State of Confusion

05 September 2012   Senator Jon Kyl
We've had a Supreme Court decision on ObamaCare. Now what?

In the aftermath of the Supreme Court’s ruling on ObamaCare, a significant amount of attention has been paid to the fate of the individual mandate. Lost in this intense focus on the mandate, however, is the coercive expansion of Medicaid that the court ruled unconstitutional by a vote of 7 to 2.

Under ObamaCare’s original requirements, 26 million more people – those earning up to 133 percent of the federal poverty level – would have been made eligible for Medicaid, a program intended to assist the impoverished and those with disabilities. The law attempted to force states to adopt this new, massively expensive eligibility criterion by prohibiting all Medicaid funding for states that refused to implement the new policy.

This threatened loss of federal health-care support for states’ neediest and most vulnerable citizens was described by Justice John Roberts as the equivalent of a “gun to the head,” which is exactly what the Obama Administration was counting on when it pushed the law through Congress. In effect, ObamaCare made an offer that states couldn’t refuse – and this is precisely what the court found unconstitutional.

ObamaCare forced states to either “accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding,” Roberts said in his ruling. The court found that this violated the limits on Congress’ authority imposed by the Spending Clause. While Congress may use federal funding to encourage states to adopt certain policies, it cannot use the threat of loss of all funding for a major program to coerce states. The court held that states are free to refuse the ObamaCare expansion without jeopardizing all federal funding for their Medicaid programs.

Since the Supreme Court ruling, five states have announced their intention not to participate in the ObamaCare Medicaid expansion. For those states that decided to opt out, there are several reasons that undoubtedly played a role in that decision.

First, although ObamaCare pledged supplementary federal funding to states for new Medicaid enrollees, that increased funding will decrease in coming years. Additionally, many states are wary of promises made by Washington politicians – and with good reason. The federal government is currently drowning in red ink, with a massive $1.2 trillion deficit and more than $15 trillion in debt. Who’s to say that these promised funding levels will not be adjusted downward when Congress needs money for other spending priorities? In fact, that seems a likely scenario for some states. If so, “the burden gets dumped on the taxpayers of our state,” as Florida Governor Rick Scott recently pointed out.

Second, Medicaid programs are already overstretched and are underserving populations in many states. Indeed, studies have shown that, in many cases, outcomes for patients on Medicaid are worse than for those with no insurance at all. In addition, the program underpays providers so they simply no longer see Medicaid patients; a recent survey in Texas indicated that only 31 percent of Texas physicians are accepting new Medicaid patients, down from 67 percent in 2000. Dumping 26 million more people into this program – without any accompanying structural reforms – would only exacerbate the crisis for existing beneficiaries.

Third, ObamaCare would have changed Medicaid into a program that many state leaders believe goes in the wrong direction. According to the Supreme Court, it would have changed from being “a program to care for the neediest among us” into “an element of a comprehensive national plan to provide universal health insurance coverage.”

The Supreme Court has empowered states to decide whether their particular circumstances warrant participation in ObamaCare’s proposed Medicaid expansion. Some states may find participation unwise; others may not. This autonomy for the states is what the Constitution envisions and what the Supreme Court reaffirmed in its recent ruling.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees.

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