Perspective
All Heat, No Light — The States' Medicaid Claims before the Supreme Court
N Engl J Med 2012; 366:487-489February 9, 2012
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open through February 15, 2012
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It has been clear for some time that the political fight over the minimum-insurance-coverage requirement in the Affordable Care Act (ACA) would eventually reach the U.S. Supreme Court. What few would have predicted was that the question of the constitutionality of the latest in a long line of Medicaid expansions would also end up there.
In their appeal to the Supreme Court of the 11th Circuit Court of Appeals' rejection of their Medicaid claims, Florida and 25 other states argue that the ACA “coerces” them into expanding their Medicaid programs to cover all adults with incomes below 133% of the poverty level by making their receipt of any and all federal Medicaid funding conditional on such an expansion.1 Although the Constitution's 10th Amendment prohibits the federal government from forcing the states to carry out a federal program, it allows the federal government to require states to meet specific conditions if they accept federal money. The states, however, argue that they are being coerced into accepting the expansion, since Medicaid is their largest source of federal funding and since it offers the only basis for covering the poorest Americans under the ACA.
Although the Supreme Court has articulated a number of constitutional requirements that must be met when federal spending programs impose conditions on the states, the lower courts found that all those conditions were met in this case. The states have asked only that the Court review the coercion question. Not only did the lower courts reject the coercion theory in this case, however, but no federal court has ever declared a federal law unconstitutional on the basis of this theory, which is mentioned as a possibility in only a couple of Supreme Court cases.2 Indeed, several federal appellate courts have concluded that the theory, which would be very hard to apply in any case, is not really the law.3 It is surprising, therefore, that the Supreme Court agreed to hear the states' argument in this case.
What makes the Court's decision even more surprising is that contrary to assertions the states made in their review petition to the Court, the ACA expansion works the same way Medicaid expansions have always worked.
Two basic principles undergird Congress's original and repeated decisions to provide states with a cumulative total of trillions of dollars in federal funding over the past half century to pay for health care for poor Americans. The first is that in exchange for federal funds, states must provide a minimum set of covered services to certain population groups. The original 1965 Medicaid statute required the states to cover families receiving assistance from the Aid to Families with Dependent Children (AFDC) program, as well as individuals receiving aid under federally assisted state cash-welfare programs for the aged, blind, and disabled. From the beginning, however, Congress also gave states the option of covering additional categories of the poor, such as “financially needy children” who were poor but could not qualify for cash assistance, typically because both parents were present.
The second principle, embedded in Medicaid's basic legal architecture, relates to the constitutional supremacy of federal law. Although some would compare Medicaid to a contract between the states and the federal government,4 from a constitutional perspective the Medicaid statute, like all federal laws, is the supreme law of the land. As a result, Congress from the beginning reserved to itself the right to revise and amend Medicaid at any time without state permission.5 States have been on notice of this possibility for half a century. The Department of Health and Human Services can use financial incentives, including the full or partial withholding of federal funds, to ensure compliance by states that choose to participate but resist the program's terms — and the law has always allowed this.
Since 1965, Congress has steadily expanded the categories of low-income Americans covered by Medicaid and the services to which they are entitled. In so doing, it has ensured that the massive Medicaid investment implements a national coverage policy to protect the most vulnerable Americans, while at the same time affording states considerable flexibility to tailor their programs to specific state conditions.
This evolution in mandatory coverage groups began in 1972, when Congress created the Supplemental Security Income (SSI) program covering disabled children and adults and the indigent elderly and required states (with certain exceptions) to extend Medicaid to SSI beneficiaries as a condition of participation in Medicaid. Even more striking has been Congress's record of reforms for children and pregnant women. A series of expansions beginning in 1984 moved financially needy children from the optional to mandatory coverage column and established pregnant women as a mandatory coverage group. Today, all states must extend Medicaid to all infants, children under 6 years of age, and pregnant women whose family incomes are below 133% of the federal poverty level, as well as to all children 6 to 18 years of age with family incomes up to 100% of the federal poverty level.
Cycles of expansion have followed a familiar pattern, with mandatory coverage evolving as social conditions have revealed the need for a public health insurance intervention to aid disadvantaged populations. Congress may first offer new options for states that wish to extend coverage, as it did for low-income children, but the extension may later become mandatory, as it ultimately did with children. Congress also may strengthen earlier mandates, as in the case of aged, blind, and disabled beneficiaries. Not infrequently, as the “floor” is raised, states are offered new options to again move beyond that floor. This has been Medicaid's pattern since 1965, and states know that.
Coverage of poor, nonelderly adults has similarly followed this pattern. Under current law, states must cover certain categories of nonelderly adults: adults who are pregnant or would have qualified for AFDC before it was abolished and, with certain exceptions, nonelderly SSI recipients. But states have long had the option of offering more generous coverage for pregnant women, nonelderly adults with disabilities, and parents. Indeed, the ACA gave the states the additional option of immediately covering all nonelderly low-income adults — something that several states have already done.
On January 1, 2014, coverage of all nonelderly adults with family incomes below 133% of the poverty level will become mandatory, with the federal government initially absorbing 100% of the cost (and eventually 90%) instead of the far lower financial contribution rates used for other mandatory eligibility groups. In expanding Medicaid, Congress built on what was already in place instead of reinventing the wheel. By covering poor adults in addition to poor children, Congress will finally have established as national policy the floor of coverage for low-income Americans that began to be built in 1965.
From a legal perspective, nothing about this latest Medicaid expansion is different from past expansions, other than the fact that it passed as part of a broader health care reform effort. This fact does not change Medicaid's fundamental status as a voluntary program. Were a state to decide that it would rather end its Medicaid program than cover poor adults, it might have to devise a health care alternative for its poorest residents. But that has always been the question states face when Congress expands Medicaid. States may be confronted with a “hard choice,” in the words of the 11th Circuit, as to whether to continue participating in Medicaid. But that is not a constitutional matter.
Disclosure forms provided by the authors are available with the full text of this article at NEJM.org.
This article (10.1056/NEJMp1114480) was published on January 11, 2012, at NEJM.org.
Source Information
From the Department of Health Policy, George Washington University School of Public Health and Health Services, Washington, DC (S.R.); and Washington and Lee University School of Law, Lexington, VA (T.S.J.).
- References
References
1
Florida et al. v United States Department of Health and Human Services, Petition for Writ of Certiorari (Sept. 27, 2011), pp. 16-26.
2
South Dakota v Dole, 483 U.S. 203 (1987).
3
Florida et al. v United States Department of Health and Human Services, 648 F 3d 1235 (Eleventh Cir., 2011), pp. 1265-6.
4
Cohen IG, Blumstein JF. The constitutionality of the ACA's Medicaid-expansion mandate. N Engl J Med 2011. DOI: 10.1056/NEJMp1113416.
5
42 U.S.C. §1304.
- Comments (1)
Wired
From the Supreme Court that gave us the Citizens United decision, expect a 5 to 4 decision in favor of the states. Expect a similar decision later against the individual mandate. Perhaps if all medical associations filed an amicus curiae with the Supreme Court supporting the federal law then the outcome would not be so clear.