The Supreme Court's Surprising Decision on the Medicaid Expansion

How Will the Federal Government and States Proceed?

In National Federation of Independent Business v. Sebelius, the U.S. Supreme Court upheld the constitutionality of the requirement that all Americans have affordable health insurance coverage. But in an unprecedented move, seven justices first declared the mandatory Medicaid eligibility expansion unconstitutional. Then five justices, led by Chief Justice John Roberts, prevented the outright elimination of the expansion by fashioning a remedy that simply limited the federal government’s enforcement powers over its provisions and allowed states not to proceed with expanding Medicaid without losing all of their federal Medicaid funding.

The Court’s approach raises two fundamental issues:

  1. Does the Court’s holding also affect the existing Medicaid program or numerous other Affordable Care Act Medicaid amendments establishing minimum Medicaid program requirements?
  2. Does the health and human services secretary have the flexibility to modify the pace or scope of the expansion as a negotiating strategy with the states?

The answers to these questions are key because of the foundational role played by Medicaid in health reform.