Ruling Could Lead to Medicaid Fight in the States

The Supreme Court virtually guaranteed sharper debate in the states, especially Republican-leaning red states, over whether to join the program the health care law establishes to expand Medicaid eligibility and coverage.

Those decisions will carry substantial stakes. Many of the conservative states most likely to opt out of the Medicaid expansion are also among the states with the largest number of uninsured.

National Journal has calculated that the 26 states that joined the lawsuit against the Medicaid expansion contain 27.6 million uninsured, a 55 percent majority of all the uninsured in America, according to Census Bureau figures. That includes Texas at 6.1 million uninsured, Florida at 3.9 million, and Georgia at 1.9 million.

That expansion was expected to provide coverage to about 17 million of the uninsured, roughly half of the total coverage expansion projected under the law. (The mandate on individuals to buy insurance, with substantial subsidies from the government and the establishment of exchanges where they can shop for competing coverage plans, is expected to provide the other half.)

The five-member Court majority struck down one aspect of that planned expansion: the penalty the law established for states that choose not to participate in the expanded coverage. The law said states that opted out could lose not only the funding relating to the expansion, but all of their federal Medicaid dollars — including their funding for the existing program.

That decision will undoubtedly make it easier for states, especially conservative states, not to participate in the Medicaid expansion. But, even after the decision, opting out won't be a painless choice. The health care law provides states with a very sweet deal for expanding coverage. Under the law, the federal government will pay all of the cost for the coverage expansion during its first three years (2014-2016), and then taper down to a permanent 90 percent contribution by 2020.

Even without the threat of a complete funding loss, it may not be easy for governors to explain why they would walk away from a deal that commits Washington to paying 90 cents on the dollar for expanding coverage to the uninsured in their state.

In every state, medical interests, like hospitals, groaning under the cost of uncompensated care for the uninsured may question turning back federal assistance that would attach a funding stream to thousands of those patients. Health and Human Services Secretary Kathleen Sebelius may have had such considerations in mind on Thursday when, according to administration sources, she assured President Obama that she does not believe the Court decision will significantly hurt the Medicaid expansion.

But that doesn't mean some of the governors who joined the lawsuit against the reform plan won't do exactly that. (Surely the announcement from Texas Gov. Rick Perry will be coming soon.) While the Court settled the big constitutional questions surrounding the health care law, it hasn't ended the debate over it — and probably won't end the scorched-earth resistance in most of red America.