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MEDICAID AND HEALTH SPENDING:
The Supreme Court’s Health Care Decision

One of the best-kept secrets in Washington has been released.

In a much awaited landmark ruling, the Supreme Court announced today the Affordable Care Act (ie. president’s health care bill) is largely constitutional. Of note, the individual mandate was upheld and requiring states to join a massive Medicare expansion was overturned.¹,²,³

Individual Mandate
The decision to uphold the individual mandate was based an understanding that the Affordable Care Act does not require individuals to purchase healthcare, but that the mandate acts as a tax on those who do not, and is thus constitutional.

• In other words, the federal government cannot require people to purchase insurance, but it can tax them if they do not.
• Because individuals can choose to pay a tax if they want to abstain from health insurance, the measure is constitutional.
• It is currently unclear how it will affect the number of new healthcare customers.² Presumably, this may affect the cost of the bill.

Five justices supported upholding individual mandate while four opposed it2. Some observers were surprised that the deciding vote in this case was Chief Justice John Roberts, who joined the justices who are traditionally considered to be left-leaning. Here is how the ruling on the individual mandate breaks down:

The court’s decision on the constitutionality of the Medicaid expansion is divided and complicated. The bottom line is that:
1. Congress acted constitutionally in offering states funds to expand coverage to millions of new individuals…
2. So states can agree to expand coverage in exchange for those new funds.
3. If the state accepts the expansion funds, it must obey by the new rules and expand coverage,
4. But a state can refuse to participate in the expansion without losing all of its Medicaid funds; instead the state will have the option to continue its current, unexpanded plan as is.³

What happens next?

Immediately after the ruling, Republicans in the House of Representatives doubled down “on promises to repeal the healthcare reform law in the wake of the Supreme Court decision.”⁷ This action, however, is largely political as it has been done previously and there is very little chance the bill would receive a vote in the Senate.

Like always, as details emerge regarding the decision’s impact on the future of health care spending and Medicaid, we will keep you updated.

To view this document as a .pdf, click here.