Health Center Federal Policy

ACA Medicaid Expansion Upheld in Part, but Supreme Court Decision Means Less Certain Future

by Heather J Foster, MPH

While all eyes were on the “Individual Mandate” and whether that component of the Affordable Care Act (ACA), the health care reform law, could be severed from the rest of the law were it struck down, the Medicaid expansion was truly the sleeper issue that has taken everybody by surprise.  Ultimately, the high court treaded a very fine line of not declaring the Medicaid expansion unconstitutional while at the same time declaring the mandate of the expansion unconstitutional.

The U.S. Supreme Court limited the Medicaid expansion by effectively making it a state
option rather than a mandated expansion, so that states that want to move forward with the planned expansion (which would give coverage to all individuals under 133% FPL) may do so, but states that do not want to will no longer be required to do so.  According to the law, if a state did not move forward with the expansion that state would lose all of its Medicaid funding—including its current funding.  According to the Court’s ruling, however, it would be coercive for the Federal Government to withhold funding for a state’s Medicaid program as it stands today if a state were to choose not to move forward with the ACA’s Medicaid expansion, because the expansion is essentially a “new  program.”  The Court determined the Medicaid expansion was in effect a “new program” because in its estimation, ACA changed the scope of the original Medicaid program in the expansion so dramatically–by changing the eligible population–that it was  transformative in nature rather than just modifying the current program.   By ruling that the “stick” that ACA provided to the Federal Government for compelling states to   comply with the Medicaid expansion (losing all of their Medicaid funding)  was  unconstitutional, the ruling has made the expansion optional, rather than mandatory,  for states.

What this means is that some of the poorest of the poor, who had stood to benefit the most from health reform, are at risk of losing their only access to affordable health care  coverage.  In states that choose not to move forward with the expansion, residents who would otherwise have been eligible for Medicaid will have no other source for affordable
coverage as they are specifically excluded from receiving a Federal subsidy to purchase  coverage in the new health insurance Exchanges.  The health reform law establishes subsidies on a sliding scale for individuals and families between 100% and 400% FPL.  It did not establish subsidies for those under 100% FPL because it was  assumed they would be covered by the Medicaid expansion.

The ruling does, however, leave open the opportunity for some of the plaintiff states who
opposed the Medicaid expansion to take it up since they can argue they just didn’t want it to be a Federal mandate.  Some will certainly choose not to, however, leaving their most vulnerable populations without access to coverage.  Community health centers will stand at the ready to provide access to care for this population; however, it does mean that health centers’ Medicaid rolls will not increase as predicted and that there will still likely be high rates of uninsured at health centers.

We have lots to watch over the coming years and it is likely that both a political and policy fight will ensue as the process rolls out and states must decide whether to  implement the expansion or not.  It is unclear just how many of the 16 million individuals who had stood to gain coverage under the Medicaid expansion will be affected, but we here at NACHC will be working to make sure that our nation’s most vulnerable individuals will not be left out in the cold.  Dan Hawkins’ response to the ruling can be seen here and additional information on the potential impact of the ruling can be found here.