The Health Care Ruling — Big Takeaways and New Questions

Now that the dust is settling from this morning’s Supreme Court ruling, I thought I’d stop to highlight a few big takeaways from the opinion and identify the big questions going forward.  The biggest of those:  What will happen with the Medicaid expansion?  Read on for my initial thoughts.

The First Big Question:  Will Any States Decline to Expand Their Medicaid Programs?

Under the majority opinion, if states refuse to expand their Medicaid programs pursuant to the ACA, the federal government cannot punish them by withdrawing all existing federal Medicaid funds.  That raises the first big question:  With Congress’ biggest stick taken away, will some states now decide not to expand Medicaid?  Only time will tell.  But if any states do go that route, it likely would mean more Americans remain without health coverage, and as a result hospitals may face greater uncompensated-care costs than the ACA anticipated.

On this topic, hospitals will simply have to stay tuned.  It’s impossible at this juncture to predict which states — if any — will refuse to participate in the ACA’s Medicaid expansion.

The Second Big Question:  If a State or States Does Not Expand Medicaid, What Can the Feds Do?

Chief Justice Roberts’ opinion makes clear that the federal government cannot coerce states to participate in the Medicaid expansion by threatening them with the loss of all “existing Medicaid funds” if they refuse.  But the opinion does not appear to foreclose  the use of smaller “sticks” to encourage state participation.  For example, could the federal government tell states that they will lose other PPACA-based funds if they decline to participate?  (Those funds, after all, are not “existing” funds, in the sense Roberts appears to use the term.)  Could it threaten states with the loss of some subset of pre-existing Medicaid funds, but not all of them?  (The idea there is that a smaller threat would not push the case over the line from encouragement to coercion.)

The answer isn’t clear; it’s very possible that the federal government would interpret the opinion to say it can make these threats, while states would interpret the opinion to say the feds cannot do so.  Of course, it remains to be seen whether any states will decline to participate in the expansion.  But if they do, the federal government will have hard choices to make about how it can and should respond.

Big Takeaway #1 — The Court’s Conservatives Really Wanted to Foreclose Mandates

Chief Justice Roberts easily could have skipped the Commerce Clause discussion and gone straight to the tax power.  He could have said, in effect, “the challengers say this law is invalid under the Commerce Clause, but we don’t have to consider that issue, because the law is valid under Congress’s taxing authority.”  In fact, that is what a judge normally would do; judges typically do not decide questions unnecessary to the outcome.  And yet Chief Justice Roberts instead wrote a long opinion explaining why Congress cannot make Americans buy a product (here, health insurance) using the commerce power.  The four dissenting justices agreed, and so that position, with a total of five votes, arguably is the law.  Chief Justice Roberts thus managed to uphold the ACA while still reaching out and sharply warning Congress against mandates.  A deft move from a judge always known for his skills in advocacy.

Big Takeaway #2 — The Medicaid Portion of the Case Is the Most Important, Legally Speaking

The Chief Justice’s majority opinion arguably forecloses Congress from trying to enact product-purchase mandates.  That is important, but not something that will come up often; after all, Congress has rarely if ever tried to make Americans buy a product.  Likewise, the Chief Justice’s opinion on the tax power is important to this case, of course, because it allowed him to uphold the law.  But that piece of the opinion also may not apply in too many cases.

The Medicaid piece of the case is another matter altogether.  As I have said in other posts, the idea pushed by the states here — that if Congress offers excessive “encouragement” to states to regulate in a certain way, it amounts to an unconstitutional direct command — has never been squarely accepted by the Supreme Court until today.  Put another way, the Court has never said — not in 200-plus years — that a Congressional spending offer to the states was so coercive as to be unconstitutional.  Now, however, the “coercion doctrine” is the law.  And that means states may be able to object to changes to various cooperative federal-state programs on the theory that those changes are coercive.  It also means states may be able to object to some future changes to Medicaid, depending on how those changes are structured.

The Medicaid portion of the decision, in short, is a big change in the law, and it has the potential to interfere with Congress’ ability to tweak federal-state programs as appropriate.  It was a sleeper, but it may turn out to be the most significant piece of the decision in the long run.


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