Medicaid Makes States an Offer That Is Too Good To Refuse
Today, the Supreme Court will hear arguments on whether the Affordable Care Act (ACA)’s Medicaid expansion (the planned increase in the number of low-income adults who are able to receive Medicaid coverage in 2014) is constitutional.
The plaintiffs will argue that the ACA’s Medicaid expansion constitutes coercion because the federal government is requiring them to expand Medicaid and to fund (a small portion of) that expansion. But the truth is that state participation in Medicaid is entirely voluntary, not at all coerced. States that don’t want to comply with the expansion can drop out of Medicaid at any time.
The plaintiffs’ response is that dropping out of Medicaid is not a real option – their budgets rely too heavily on the stream of federal Medicaid dollars they receive. Their argument essentially boils down to “the Medicaid program is such a good deal, we’d be crazy to drop out!”
As the case has made its way through the legal process, no lower court has made the leap from “a really good deal” to “coercion,” and it’s hard to believe that the justices of the Supreme Court will be the first to buy that faulty logic. Most legal scholars agree that SCOTUS will uphold the Medicaid expansion, and the Medicaid expansion will still stand even if they rule against the individual mandate.
Upholding the expansion is potentially life-saving for the 15 million people who will gain coverage through Medicaid in 2014. It will also put SCOTUS on the side of the American public as a whole: a recent poll shows that 70 percent of the public supports the Medicaid expansion (roughly the same percentage as support the most popular elements of the law, like eliminating pre-existing condition discrimination).
And ultimately, even though they’re arguing against it in court, it’s good news for states and their budgets. The federal government will foot more than 95 percent of the bill for the newly eligible in the first five years of the expansion. In return for their relatively small investment in this expansion, states will see the number of uninsured adults with incomes below 133 percent of the federal poverty level (FPL) drop by almost half.
Higher rates of insurance coverage means lower state and local spending on mental health care and on uncompensated care for safety-net hospitals. It also means reduced costs for the states that already cover these low-income adults in Medicaid. A 2011 Urban Institute report finds that rather than burden states with new costs, the ACA will lead states overall to spend $92-129 billion less from 2014 to 2019.
Without the federal government stepping in to help, states will eventually have to try to find a solution to the growing number of uninsured. It’s hard to imagine how they would find a better deal than this.
–Katherine Howitt, Senior Policy Analyst