While the individual mandate of the Affordable Care Act has taken center stage in the media, the Supreme Court’s decision on another of the Act’s reforms – the expansion of Medicaid – will have significant impact on entities ranging from hospitals, to individuals, to states themselves.
Under the Affordable Care Act, Medicaid coverage would be expanded to all adults under 65 who have an income below 138% of the federal poverty level. The federal government would cover the costs of this expansion between 2014-2016 completely, dropping down to 90% by 2020. However, states must cover individuals who are newly eligible in order to receive any federal Medicaid funding, leaving some states to argue that the expansion is unconstitutional because states are being “coerced” into participating. The defense, however, asserts that states remain free to not participate and that earlier expansions, which states did accept, also required their participation.

If this new provision is found to be unconstitutional, it could threaten all federal spending programs that set a minimum participation rate. In addition, it will negatively imapct not only the 16-17 million Americans who are expected to gain Medicaid coverage under the expansion, but hospitals who will be forced to continue treating uninsured patients at a financial loss, insurance companies who stand to gain billions in revenue from the expansion, and states who already have expanded their programs and will now not receive federal funds to do so.

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