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Tuesday, March 27, 2012

Preview: Medicaid and the Supreme Court

Tomorrow the United States Supreme Court will be in its third day of arguments about the constitutionality of the Affordable Care Act (ACA). Tomorrow's argument will focus not on the Individual Mandate (which has gotten the most press and political rhetoric) but on challenges to the constitutionality of the Medicaid expansion that will take place in 2014.

Under the ACA, Medicaid coverage will be expanded to any adult with an income at or below 133% of the Federal Poverty level, making low income levels the primary qualification for the program. In Illinois, alone, the Medicaid Expansion will impact 610,000 people. The Federal government will provide funding to cover 100% of the expansion costs for the first three years and 90% thereafter.

The primary argument against the constitutionality of the Medicaid expansion is that the expansion is unlawfully coercive. The plaintiffs argue that the 100% federal funding offered to states for the expansion is so advantageous that states must choose to continue to participate in the Medicaid program. 

Medicaid is, and always has been, voluntary to states. The funding offered for the expansion is not a new idea for Medicaid which has always involved government funding. Historically, the Federal government has funded a substantial percentage of each state’s Medicaid program, ranging from 50-83% of states’ costs and, on occasion, 100% of certain expenditures. Due to the vagueness and lack of legal precedent regarding what is “coercive,” this argument may be difficult to prove to the Supreme Court. 

A secondary argument is that the expansion, in tandem with other parts of the ACA law, creates changes that are extreme to the point of revolutionizing Medicaid. The Plaintiffs argue that the minimum essential coverage requirements outlined in the ACA render State participation in Medicaid indispensable thus turning Medicaid into “a program to provide a minimum level of coverage to every needy person.”

The Defendants counter that, Medicaid is not the only source of coverage for low-income individuals; they may also receive coverage via Medicare, Veteran’s Assistance benefits, other types of government funded care (such as ICHIP or IPXP in Illinois), or through an employer-provided insurance plan. Also, many individuals who would become eligible for Medicaid in 2014 may not be subject to the individual mandate due to their low income and non-taxpayer status. 

Finally, just as participation in Medicaid is voluntary to States, enrollment is voluntary for individuals. This argument also reflects a weak understanding of Medicaid. From its inception, Congress has reserved the right to make changes to the Medicaid program. None of these changes, however, have changed the core features of the program. Instead, these changes have followed a path that leads logically to the reforms called for in the expansion. Minimum coverage offered by a state has gradually expanded over time as criteria for certain low-income populations such as pregnant women, children and adults with a disability and elderly adults were put in place. The types of services covered have increased such as expansions to home- and community-based services that keep beneficiaries out of institutions.  Many of these reforms began as options, and were then converted into requirements for states’ participation in the program. 

A final piece of the Plaintiff’s argument claims that Medicaid is already too large of a program, and that the expansion will cause it to become too much of a financial burden on states. The Defendants counter that the size of a state’s Medicaid program is controlled, in large part, by the state itself. The Federal government creates the baseline requirements for a state’s Medicaid program, but also allows—and funds—many optional programs and experimental demonstration projects that allow each state to best serve the needs of the population. Many states have created programs that go well beyond the federal baseline. In fact, a large part of all Medicaid spending is on these programs—in Fiscal Year 2007, it comprised 60.4% of all Medicaid expenditures.

For more information about the argument to uphold the Medicaid expansion, see the National Health Law Program's Amicus Brief here. For transcripts and recordings of the Supreme Court's Affordable Care Act arguments, go here and here.

Stephanie Altman
Health & Disability Advocates

EDIT: 4/9/2012: For NHelp's recap of the oral arguments on the Medicaid Expansion, click here

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