Implications Are Far-Reaching in States’ Challenge of Federal Health Care Law

From The New York Times:

A major issue in the Supreme Court battle over the new health care law is whether Congress can force states to make a huge expansion of Medicaid, to add millions of low-income people to the rolls.

States say the federal law is unconstitutionally coercive because all their Medicaid money would be at risk if they flout the new requirement.

The states’ argument has implications that go far beyond health care. It raises questions about Congress’s ability to attach conditions to federal grants to the states for other purposes, like education, transportation, law enforcement and protection of the environment.

The implications for the health care overhaul are also enormous. The Congressional Budget Office says that about half of the people expected to gain coverage under the new law — 16 million of the 31 million people — will get it through Medicaid.

The federal government normally pays 50 percent to 83 percent of Medicaid costs. But it will pay a much larger share for people who become eligible under the new health care law: 100 percent of the costs in 2014-16 and 95 percent in 2017, declining to 90 percent in 2020 and later years.

       

States say they cannot afford to turn down so much federal money — more than $500 billion from 2014 to 2020. But the Obama administration said this argument led to a perverse conclusion: When the federal government offers more money to states, on more generous terms, it becomes more coercive.