U.S. Supreme Court Wraps-Up Oral Arguments on PPACA’s Constitutionality by Questioning the Act’s Medicaid Expansion Provision: Justices Now Must Meet in Chambers to Resolve Legal Issues

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On Wednesday afternoon, the U.S. Supreme Court concluded the final session of oral arguments concerning the Patient Protection and Affordable Care Act (PPACA)’s legality by focusing on the Act’s Medicaid expansion provision and whether it unduly coerces state governments. The Supreme Court has previously held that Congress can place conditions on state receipt of funds, but the condition cannot be “so coercive as to pass the point at which the pressure turns into compulsion.”

The 26 states challenging PPACA argued that the Medicaid expansion provision exceeds congressional authority because the law drastically increases the number of poor individuals who will then be eligible for Medicaid. The increased number of individuals using Medicaid will cost the states millions of dollars.  The government’s response to this argument was that federal dollars will account for 90 percent of the cost, and that states do not have to participate in Medicaid. Critics of the Affordable Care Act have countered that without federal funding, states will find it increasingly difficult to provide care for the poor and that the government’s argument may not be grounded in sound logic. 

Justice Elena Kagan voiced her opinion that the states’ argument may not be adequate.  She asked Paul Clement, the attorney representing the states challenging the Act, “Why is a big gift from the federal government a matter of coercion?” Justice Sonya Sotomayor continued her questioning by asking Clement to give a more exact number of just how big a “gift” from the federal government could be without it being coercive.

Those opposed to expanding Medicaid believe the refusal to accept the expanded eligibility requirements would result in the withholding of all federal Medicaid funding to the state, and therefore the provision is coercive in nature. “While some individuals are exempt from the penalties designed to enforce the mandate, no state is exempt from the massive penalty— the loss of the entirety of funding under the single largest grant-in-aid programs for the states — and so Congress did not even contemplate the possibility of a state opting out of Medicaid,” Clement wrote in his brief.

Legal and political commentators agree the answer to this question will have massive and far- reaching implications on the relationship between states and the federal government, as the Court will be “either strengthening or limiting congressional authority on this and potentially a host of other regulatory areas.”

Justice Sotomayor was vocal in her support of the federal government. “The bigger the problem, the more resources it needs,” she said. “We’re going to tie the hands of the federal government in choosing how to structure a cooperative relationship with the states.” Clement countered that the important notion to consider in the relationship between states and the federal government was accountability, and that often, states are more accountable to its citizens than the federal government. 

“If that is the case,” said Justice Samuel Alito, “then there’s nothing left…of federalism.” One way or another, Congress is going to have to reconsider this,” said Justice Antonin Scalia.

On Friday, press accounts are reporting that the Justices will begin discussing the oral arguments in one or more closed-door sessions and ultimately vote on the case.  After the vote has concluded, the Justices will return to their chambers and begin the task of writing an opinion.  Of course, how the Justices vote initially does not mean they might change or modify their individual positions before the decision is finalized.    

Although it would be premature to make a prediction, it looks like the individual mandate might be in trouble.  However, the U.S. Supreme Court Justices have not voted yet.  On rare occasion, a Justice has ruled in a manner that did not appear to coincide with their questions during oral argument. A Justice also could change their position on the case during deliberations. For example, Justice Kennedy, seen by many as the pivotal swing vote in this case, has been known to change his view after reading opinion briefs and debating with his colleagues.  Michael Dorf, a law professor at Cornell University who clerked for Justice Kennedy, advised that the Justice “has been known to change his mind.” 

Though the oral arguments on PPACA’s fate have concluded, we will have to wait to hear the Justice’s final decision, which will likely be announced this summer.  Regardless of the legal maneuvering included in the opinion, the Court’s decision and reasoning will have far-reaching implications on the health care and insurance industries, the relationship between the federal government and states, and the relationship between the federal government and citizens.

We have covered many PPACA-related issues since its inception, and will continue to follow these issues for you. Please visit www.HealthcareExchange.com for those and other blog posts, polls, surveys and numerous resources or www.benefitmall.com to view past Legislative Alerts.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

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