July 11, 2012 | Issue Brief on Health Care
If the Administration’s attempt to centralize health care decision making in Washington was unworkable, its unconstitutional imposition on the states has made its problems even worse. Long before the Supreme Court’s decision to strike down the Medicaid mandate on the states as unconstitutionally coercive, opponents of the health care law argued that it would be financially unsustainable and administratively unworkable. The Court’s decision likely puts the law on a faster pace to collapse.
Under the law’s unconstitutional Medicaid expansion, states would have been required to expand their Medicaid program to cover all individuals up to 138 percent of the federal poverty level (FPL) or risk losing all of their federal Medicaid funds.
As a result of the Supreme Court’s ruling, states are now free to make their own decisions on the Medicaid expansion. As directed by the law, they can expand their Medicaid programs and receive enhanced federal Medicaid funding for this new population. But a state can also choose not to expand its Medicaid program and no longer risk losing their existing federal Medicaid funds. In essence, the ruling makes the Medicaid expansion voluntary.
Fewer Insured, Higher Costs
While the Administration is generally celebrating the Court’s decision on the constitutionality of the individual mandate, the Medicaid decision has major implications for the law’s cost and coverage. To achieve promised coverage gains, Obamacare depends on two sources for coverage: the Medicaid expansion for persons with incomes up to 138 percent FPL and the new federal subsidies through the exchanges for those persons between 100 percent FPL and 400 percent FPL.
However, those persons between 100 percent FPL and 138 percent FPL do not qualify for the subsidy unless they are found ineligible for Medicaid. This is where the trouble begins for the President’s health care overhaul. Specifically, the decision could lead to:
States Should Not Buckle
The Administration and its allies in Congress and elsewhere are trying to distract attention away from the Medicaid ruling by urging states to proceed with implementation. There are several reasons why states should not buckle under this pressure:
The Future Looks Even Worse
The potential fallout effects of the Medicaid ruling are not the fault of the states but of the authors of the health care law. It is yet another example of the shortcomings of this complex and highly tangled law and likely just a sign of things to come. As Heritage senior fellow Robert Moffit argued at the time of enactment, the President’s signature on Obamacare does not end the national debate on federal control of health care. “The debate merely enters a new and perhaps even more difficult and divisive phase. Based on current revelations and previous experience, this continuing debate gives Congress ample justification to repeal Obamacare.”
Nina Owcharenko is Director of the Center for Health Policy Studies and Preston A. Wells Jr. Fellow at The Heritage Foundation.
Genevieve M. Kenney et al., “Opting Out of the Medicaid Expansion Under the ACA: How Many Uninsured Adults Would Not Be Eligible for Medicaid?,” Urban Institute, July 5, 2012, http://www.urban.org/UploadedPDF/412607-Opting-Out-of-the-Medicaid-Expansion-Under-the-ACA.pdf (accessed July 7, 2012).
Drew Gonshorowski, “Comparing Spending Predictions on the Supreme Court Ruling on Medicaid,” The Heritage Foundation, The Foundry, July 6, 2012, http://www.foundry.org/2012/07/06/comparing-spending-predictions-on-the-supreme-court-ruling-on-medicaid/.
National Governors Association and National Association of State Budget Officers, “The Fiscal Survey of States,” Spring 2012, p. 53, http://www.nasbo.org/sites/default/files/Spring percent202012 percent20Fiscal percent20Survey_0.pdf (accessed July 7, 2012).
It is worth noting that those currently eligible but not enrolled receive standard federal matching rates, not enhanced rates.
Robert E. Moffit, “The Prospects for Ending Obamacare: Learning from Health Policy History,” Heritage Foundation Backgrounder No. 2424, June 21, 2010, http://www.heritage.org/research/reports/2010/06/the-prospects-for-ending-obamacare-learning-from-health-policy-history.