Plain Language Summary of U.S. Supreme Court Decision on Affordable Care Act

In its decision yesterday June 28, 2012, the U.S. Supreme Court upheld the constitutionality of the 2010 Patient Protection and Affordable Care Act (ACA), clearing the way for its full implementation, with one exception regarding the expansion of the Medicaid program.

The Medicaid health insurance program is jointly funded by the federal and state governments and has some basic federal guidelines for eligibility and benefits, with flexibility for each state to adjust its program (with federal approval) in terms of both eligibility and benefits provided.  The program is technically a voluntary program that states do not have to participate in.  However, ever since 1982, every state participates in the Medicaid program (Arizona joined the program that year).  Because states need to jointly fund the program (sharing from 50 percent to 17 percent of the costs), the program also has become a major expenditure in state budgets.

Under the ACA, beginning in 2014, eligibility for Medicaid would be expanded in all states to all individuals below 133 percent of the federal poverty level.  Beginning in 2014, states would receive 100 percent federal funding for the individuals who would be newly eligible for Medicaid under this expansion, with that federal funding gradually decreasing and remaining at 90 percent federal funding in 2020.  The Supreme Court ruled that while this expansion of Medicaid eligibility could be authorized for all states, the federal government (the Centers for Medicare and Medicaid Services) could not withhold federal funding for existing Medicaid programs from states that choose NOT to expand their state Medicaid program under the ACA.  This would be similar to states refusing to accept economic stimulus funding (along with its programmatic changes) under the 2009 American Recovery and Reinvestment Act (ARRA), as the state of Alaska did.

While 26 states had challenged this Medicaid expansion, it will remain to be seen how many of them now actually refuse to implement the expansion when it is funded 100 percent by the federal government for the first three years (2014-1016). States would be able to reduce their number of uninsured residents with relatively minimal administrative costs, especially since each state also is receiving federal funding to establish health insurance exchanges that will provide a single portal or application process for all health insurance programs, including Medicaid.

The name of the U.S. Supeme Court case is National Federation of Independent Business v. Sebelius.

This entry was posted in Author, Health Care Reform, Ignatius Bau: Policy Analysis. Bookmark the permalink.

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