Medicaid may be part of Court decision

Medicaid could be in Supreme Court’s sights

The justices will hear an argument that President Obama’s healthcare law violates states’ rights by requiring a Medicaid expansion. If the court agrees, previous expansions and an array of federal social programs could be affected.

By David G. Savage and Noam N. Levey, Washington Bureau

11:47 PM PDT, March 25, 2012

Reporting from Washington


Ever since the Democratic Congress passed President Obama’s healthcare law, critics have focused their ire on the requirement that all Americans have health insurance beginning in 2014.

But some legal experts believe — and progressives worry — the Supreme Court’s conservatives will instead target another mandate in the new law: the requirement that states expand the Medicaid rolls and provide subsidized healthcare for as many as 17 million more low-income people.

On Wednesday, the third day of oral arguments on the law, 26 Republican-led states will argue that the federal pressure to expand Medicaid to all low-income Americans violates states’ rights.

Medicaid “is the real sleeper issue,” said Simon Lazarus, counsel for the National Senior Citizens Law Center. “If the court buys the ‘coercion’ argument, it will effectively mean that every expansion of Medicaid since 1965 will be vulnerable to challenge.” Such a ruling could also undercut an array of federal social programs.

Justice Anthony M. Kennedy, whose stand could be decisive, has repeatedly spoken of the need to protect the “sovereignty” of the states from a too-powerful federal government. Last week, he spoke for a 5-4 majority in voiding part of the federal Family Medical Leave Act. His opinion rejected a lawsuit from a fired state worker on the grounds it would threaten “our constitutional design” that “states, as sovereigns, are immune” from damage claims.

At first, the challenge to the Medicaid provision was treated as far-fetched.

Throughout the 20th century, Congress passed laws that offered states money for certain purposes — for highways, schools, colleges, hospitals and many others — in exchange for following federal rules. The Supreme Court has never struck down such a spending law — including previous Medicaid expansions — even though the states have often griped about “unfunded mandates” from Washington.

The new Medicaid provisions also look to be quite generous to states. In the past, Congress has paid about half to three-fourths of a state’s cost for providing healthcare for the poor, about half of whom are children. Under the new law, Washington will initially pay 100% of the cost for expanding Medicaid. The federal share will drop to 90% by 2020.

However, Paul D. Clement, the lawyer for the states, says this deal is not as good as it looks. Even with the big federal subsidies, the states’ share of the coverage expansion may top $21 billion over the next seven years. The states are given no real choice whether to participate in the Medicaid expansion, Clement said. Congress should not be “free to use its spending power to coerce states into enforcing the federal government’s dictates,” he said.

That argument lost repeatedly in the lower courts, even in the U.S. 11th Circuit Court of Appeals, which struck down the individual mandate. But to the surprise and dismay of liberal advocates, the Supreme Court voted to hear the claim and devoted a separate hourlong argument to it.

“It would be a constitutional earthquake” if the high court were to strike down the expansion of Medicaid, said Doug Kendall, president of the Constitutional Accountability Center.

It would also dramatically undermine the law’s plan for achieving universal healthcare. More than half of the approximately 30 million Americans who are expected to gain coverage over the next decade will rely on Medicaid. These are primarily childless adults and other low-income Americans who are not currently eligible for the program in most states.

“If the Medicaid expansion is invalidated, it would mean the poorest of the poor will be simply shut out of America’s healthcare system,” said Families USA Executive Director Ron Pollack, a leading Washington-based consumer advocate. “It would be a huge setback.”

Scrapping the Medicaid expansion would save the federal government nearly $800 billion over the next decade, the largest expense in the new law, according to estimates from the nonpartisan Congressional Budget Office.

But it may have broader consequences as well, said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, who compared such a move to opening a Pandora’s box.

States would be free to cut people from their Medicaid rolls, which could set off a round of cutbacks around the country that would further boost the number of people without health insurance.

Also in jeopardy are three years of federal funding for the Children’s Health Insurance Program, a state-administered insurance plan for children from families who make too much to qualify for Medicaid but may not be able to buy insurance on their own.

NY Times – Implications of Supreme Court Decision

March 24, 2012

Implications Are Far-Reaching in States’ Challenge of Federal Health Care Law


WASHINGTON — A major issue in the Supreme Court battle over the new health care law is whether Congress can force states to make a huge expansion of Medicaid, to add millions of low-income people to the rolls.

States say the federal law is unconstitutionally coercive because all their Medicaid money would be at risk if they flout the new requirement.

The states’ argument has implications that go far beyond health care. It raises questions about Congress’s ability to attach conditions to federal grants to the states for other purposes, like education, transportation, law enforcement and protection of the environment.

The implications for the health care overhaul are also enormous. The Congressional Budget Office says that about half of the people expected to gain coverage under the new law — 16 million of the 31 million people — will get it through Medicaid.

The Obama administration denies coercion and says the terms of the deal are exceedingly generous to states.

The states’ argument has “no logical stopping point,” said Solicitor General Donald B. Verrilli Jr., who will defend the health care law at the Supreme Court next week. The states’ theory, he said, “would call into question not only the extension of Medicaid eligibility in the Affordable Care Act, but also every other requirement for participation in the Medicaid program, not to mention an unspecified number of other federal spending programs.”

Senator Charles E. Grassley, Republican of Iowa, a vocal critic of the new law, offered a similar assessment, saying that a ruling for the states could “bring into question” prior expansions of Medicaid and conditions attached to other federal money.

Medicaid is by far the largest grant program, accounting for more than 40 percent of all federal aid to state and local governments, according to the White House.

The health care law offers Medicaid to people with incomes up to 133 percent of the federal poverty level (up to $14,850 for an individual and $30,650 for a family of four). Some states, like Louisiana, expect Medicaid rolls to grow by more than one-third, as many uninsured adults without children gain coverage.

In a Supreme Court brief, the 26 states challenging the law describe the expansion of Medicaid as “an extreme and unprecedented abuse of Congress’s spending power.” And they assert:

“The Affordable Care Act threatens states with the loss of every penny of federal funding under the single largest grant-in-aid program in existence — billions of dollars each year — if they do not capitulate to Congress’s steep new demands.”

The Obama administration says that Medicaid is technically a voluntary program from which states can withdraw. But states say they have “no real choice” because they depend so heavily on it to finance medical care for low-income people.

For years, governors have complained about explosive growth in Medicaid costs, and they say the expansion of the program will further drive up costs.

The administration says that Congress has often expanded Medicaid to cover additional people and services. Moreover, it says, the latest expansion will be less onerous than states assert.

The federal government normally pays 50 percent to 83 percent of Medicaid costs. But it will pay a much larger share for people who become eligible under the new health care law: 100 percent of the costs in 2014-16 and 95 percent in 2017, declining to 90 percent in 2020 and later years.

States say they cannot afford to turn down so much federal money — more than $500 billion from 2014 to 2020. But the Obama administration said this argument led to a perverse conclusion: When the federal government offers more money to states, on more generous terms, it becomes more coercive.

“That cannot possibly be the law,” Mr. Verrilli said.

Lower courts rejected the states’ argument on Medicaid, but the Supreme Court said specifically that it wanted to hear the issue debated next week.

States cite cases going back to the New Deal to support their claim that federal requirements can be unduly coercive.

In 1987, the Supreme Court upheld a federal law that required states to set a minimum drinking age of 21 as a condition of receiving their full allotment of federal highway money.

William H. Rehnquist, who was then chief justice, wrote that, “in some circumstances, the financial inducement offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion.”

That is exactly what happened with the 2010 health care law, states say.

To support their argument, states point to two other cases as well.

In 1992, the Supreme Court said Congress could not “commandeer state governments” to carry out a federal regulatory program involving the disposal of radioactive waste. Five years later it ruled that Congress could not require state officials to help administer a federal gun control law by performing background checks of prospective gun buyers.

The Senate majority leader, Harry Reid, Democrat of Nevada, and the House Democratic leader, Nancy Pelosi of California, told the Supreme Court last month that federal judges had no business “attempting to draw a line between permissible persuasion and impermissible coercion.”

That, they said in a “friend of the court” brief, is a political question that should be left to elected officials.

The new law requires most Americans to carry insurance, starting in 2014. States say “Congress knew that no state could or would opt out” of Medicaid and therefore provided no other means for the poorest Americans to comply with the requirement.

Congress created insurance exchanges where people can shop for private health insurance, subsidized by the federal government. But the subsidies will generally not be available to people with incomes below the poverty level, who are expected to go into Medicaid.

The Obama administration says that, far from being coercive, the new law will save money for states, reducing the need for them to care for the uninsured.

Oregon and a dozen other states have filed a brief in the Supreme Court supporting the expansion of Medicaid as an example of “cooperative federalism.”

States have long wanted to expand coverage, they say, and the new law will help them do so.