Supreme Court Upholds Health Reform Law, Sets Limits on Medicaid Expansion

June 28, 2012 — In a 5-4 opinion, the Supreme Court upheld the Affordable Care Act (PL 111-148) -- including the individual mandate -- but said the federal government may not withhold existing Medicaid funds from states if they do not comply with the law's Medicaid expansion, the Washington Post reports.

Chief Justice John Roberts joined the court's liberal wing -- Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan -- in the majority.

Individual Mandate is a Tax

The question of the individual mandate -- the requirement that U.S. residents obtain insurance coverage or pay a penalty -- was considered a central issue. Striking it down could have threatened insurers' ability to implement other provisions, such as not denying coverage because of pre-existing conditions, the Post notes.

The justices said that the penalty is a tax and that Congress therefore was within its taxing authority in enacting it. They rejected the Obama administration's argument that the mandate should be upheld under the Commerce Clause, which gives Congress the power to regulate interstate commerce.

Medicaid Expansion Limited

The court held that the Medicaid expansion may stand, but if states opt to not participate, the federal government cannot take away their existing Medicaid funding, according to the Post (Branigin et al., Washington Post, 6/28).

Under the Medicaid provision, starting in January 2014, states are required to extend Medicaid eligibility to all citizens -- and legal residents who have been in the country at least five years -- with incomes up to 133% of the poverty level (Women's Health Policy Report, 9/29/11). The law ties state's compliance to their federal Medicaid funding, which the states challenging the law have argued is overly coercive because they stand to lose so much money if they do not comply (Women's Health Policy Report, 3/12).

Roberts wrote in the majority opinion, "Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that States accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding" (SCOTUSblog, 6/28).

Dissent

In the dissent, Justices Anthony Kennedy, Antonin Scalia, Clarence Thomas and Samuel Alito said that the entire law should have been struck down.

The ACA "exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting States all Medicaid funding," Kennedy wrote in the dissent (Sherman, AP/San Francisco Chronicle, 6/28).

Early Reaction

"This law will bring 30 million Americans into a health-care system that includes affordable family-planning services, better access to contraception, and maternity care," NARAL Pro-Choice America President Nancy Keenan said, adding, "The Supreme Court's decision to uphold the law is a tremendous victory for American women" (NARAL release, 6/28).

National Women's Law Center Co-President Marcia Greenberger said in a statement, "Women in this country can breathe a huge sigh of relief that they and their families can continue to receive the many benefits of the health care law." She added, "It is clear that the federal government and the states must continue the essential work of implementing the law, and it is especially important that the states step up to the plate and provide health care coverage for all of their citizens, including those who are economically vulnerable and sorely need the expanded Medicaid coverage that the law provides" (NWLC release, 6/28).

Meanwhile, House Majority Leader Eric Cantor (R-Va.) said the House will hold a vote on a repeal of the law the week of July 9, after Congress returns from its July 4 recess (Kim, "On Congress," Politico, 6/28).