Today's Supreme Court ruling upholds the best-known parts of the Affordable Care Act, such as the mandate and the support for people with pre-existing medical conditions. But the decision does undermine a provision that was projected to insure some 16 million of the nation's neediest adults through an expansion of Medicaid. As a result, some of them may still be stuck with no access to affordable coverage when the law goes fully into effect in 2014.
Medicaid, financed jointly by the states and the federal government, mainly covers children, some of the very poorest parents of minor children, pregnant women, and vast numbers of disabled and elderly people in nursing homes. In most states, adults without young children can't get Medicaid no matter how destitute they are.
The reform law was to have changed that by expanding Medicaid to cover all households with an income of less than 133 percent of the federal poverty level. That's now $14,856 for a single person and $30,657 for a family of four. If states didn't expand their coverage, the law said they would have all their Medicaid funding cut off.
The Supreme Court disagreed. It ruled that states can turn down the Medicaid expansion if they want to without jeopardizing their existing Medicaid programs.
And without that expansion, the very poorest consumers will be plumb out of luck. The way the reform law is written, if your household income is under 100 percent of the poverty level, you're not eligible to purchase subsidized coverage on the new health exchanges. To change this would require amending the law, an unlikely prospect in today's ideologically divided Congress.
Whether any states will actually decline to expand Medicaid is unclear, according to John Holahan, a Medicaid expert at the Urban Institute, a Washington, D.C. think tank, because by doing so, they'd be turning down "a huge amount of money."
The federal government picks up between 50 percent and 83 percent of the tab for existing Medicaid programs. For the expanded coverage under health reform, they'll foot the entire bill for the first two years and after that phase down to 90 percent. Meanwhile, the reform law takes away billions of federal dollars that hospitals have been receiving for years to offset the cost of charity care for the uninsured, on the presumption that these people will now have insurance to pay their bills.
"The taxpayers in states that don't expand will be paying taxes that go to support the expansion in every other state except theirs," Holahan said. "If nothing else, there will be pressure from the hospitals to get on board with this and do it. They're just leaving too much money on the table."
But with political leaders in some states adamantly opposed to health reform and angry about today's Supreme Court ruling, Holahan said "it could take a few years and cause some really tough political battles. People who live in those holdout states are going to be hurting for a while."