Though the Supreme Court recently ruled that the health care legislation known as the Patient Protection and Affordable Care Act is constitutional, it’s ruling also left a path for states which do not wish to participate in the planned expansion of Medicaid under the law.
Under the law, Medicaid is set to expand greatly beginning in 2014. The law provides that any individual or family who makes equal to or less than 133% of the federal poverty limit will be eligible for Medicaid coverage. Under this expansion, an estimated 15 to 16 million more Americans will receive health insurance through the Medicaid program.
However, the court ruled that the way the healthcare law enforces this expansion is not allowable in how it punishes states which do not wish to participate. Here’s how it works: the law imposed a penalty on any state that did not adopt the new Medicaid expansion criteria. Because Medicaid is a joint federal and state program, the federal government can impose certain requirements. The new law stated that if a state chose not to implement the expansion, the federal government would deny that state all Medicaid funds. Federal Medicaid funds account for about 10% of all state Medicaid expenses, so that’s a significant amount of money.
The Supreme Court declared that this kind of punishment is unconstitutional. Though the federal government can give states incentives to participate, it cannot punish them by denying them funds it already provides if they choose not to expand Medicaid eligibility. This means that some states may choose not to include the expanded Medicaid coverage requirements, essentially “opting out” of the requirement.