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After Supreme Court ruling, Medicaid expansion faces uncertainty

A main goal of the Affordable Care Act was to increase the rolls of insured Americans, with about half coming from Medicaid. But the Supreme Court made it easier for states to opt out of the expanded program.

By Staff writer / June 29, 2012

Rep. Tim Murphy, R-Pa., holds up a copy of the Supreme Court's health care ruling during a news conference by the GOP Doctors Caucus on Capitol Hill Thursday.

Cliff Owen/AP

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This week's Supreme Court on health-care reform represented a legal victory for President Obama on many fronts, but the ruling made it easier for states to opt out of one important area, the expansion of Medicaid for America's poor.

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The president won a major enlargement of Medicaid funding as part of the 2010 Affordable Care Act. As many as 17 million people, or about one-third of Americans who lack health insurance, stood to gain coverage under the law.

But many states, which administer the Medicaid program and help to fund it alongside the federal government, joined a legal challenge to the act. Some 26 states argued that this portion of the law was an unlawful federal intrusion into their affairs.

Participation in Medicaid has always been at the discretion of states. In Thursday's ruling, a majority of justices indicated that the federal government could not force states to accept the law's expansion of the program, saying the threat that states refusing to participate in the expansion would lose all federal Medicaid funding was unconstitutionally coercive.

The result, potentially, could be to undercut Mr. Obama's major goal of expanding health insurance to more Americans. As many as half of people gaining coverage were expected to do so within Medicaid.

The law will still call for a big increase in federal spending on Medicaid, as much as $930 billion during the next decade to insure Americans whose income is 1.33 times the official poverty level or lower. But how many new people are enrolled under this plan will depend on whether states opt in.

"We are concerned many states will choose not to expand coverage," Bruce Siegel, president of the National Association of Public Hospitals and Health Systems, said Thursday in a statement released following the court's decision. "In the 26 states that participated in the federal lawsuit, more than 27 million people have no insurance," he added, and many of those who would have been eligible for Medicaid in 2014 "might no longer have that option."

His association represents so-called "safety-net hospitals," which serve a high percentage of poor patients and get significant funding through Medicaid.

States that challenged the Obama law include many in the South, Midwest, Great Plains, and Rocky Mountain region. Whether they opt out of the law remains to be seen. The vast sums of money that the federal government would be sending to the states to cover the Medicaid expansion create significant incentives to participate.

Republican governors didn't commit to a particular position on the Medicaid expansion. Still, several went out of their way in statements released after the ruling to cast Medicaid as a budget-buster in the law.

"A Medicaid expansion would put 1 in 4 Hoosiers (approximately 500,000 new enrollees) in Medicaid at a cost of approximately $2 billion over 10 years," Gov. Mitch Daniels of Indiana said. Indiana is seeking a federal waiver to cover more people through a program called the Healthy Indiana Plan instead.

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