States face uphill climb in legal challenge over health law's Medicaid expansion

The 26 states challenging President Obama’s healthcare law are facing several thorny dilemmas as they try to convince the Supreme Court to throw out the law’s Medicaid expansion.

Both of the lower courts that heard the Medicaid challenge ruled against the states, even as those judges struck down the healthcare law’s individual mandate. Legal experts on both sides of the debate over the mandate were surprised that the Supreme Court agreed to also hear the Medicaid piece of the states’ lawsuit.

Supporters of the healthcare law say the states made significant missteps in their initial brief on the Medicaid expansion, which was filed with the Supreme Court earlier this week.

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The states say the healthcare law’s Medicaid expansion is “coercive.” Although states participate in the program voluntarily, the brief argues, the healthcare law made it impossible for states to actually opt out of Medicaid.

The brief makes a concerted effort to link the Medicaid expansion to the individual mandate, arguing that states couldn’t exercise their legal right to leave Medicaid because it’s the only way for Medicaid-eligible residents to satisfy the mandate.

“While the (Affordable Care Act) purports to leave States’ participation in Medicaid nominally voluntary, multiple aspects of the Act evince Congress’ keen awareness that, in fact, no State will be able to reject its new terms and withdraw from the program,” the brief says. “Most obviously, the ACA’s individual mandate requires Medicaid-eligible individuals to obtain and maintain insurance.”

But most Medicaid-eligible people would be exempt from the mandate, said Timothy Jost, a law professor at Washington and Lee University and a supporter of the health law.

People whose incomes fall below the federal poverty level are exempt from the requirement to buy insurance. The mandate also does not apply to anyone who couldn’t buy a specific type of plan without spending more than 8 percent of his or her income.

Those two exemptions will capture nearly everyone who’s eligible for Medicaid, Jost said.

The healthcare law expands Medicaid so that everyone who makes less than 133 percent of the federal poverty level — about $14,500 for a single person — is eligible for the program. But Jost said that, based on cost estimates from the Congressional Budget Office, a person would have to make about $56,000 before being penalized for remaining uninsured.

“Basically nobody on Medicaid is ever going to be required, by the minimum coverage requirement, to purchase insurance,” he said.