Medicaid Expansion, PPACA and States’ Rights

This past week, initial briefs on the validity of the Patient Protection and Affordable Care Act (P.L. 111-148) (PPACA) were filed in the Supreme Court. Together, 26 states argued that the expansion of Medicaid under PPACA  is unprecedented and infringes on the  powers reserved to the states under the Tenth Amendment to the United States Constitution.

It is true that PPACA expands the Medicaid program to require states to make certain benefits available to people who were never eligible before.  When Medicaid was enacted in 1965, states were not required to participate, and eligibility was limited to categories of individuals who were eligible for cash assistance— Aid to Families with Dependent children (AFDC), Old Age Assistance and state-sponsored assistance to disabled adults.

Over the years, Congress has raised the income limits for mandatory Medicaid coverage of low-income children and  pregnant women and certain groups of individuals with disabilities.  The states argue that most additions to Medicaid have been optional, or that the federal government has offered incentives to comply with new standards. For example, in 1972, the federal cash assistance program for disabled individuals, Supplemental Security Income  (SSI) was established. States were given the choice either to provide Medicaid to  all SSI beneficiaries or to continue to apply their more stringent standards for Medicaid   on disability.

PPACA expands mandatory eligibility for Medicaid to include childless adults who are neither elderly nor disabled. With rare exceptions, the only adults excluded are undocumented immigrants and immigrants who  have been admitted to the United States but have lived here less than five years. However,the mandatory coverage to be offered to the “newly eligible” childless adults is not the traditional Medicaid benefit. Rather, the states have to contract for the provision of “benchmark” insurance coverag, not the Medicaid services. In fact, the law states that federal matching funds are not available for any benefits for the newly eligible except for benchmark  or benchmark-equivalent insurance coverage.

The states contend that the Medicaid expansion under PPACA differs from the other requirements Congress has added over the years because states cannot decline to participate without risking the loss of all federal funding for their Medicaid programs. They contrast the Medicaid expansion with the health insurance exchanges, also created by PPACA. States may design their own exchange within the parameters of the law, but if they choose not to do so, the federal government will operate the exchange.  The states also note that the lawful immigrants who are not eligible for Medicaid must  be eligible fto buy coverage through the health insurance exchanges. However, the states note, the law contains no provision for the newly eligible group to obtain coverage if the state chooses not to participate in Medicaid, because Congress knew that no state could afford to withdraw entirely from Medicaid.

Further, they argue, Medicaid has consumed an ever growing share of state budgets, forcing cuts to other state priorities, and the expansion will increase that burden tremendously. The required expansi0n cannot be avoided or minimized and is so burdensome that it interferes with the states’ sovereign  powers under the Tenth Amendment to the United States Constitution, with dire consequences for “Our Federalism.”

The Tenth Amendment states, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The states’ brief posits that this language limits Congress’ power to promote the general welfare; the states retain some power over matters of state concern that Congress may not infringe. Still, the briefs cite no rulings that exclude some area from Congress’ power because the subject belongs entirely to the states.  Justice O’Connor’s opinion for the court in New York v. United States, 505 U.S. 144 (1992), discussed in the brief, noted that  the Court;s development of this area of the law has been difficult and sometimes inconsistent.

The opposing force, as discussed in the states’ brief,  is the Congressional power to spend for the general welfare and to place conditions on receipt of federal funds. The states argue that previous decisions have stated that Congress may use spending to pressure states, but not to coerce them. Although the fine line between pressure and coercion is not easily discerned, the states say, PPACA definitely crosses it.  The brief does not discuss  the  relevance of Congress’ power to regulate interstate commerce.

PPACA is different enough from previous cases, and the reasoning of those cases is sufficiently opaque, that any decision the court makes could be explained or justified using precedent.  It will be interesting to see how the federal government responds to the arguments and to what extent the questions and answers seem to come from political ideology.