion ruling is even worse.

There were three different opinions between the nine Justices.

Two Justices – Ginsburg and Sotomayor – wanted to uphold the Medicaid expansion in its entirety.

Three Justices – Breyer, Kagan, and Chief Justice Roberts – wanted to overturn only the provision withholding all Medicaid funds from states that were noncompliant with the conditions stipulated by the ACA’s expansion.

The final four Justices – Kennedy, Scalia, Thomas, and Alito (the dissenters) – wanted to invalidate the expansion in its entirety (along with the rest of the ACA).

The Medicaid expansion was (mostly) upheld, so what happened?

Justices Ginsburg and Sotomayor added a little something to their stance that saved the expansion.

Specifically, the two held that if the statute were found to be unconstitutionally coercive (per 1937’s Steward Machine Company v. Davis and 1987’s South Dakota v. Dole), then the proper action would be to throw out only the part that Breyer, Kagan, and Roberts wanted to.

SCOTUSSo, we have a 7-2 vote that the Medicaid expansion is unconstitutional, and a 5-4 vote that the remedy is to cut out only the penalty of withholding all Medicaid funding from those states that don’t comply with the new ACA conditions.

In practice, I’m guessing this means that a state may choose not to participate in the ACA’s Medicaid expansion (or any future one), and the only thing that it would lose is the funds from that specific expansion.

In other words, a state’s loss of funds is only tied to those funds that are attached to the conditions that the state refuses to accept – instead of all Medicaid funding.

This distinction matters more in principle than in practice, though.

Although a state will have to pay more to implement the Medicaid expansion, the Federal Government pays 90% of the costs of the expansion.

That Federal Government money comes from – you guessed it – taxpayers.

If a state refuses to adopt the ACA’s Medicaid expansion, but other states adopt it, taxpayers from the noncompliant state are going to be subsidizing Medicaid for any and all other states that do choose to adopt it.

That little reality check should prove to be “coercive” enough to get most, if not all, states onboard with the new Medicaid expansion.

Looks like I ran out of room in this post for the Anti-Injunction Act.  Don’t worry, though.  It’ll be along shortly!