Governors faced with Medicaid dilemma in wake of court ruling

The Supreme Court's ruling on healthcare reform has created a dilemma for states, which must decide whether to participate in the law's expansion of Medicaid.  

The court ruled that cash-strapped states can refuse to participate in the healthcare law's expansion of Medicaid coverage for millions of low-income people. Before, governors who did not expand their Medicaid rolls would have lost all federal dollars for the program. 

That approach was strongly criticized in the majority opinion from Chief Justice John Roberts. 

"The financial 'inducement' Congress has chosen is much more than 'relatively mild encouragement' " to expand Medicaid, Roberts wrote. "It is a gun to the head."

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The law tried to make the expansion easier on states by sticking the federal government with the bill until 2016.

House Minority Leader Nancy Pelosi (D-Calif.) noted this as she defended the Medicaid provision on Thursday.

"I don't think that's a gun to the head," she said. "We wrote this very carefully because we wanted it to be well received."

She added that Democrats are not "bothered" by the court's ruling on the law's Medicaid portion because states still have an incentive to comply.

"We think that most governors would probably accept 100 percent funding without matching funds," she said.

Past estimates have said that Medicaid expansion would provide healthcare access to an additional 17 million poor Americans — those who earn 133 percent or less of the poverty level every year.

But the choice now lies with states on whether to pursue it, and the decision is laden with political overtones for Republican governors who oppose the healthcare law.  

"States will now have to make a series of decisions moving forward," Matt Salo with the National Association of Medicaid Directors said in a statement. "Those include the political, fiscal, and policy calculations of whether or not this particular expansion makes sense.

"They will also have to factor in what may happen in the wake of the November elections," he said.

Florida's choice could herald a trend, as the state led a major legal effort against the healthcare law.

But as of Thursday afternoon, Gov. Rick Scott (R) had not said what he will do.

The governor's "policy and legal staff are reviewing the SCOTUS decision," spokesman Lane Wright told The Hill. "It's going to take us some time to get through it and determine what is the best path for Florida."

Scott was a prominent critic of "ObamaCare" as head of a group called Conservatives for Patients' Rights before he was elected governor in 2010.

He said in a recent conference call with reporters that Florida would comply with all portions of the law if it was upheld.

"We'll comply with all the issues when we know it is going to be the law of the land," he said. "If it's the law of the land, we're going to comply."

According to The Palm Beach Post, Medicaid absorbs about one-third of Florida's budget — $21.4 billion of $69.9 billion in total.

Florida officials estimate that the state's bill for the expansion could reach $1 billion.

On Thursday, the Republican Governors Association (RGA) signaled that states could ignore the law's implementation and wait for November in case Mitt Romney is elected and helps to kill it.

"The only way to stop Barack Obama's budget-busting healthcare takeover is by electing a new president," RGA Chairman Bob McDonnell, the governor of Virginia, said in a statement. 

McDonnell is considered a possible Republican vice presidential nominee. He told MSNBC that Virginia will follow the law "eventually," depending on what happens in the election.

Americans are "stuck" with the law," he said — "at least, until we see if we have a new Senate and a new president." 

—Mike Lillis contributed.