State Challenges to Medicaid Laws Have Hill to Climb

Ernie Shannon's picture

The nation’s Medicaid program faces daunting challenges in 2012 not the least of which is a Supreme Court review of whether the Obama administration can require states to accept millions more people onto their Medicaid rolls or lose some of their federal funding.

Recently, I Glenn Cohen of the Harvard Law School and James F. Blumstein of the Vanderbilt Law School evaluated the upcoming high court hearing and whether the states challenging the Affordable Care Act’s mandate have a leg to stand on. Their comments appeared in the January issue of the New England Journal of Medicine.

The new health care law mandates that state Medicaid plans provide coverage for everyone under the age of 65 with incomes of 133 percent of the federal poverty level and below. To remain eligible for any federal Medicaid matching funds, states must accept these new requirements. In response, Florida, joined by another 25 states chose to challenge the Medicaid rule claiming Congress overstepped its bounds with the change in Medicaid policy. While the 11th Circuit Court of Appeals rejected the challenge, the Supreme Court decided to take up the argument when it hears testimony regarding the overall constitutionality of the Affordable Care Act.

According to Cohen and Blumstein, the challenging states are basing their move on two issues: “federal conditions must be unambiguous, ensuring that states are given clear notice of their obligations when they accept federal funds so that they can knowingly exercise their choice about whether to participate.” The other issue is that “the federal government may not employ the spending power in such a way as to ‘coerce’ the states into compliance with federal objectives.”


Regarding these two issues, the 11th Circuit said, “Congress cannot place restrictions so burdensome and threaten the loss of funds as great and important to the state’s integral function as a state – funds that the state has come to rely on heavily as part of its everyday service to its citizens.” However, the court decided that the Medicaid changes constituted pressure rather than compulsion.

Cohen and Blumstein shared their own opinion regarding these states’ chances of winning in front of the nine justices in March. First, they point out, states were from the beginning that Congress reserved the right to make changes to Medicaid and at each subsequent amendment stage, states could choose between complying with the changes and losing all or part of their funding.

Second, the authors suggest that since the federal government will bear 90 percent of the costs associated with the expansion once it is fully phased in, their can’t be coercion.

Third, the lawyers say that states have four years from the date the Affordable Care Act was enacted to decide whether to stay in Medicaid by adopting the expansions and thus have had significant notice and time to deal with the expansion. Finally, Cohen and Blumstein propose that states can tax and raise revenue and therefore can create and fund their own programs if they don’t like Congress’s terms.

Regardless of these arguments and the opinions of the 11th Circuit Court of Appeals, the real decision will lie with the Supreme Court and they may well determine the future of Medicaid as we know it.


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