States May Opt Out of Medicaid Expansion Under Health Care Ruling

The Supreme Court’s ruling on the 2010 healthcare law upheld the key portions of the legislation, but also made it possible for states to choose not to comply with the law’s Medicaid expansion. Under the terms of its ruling, the Supreme Court stated that the way the federal government punishes states that choose not to comply with the Medicaid expansion is unconstitutional. This gives individual states the right not to comply, which means millions of those who would otherwise have become eligible for Medicaid in 2014 may be left out.

The Patient Protection and Affordable Care Act of 2010 provides that all states must expand Medicaid coverage beginning in 2014 to include anyone who earns up to 133% of the federal poverty limit. This expansion would add an estimated 15 million more people to the Medicaid program. Because Medicaid–known as Medi-Cal in California–is funded by both states and the federal government, the law required all states to participate in the expansion. If a state chose not to do so the federal government would remove the Medicaid funds it provided to the state. This amounts to about 10% of the money each state spends on Medicaid.

The Supreme Court stated that this punishment scheme is unconstitutional and that the federal government cannot deny a state Medicaid funds if it chooses to not expand Medicaid under the terms of the legislation. Individual states will have to decide if they want to participate in the expansion program, though at least one state’s governor,Rick Scott of Florida, has recently indicated his state may choose to opt-out. It is not expected, however, that California Governor Jerry Brown

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Timothy P. Murphy

Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes.