SCOTUS: Don’t Punish States Who Opt Out of “Dramatically Transformed” Medicaid Program

The Medicaid program as envisioned through the Affordable Care Act’s expansion provision has been “transformed” and isn’t even the same program anymore, said the Supreme Court Justices today in their momentous healthcare reform ruling, so it’s not constitutional for the government to threaten states with losing their existing Medicaid funding if they choose not to comply with the expansion. 

“The original program was designed to cover medical services for particular categories of vulnerable individuals. Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level,” the Justices noted in the syllabus of their massive decision. 

They argue that states could have “hardly anticipated” that when Congress reserved the right to “alter” or “amend” the Medicaid program, it would also have the power to “transform it so dramatically.” 


Click here to read about how the Medicaid expansion could affect the long-term care industry. 

Medicaid is a voluntary program that all states currently choose to participate in. Each state Medicaid program is allotted a certain amount of matched federal funding, depending on the demographics of that state’s residents. However, part of Obamacare gives the Department of Health and Human Services the authority to penalize states that choose not to participate in the expansion, by taking away their existing Medicaid funding. 

States depend heavily on that matching funding, though, so most states, despite the voluntary nature of the program, would essentially be forced to go all-in with the expansion—or risk losing everything. 


But “depriving a state of all of its Medicaid funding for refusing to agree to the new expansion would exceed Congress’s power under the Spending Clause,” writes the SCOTUSblog of three of the Justices’ position on the provision. 

“Although Congress may attach conditions to federal funds, they concluded, it may not coerce states into accepting those conditions,” SCOTUSblog says. “And in this case, taking away all the states’ funds for the entirety of its Medicaid program just because it disagreed with a piece of the program would be coercive.”

The bottom line is that while expanding Medicaid is constitutional, it’s unconstitutional for the federal government to cut off all funding for states who choose not to comply with the expansion, the article continues. 

“The result is that states can choose to participate in the expansion, [and] must comply with the conditions attached to the new expansion funds if they take that new money, but states can also choose to continue to participate only in the unexpanded version of the program, if they want,” it says.

Basically, the Court decided to limit the financial pressure the Department of Health and Human Services could apply to states to force them to accept the terms of the Medicaid expansion. But while some states are now more able to choose to reject the expansion, that doesn’t mean all—or even any—will, the Justices note. 

Read the SCOTUSblog’s full piece on Medicaid expansion, or take a crack at the Supreme Court ruling

Written by Alyssa Gerace