Power Grid Blog
Supreme Court Decision Gives States an Option to Refuse to Expand Medicaid To Cover More Persons with Disabilities with Incomes Near the Poverty Level
July 2, 2012 | David Heymsfeld, AAPD Policy Advisor
The Supreme Court’s decision last week generally upheld the health care reform act (the Affordable Care Act or ACA), and preserved most of the provisions that were strongly supported by the disability community, including the requirement that insurance must be available to persons with disabilities or chronic health problems. Unfortunately, on one important issue, the expansion of Medicaid, the Court’s decision jeopardizes an ACA program intended to provide health and long term care benefits to some of our most vulnerable citizens.
The ACA expanded the Medicaid program, a program of great importance to persons with disabilities. The Medicaid program has always been limited to people with low incomes. Before ACA, the States had some flexibility to set the income level, subject to a federal requirement, that for persons with disabilities, the cap could be no lower than 75% of the Federal Poverty Level ( for 2011 75% of FPL is about $8,700 a year for a single person). The Affordable Care Act required the eligibility level be raised to 133% of the FPL in 2014, about $15,600 for a single person. The Act provided that if a State refused to raise the cap, the federal government could end all federal support for a State’s existing Medicaid program. The lost federal funding would be substantial—federal support of Medicaid in all States was about $275 billion in FY 2011.The Supreme Court decided that this sanction was unconstitutional because the sanction was so large that a State would not be making a voluntary choice to expand Medicaid, but would be “coerced” into accepting the Medicaid expansion to avoid the sanction. In the view of a Majority of the Court, this coercion is the equivalent of a law directing the States to expand Medicaid, which would be beyond Congress’ constitutional authority. (A discussion of the details of the Court’s legal analysis is beyond the scope of this blog).
However, the Court did allow the Medicaid expansion to continue as a voluntary program. The Court ruled that the federal government could continue to offer funding for a State to expand its Medicaid program to cover persons with incomes of up to 133% of FPL. The State could decide whether it wished to expand its program and accept the new federal funding, or not participate in the expansion and not receive the new federal funding for the expansion. If a State refused to expand, it would continue to receive federal funding for the rest of its Medicaid program
The possibility that States will decide not to participate in Medicaid expansion, threatens to impair an important part of the ACA’s goal of extending health care to all Americans. As enacted, the ACA provided that persons with incomes above 133% of the poverty level would get health insurance from their employers or individual policies . For lower incomes of 133% to 400% of FPL, the purchase of insurance would be supported by federal subsidies paying a portion of the premiums.
Below this level, persons whose income was less than 133% of FPL , the ACA contemplated that health care would be provided by Medicaid. It has been estimated that about 17 million persons would be added to the Medicaid program under the ACA.
Under the Supreme Court’s decision, if a large number of States do not choose to expand Medicaid, many of the 17 million will not get the health care the ACA intended them to receive. It would be most disturbing if the result of the Supreme Court’s decision was that higher income persons would keep the health care benefits provided by ACA, while some of the most vulnerable would lose the Medicaid benefits of the Act
As a caveat, it is possible that some of the persons who would have been eligible for expanded Medicaid under ACA would still be eligible for premiums for buying health insurance. This possibility is now being analyzed. But there is no thought that subsidies would be available to most of the 17 million who would be added to Medicaid by ACA. In any event, the subsidies are not as robust a benefit as Medicaid, because they still require the purchaser to pay a portion of insurance out of his own pocket.
In the days following the Supreme Court decision, there has been considerable speculation about what the States will do. One thought is that the federal funding offered for a Medicaid expansion is so generous that most States will participate. Under the ACA, the federal government will pay 100% of the cost to add people to a State’s program for the first three years until year 6, after which the federal share will be 90%. Another financial incentive for the States to accept the expansion is that they would be relieved of the subsidized services and higher insurance rates, now required to provide health care for the low- income people, who would be added to Medicaid.
On the basis of these financial realities Senator Orrin G. Hatch of Utah, the ranking Republican on the Senate Finance Committee stated shortly after the Court’s decision “No state can afford to opt out, There’s no state in its right mind that wouldn’t take the money, because they’re going to have all those additional people they’re going to have to take care of.” (reported in CQ Healthbeat News, June 28, 2012)
On the other hand, the media has reported a number of State elected officials stating that they would not participate in a Medicaid expansion. Bear in mind that 26 States were parties to the lawsuit asking the Supreme Court to set aside the entire Medicaid expansion. Advocates can hope that the litigants’ disappointment over the failure to achieve total victory is responsible for their early negative statements, and that their unwillingness to participate will dissipate over time. The arguments made by the unwilling states include that they can’t afford the 10% share (which will ultimately be required) and that in the future, Congress may reduce the federal share, or that Medicaid is an unsound program, which should not be expanded. There has also been speculation that officials in some states are making strong suggestions that they will not participate in the expansion to gain leverage in negotiations on other Medicaid issues, such as turning the program into a block grant.
In short, the Supreme Court’s decision does not ensure that we
will keep all the important reforms made by ACA. Supporters of Medicaid expansion will now have to shift their efforts to the States, and persuade elected officials that the expansion is the most economic and efficient way to ensure that those close to the poverty line get the health and care services they need.