PPACA: Majority Opinion Analysis on Medicaid Expansion

In our continued analysis of Chief Justice Robert’s majority opinion (see part one on the individual mandate here), we are looking at the second major portion of the opinion which was dedicated to the issue of Medicaid expansion, which begins on page 45 of the opinion.   The entirety of the Patient Protection and Affordable Care Act (PPACA) can be found here: (P.L. 111-148).

The Medicaid Issue

As we discussed in March, the issue at hand was whether Congress exceeded its authority to require states to expand their Medicaid coverage to qualifying individuals as defined by PPACA. Specifically, by 2014, states would have to cover all individuals under the age of 65 with income below 133 percent of the federal poverty limit. Furthermore, everyone with Medicaid coverage would be entitled to an essential health benefit package.

The federal government would cover 100 percent of the costs of this expansion through 2016; after that, federal assistance would gradually decrease until it reached 90 percent. Compliance with this expansion was governed by funding; states that chose not to expand their Medicaid rolls would obviously not receive the funding for expansion and would lose their former funding, forcing them to fund their Medicaid program on their own.

Spending Clause Argument

In March, the states argued that this requirement exceeds Congress’s authority under the Spending Clause which grants Congress the power to pay the debts and provide for the general welfare of the states. This allows Congress to grant funds to the states and impose appropriate conditions on those funds to ensure they are properly spent.

Previous Supreme Court cases have limited this power, however, typically when the Court has found that the program commandeers a State’s legislation or administration for a federal purpose or when Congress is using financial incentives to exert power that could be seen as undue influence. State officials must be responsible for deciding to accept or refuse federal funding without being forced.

Expansion & Existing Medicaid Funding

In this case, the Supreme Court found that Congress cannot threaten to terminate other significant independent grants of money (the original Medicaid funding) as a means of pressuring states to accept a policy change (the expansion of Medicaid). Specifically, the termination of all Medicaid funding was not “relatively mild encouragement” to expand a state Medicaid program to meet the needs of an entire population. States must be free to decline participation in the new program without losing their current level of funding.

Furthermore, Congress can offer new funds under PPACA to expand availability, but they cannot withdraw any existing funding. Although Congress assumed that all states would participate in the expanded program, the Supreme Court found that even if they did not, the expanded coverage program can continue on a state by state basis. Failure of all the states to participate does not invalidate the entire portion of PPACA.

Coverage of the Court’s dissenting opinions still to come…stay tuned!