Will the Supreme Court Take the Next Medicaid Funding Case?

In January, the response to Arizona’s petition for certiorari in Planned Parenthood v Betlach will be due, and the Court will consider whether to hear another case involving federal requirements for Medicaid funding. This case is one of several challenges to state laws that exclude from Medicaid participation anyone who performs abortions that would not qualify for federal funding.

In recent years, several states have passed laws forbidding their Medicaid agencies from contracting with any organization that performs abortions. The laws do not just bar the use of state funds to pay for abortion. They ban the payment of state funds to these organizations for any purpose whatsoever, even for such noncontroversial services as cancer screening. For example, Indiana’s law, Ind. Code sec. 5-22-17-5.5(b), prohibited the payment of any state or federal funds to “any entity that performs abortions or maintains or operates a facility where abortions are performed.” Arizona’s law bars the payment of any government funds, state, local, or federal, to any person who performs “nonfederally qualified” abortions, or operates or maintains a facility where such abortions are performed. It defines “federally qualified” abortions as those that could be paid for with Medicaid funds. “Qualifications” for Medicaid funding for abortion were set in the Hyde Amendment, initially enacted in 1976; specifically, either the pregnancy must be the result of rape or incest, or the woman must suffer from a physical disorder, injury, or condition that a doctor certifies puts her “in danger of death if the abortion is not performed.” The Hyde Amendment is not limited to Medicaid funding; it applies to all expenditures of federal funds, including funding for health insurance coverage.

The Indiana Litigation

Planned Parenthood sued promptly when Indiana passed its defunding legislation. The district court enjoined enforcement, and the Seventh Circuit affirmed on the ground that the state statute was preempted by Soc. Sec. Act sec. 1902(a)(23),which requires state Medicaid programs to allow beneficiaries a free choice of providers qualified to perform the needed services. The court acknowledged that Indiana had the power to make policy choices favoring childbirth over abortion. However, the power did not extend to excluding competent, appropriately licensed providers from participation merely because they perform other services for which the state is not willing to pay. The statutory grounds for exclusion from Medicaid participation, such as criminal convictions, fraud or abuse, do not stretch that far. Indiana officials petitioned the Supreme Court for certiorari, or discretionary review. However, the court denied the petition. As is typical, the court did not give a reason for denial.


In both the Arizona and the Indiana cases, the state agencies argued that neither Planned Parenthood nor the individuals who joined as plaintiffs had standing to sue because Soc. Sec. Act sec. 1902(a)(23) does not expressly provide for one.The Supreme Court has held that to confer standing to enforce a law, the law must: (1) use “rights-creating language”, phrased in terms of the individuals to be benefited; (2) use mandatory, rather than precatory language, in other words, impose an obligation; and (3) state the obligation clearly enough that a court can enforce it. And Congress must not have expressed any intent to withhold the right to sue. Both the Seventh and the Ninth Circuits found that the plaintiffs had standing to challenge the defunding law. Section 1902(a)(23) requires state Medicaid plans to provide that any individual eligible for Medicaid may receive services from any person who is qualified to perform the services and undertakes to do so. Even when a beneficiary is enrolled in a managed care program—when choice may be restricted to providers within a network—she must still be allowed a choice of providers of family planning services. Both courts found that the language was focused on individual beneficiaries and imposed a clear, specific obligation, reflecting a Congressional intent to allow individuals to sue.

“Qualified Providers”

Both courts interpreted the term “qualified provider” according to the common, ordinary meaning, that the provider be competent and able to perform the services and appropriately licensed. They found the language unambiguous; it did not leave any room for states to impose qualifications unrelated to professional competence, licensure, or connection with fraud, abuse, or other unlawful conduct.

In its petition, Arizona argues that “qualified providers” means not only competent and licensed providers, because all licensed providers are”qualified” in that sense, but also “qualified” in the sense that the state deems them worthy. In other words, the state may impose other rational limitations unrelated to competence. The petition states that the court ignored another ordinary meaning of “qualified,” i.e., “limited, conditional, not absolute.”

Arizona contends that section 1902(a)(23) cannot create any right for beneficiaries without violating the Tenth Amendment to the Constitution infringing on states’ sovereign powers to regulate the practice of medicine and decide how to spend their money. A requirement to accept any professionally competent, licensed professional or entity would surprise states with a new, unanticipated, even coercive, additional term of the contract between the federal government and the states.

Although opponents may think the argument is a long shot, but few analysts thought that the Supreme Court would overturn the mandatory Medicaid expansion provision of the Affordable Care Act.