Supreme Court Ruling Affects Medicaid Program Expansion

States Can Choose to Not Participate and Still Maintain Basic Funding

July 11, 2012 02:45 pm James Arvantes

The recent Supreme Court ruling on the Patient Protection and Affordable Care Act upheld nearly all of the provisions in the Affordable Care Act. However, the court did rule that the federal government cannot withhold Medicaid funds from states that refuse to expand their Medicaid programs to cover individuals with incomes of as much as 133 percent of the federal poverty level as called for by the Affordable Care Act.

That part of the ruling probably has raised "the single biggest question mark," said Len Nichols, Ph.D., director of the Center for Health Policy Research and Ethics and professor of health policy for the College of Health and Human Services at George Mason University in Fairfax, Va.

"The Supreme Court said states can refuse to expand (their Medicaid programs) if they want to, and the federal government cannot penalize them by taking away their overall Medicaid funding for doing so," said Nichols. "That means the expansion of Medicaid is not a guaranteed outcome of the law's survival."

Thus far, six governors have said they will not expand Medicaid eligibility to individuals with incomes of as much as 133 percent of the federal poverty level, a decision that greatly reduces the number of people who would have otherwise qualified for Medicaid in those states. Nearly one quarter of the patients who would qualify for Medicaid as a result of the expansion reside in those six states. It is not clear whether other states will follow suit. In the meantime, however, five states and the District of Columbia implemented the Medicaid expansion early.

The effect of the Supreme Court ruling on Medicaid expansion will vary for family physicians depending on how many low-income patients they care for, said Nichols.

"A lot more people will be (Medicaid-) eligible if the (expansion) goes into effect," he said.

It should be noted, however, that the court's ruling on Medicaid expansion will not affect a provision in the Affordable Care Act requiring the federal government to increase Medicaid payment rates to Medicare levels for primary care physicians during the next two years.

"While the two-year life of the provision is altogether too brief, the payment bump will make a difference for family physicians, especially in states with low Medicaid rates," said Greg Martin, the AAFP's manager of state government relations.