by Brita Darling
On June 28, 2012, the United States Supreme Court ruled on objections to the Patient Protection and Affordable Care Act (ACA) in National Federation of Independent Business v. Sebelius (567 U.S. ___ (2012)), or NFIB v. Sebelius. The majority opinion upheld the ACA, including the provisions relating to the creation of health insurance exchanges and the individual mandate to obtain insurance coverage, as well as the Medicaid expansion provisions.
However, while upholding the Medicaid expansion provisions, the Court held that the federal Department of Health and Human Services (HHS) enforcement remedy was “unconstitutionally coercive”. Under the ACA, the HHS Secretary may withhold all Medicaid funding to a state that fails to comply with the ACA’s Medicaid expansion, including funding for the state’s pre-expansion Medicaid program. The Court reasoned that, because federal Medicaid funding constitutes a large portion of states’ revenues, the threat to remove the existing Medicaid funding for failure to comply with the Medicaid expansion leaves most states with no choice but to comply with what the court found was essentially a “new” Medicaid program. For states, the Secretary’s remedy was described as “a gun to the head.”
As a result of the Court’s ruling, states will need to make decisions regarding participation in the Medicaid expansion program. A state that chooses to not participate will not receive the enhanced federal funding to cover expansion populations. However, its existing Medicaid funding will not be at risk. More details regarding the Court’s decision are found in the July 9, 2012, Office of Legislative Legal Services (OLLS) memorandum posted on the OLLS website.
Since the ACA decision, there has been a flurry of activity by many agencies and organizations to determine what the next steps may be for states. Below are some of the developments since the Court’s ruling, with links provided for more information:
- NCSL hosted a conference call on June 29, 2012, outlining the ruling and discussing questions raised by states. A tape of the NCSL conference call is posted on the NCSL website.
- The Colorado Health Institute issued a report addressing the implications of the ruling for Colorado.
- The National Governors Association wrote a letter to the HHS Secretary, Kathleen Sebelius, dated July 2, 2012, requesting timely guidance from HHS on issues of interest to states, including maintenance of effort requirements under the ACA and options for states that implement only part of the eligibility expansion or implement on a slower timeline.
- The HHS Secretary, Kathleen Sebelius, responded to the Governors on July 10, 2012, stating that HHS will work to provide timely information, and, specifically, that HHS will hold meetings around the country with state officials and stakeholders to discuss implementation issues moving forward.
HHS will host a meeting at the University of Denver on August 22, 2012, to discuss the health exchanges and other implementation issues. (The date has changed from the original HHS letter.) Due to limited space, attendees are asked to RSVP to the HHS regional office. OLLS staff will attend the meeting.
- Marilyn Tavenner, Acting Administrator of the Centers for Medicare and Medicaid Services, responds by letter dated July 13, 2012, to Governor Robert McDonnell’s letter on behalf of the Republican Governors Association. The Acting Administrator states that there is no deadline for a state to tell HHS its plans regarding the Medicaid eligibility expansion. Further, a state can receive extra funding for Medicaid IT costs and Exchange implementation costs even if it has not yet decided whether to expand Medicaid eligibility or run its own exchange–and it will not have to pay those resources back if it decides not to do so. HHS hopes that after studying their options states will recognize that expanding eligibility under the ACA is a “good deal.”
- The Congressional Research Service issued an informative memorandum concerning selected issues related to the effect of the ruling, including an analysis of a state’s choice to expand Medicaid eligibility. The memorandum concludes that the maintenance of effort requirements of the ACA remain in force, as well as the determination of Medicaid income limitations using an applicant’s modified adjusted gross income. The memorandum also addresses some of the issues around implementation and the potential for partial implementation that will need to be clarified by HHS.
- As part of its annual Legislative Summit, August 6-9, 2012, in Chicago, Illinois, NCSL is including a session concerning the ACA decision on Monday, August 6th, titled, “What’s Next”.
Stay tuned to Colorado LegiSource for more updates on health care reform.