Supreme Court Hears Arguments On Expansion Of Medicaid Required By Health Care Act

Supreme Court Hears Arguments On Expansion Of Medicaid Required By Health Care Act

WASHINGTON, D.C. - (Mealey's) In the final of four sessions of oral arguments held this week pertaining to the Patient Protection and Affordable Care Act (PPACA), the U.S. Supreme Court heard arguments March 28 on whether the act's expansion of Medicaid is constitutional (State of Florida, et al. v. Department of Health and Human Services, et al., No. 11-400, U.S. Sup.). 

(Transcript available. Document #31-120404-012T.)

The PPACA expanded the federal-state Medicaid insurance program for the poor to cover people with incomes up to 133 percent of the federal poverty level and to cover childless adults for the first time, starting in 2014.  The arguments pertaining to the expansion of Medicaid required by the PPACA were the second round of arguments heard by the court Wednesday.  Earlier in the day, the court heard arguments on whether, if the individual mandate contained in the act is found unconstitutional, it can be severed from the rest of the act. 

In State of Florida, et al. v. Department of Health and Human Services [enhanced version available to lexis.com subscribers], the U.S. District Court for the Northern District of Florida held that the act's expansion of Medicaid is constitutional, and the 11th Circuit U.S. Court of Appeals panel affirmed the finding.  As part of their appeal to the  Supreme Court, the states challenged the decision pertaining to the Medicaid expansion.

In arguing for the states, attorney Paul Clement said that the expansion of Medicaid was unconstitutional and altered the program to such an extent that the states could not afford the newly imposed costs forced upon them but that they did not actually have the freedom to opt out. 

For purposes of the PPACA, what makes the expansion coercive is that the statute is tied to the nonvoluntary individual mandate, Clement said.   

Also, "Congress here made a distinct and conscious decision to tie the [states'] willingness to accept the new funds, not just the new funds but to their entire participation in the statute, even though the coverage for these newly eligible individuals is segregated from the rest of the program," Clement said. 

The usual definition of coercion is that there is no choice, Justice Sonia Sotomayor said and then asked why there is no choice for the states.  If the states do not take Medicaid and they want to keep the same level of coverage, they may have to make cuts elsewhere in the budget to other services, but that's a political choice, she said.  "But when have we defined the right or limited right of government not to spend money in the ways it thinks appropriate?" she asked. 

This expansion under the PPACA is fundamentally different and more coercive because Congress is not saying it wants to scrap the program, but is saying that if the states do not take the new money subject to new conditions, the federal government will take all of the money the states have previously received, Clement said. 

Justice Ruth Bader Ginsburg asked Clement to address the fact that other states not part of this suit have told the court that they like the expansion and are glad to have it. 

If Congress wants to pass a statute that makes the expansion voluntary, every state that thinks it is a good idea can sign up, Clement said.  But the states suing because they think it is a bad idea also think they do not have a choice but to take the new money because they cannot afford to have their entire participation in Medicaid wiped out, he added.

 In arguing for the government, Solicitor General Donald Verrilli said that it is well settled that Congress may fix the terms on which it appropriates federal funds and that Congress has expressly reserved the right to amend the Medicaid statute and has done so repeatedly over the years.  No court has ever invalidated a federal funding condition on the coercion theory as the states urge, he added. 

Chief Justice John G. Roberts Jr. said it does seem like a serious problem.  Assuming that under the spending clause the federal government cannot give money to the states and then take it back without affecting the voluntariness of choice, but can do so if the states agree, that means the limitation in the Constitution is largely meaningless, he added.  He asked Verrilli if he could recognize any limitation on that concern. 

The states do have a choice, but the states are arguing that they do not, Verrilli said.  "It is not a case . . . that the norm here is that the federal government has offered to the states the opportunity to either stay where they are or add the new piece," he said. 

For every expansion, the states were given the choice to stay in the entire program or not, Verrilli said.  The history of the program reserves the right of the federal government to amend the program going forward, which the states have understood all along, Verrilli said. 

Verrilli, Assistant Attorney General Tony West, Deputy Solicitor General Edwin S. Kneedler, Deputy Assistant Attorney General Beth S. Brinkmann, Assistant to the Solicitor General Joseph R. Palmore and attorneys Mark B. Stern, Alisa B. Klein, Samantha L. Chaifetz and Dana Kaersvang, all of the U.S. Department of Justice; George W. Madison of the Department of Treasury; M. Patricia Smith of the Department of Labor; William B. Schultz, acting general counsel, and Kenneth Y. Choe, of the Department of Health and Human Services, all in Washington, represent the government.

Clement and Erin E. Murphy of Bancroft in Washington; Florida Attorney General Pamela Jo Bondi, Florida Solicitor General Scott D. Makar and Louis F. Hubener, Timothy D. Osterhaus and Blaine H. Winshop of the Florida Attorney General's Office, all in Tallahassee, Fla.; Texas Attorney General Greg Abbott and Texas Deputy Attorney General Bill Cobb, both in Austin, Texas; South Carolina Attorney General Alan Wilson in Columbia, S.C.; Alabama Attorney General Luther Strange in Montgomery, Ala.; Michigan Attorney General Bill Schuette in Lansing, Mich.; Nebraska Attorney General Jon Bruning and Katherine J. Spohn, of Nebraska's Attorney General's Office, both in Lincoln, Neb.; Utah Attorney General Mark L. Shurtleff in Salt Lake City; Louisiana Attorney General James D. "Buddy" Caldwell in Baton Rouge, La.; Colorado Attorney General John W. Suthers in Denver; Washington Attorney General Robert M. McKenna in Olympia, Wash.; Pennsylvania Gov. Thomas W. Corbett Jr. and Pennsylvania Attorney General Linda L. Kelly, both in Harrisburg, Pa.; South Dakota Attorney General Marty J. Jackley in Pierre, S.D.; Indiana Attorney General Gregory F. Zoeller in Indianapolis; Georgia Attorney General Samuel S. Olens in Atlanta; Idaho Attorney General Lawrence G. Wasden in Boise, Idaho; Arizona Attorney General Tom Horne and Joseph Sciarrotta Jr. and Janice K. Brewer of the Arizona Attorney General's Office, all in Phoenix; Nevada Gov. Brian Sandoval in Carson City, Nev.; Alaska Attorney General Michael C. Geraghty in Juneau, Ala.; Ohio Attorney General Michael DeWine and David B. Rivkin and Lee A. Casey of Baker & Hostetler, all in Columbus, Ohio; Wyoming Gov. Matthew Mead in Cheyenne, Wyo.; Maine Attorney General William J. Schneider in Augusta, Maine; Iowa Gov. Terry Brandstad in Des Moines; Michael B. Wallace of the Mississippi governor's office and Phil Bryant of Wise Carter Child & Caraway, both in Jackson, Miss.; Kansas Attorney General Derek Schmidt in Topeka, Kan.; and Wisconsin Attorney General J.B. Van Hollen in Madison, Wis.; represent the states.

Lexis.com subscribers can access briefs, pleadings and motions in this case.

Related content on lexis.com:

Introduction to the PPACA and HCERA of 2010

Kopp, Paley, Bacon and Foster on New Federal Health Care Reform Legislation - Its Impact on Employers and Employee Benefits Plans

Kevin Bress on the Community Living Assistance Services and Support Act (the "Class Act")

Like Your Health Plan? You Can Keep It (Maybe)

What Elder Law Attorneys Need to Know About PPACA and Health Care Reform

David L. Bacon, David S. Foster, Peter H. Durant and Regina S. Rockefeller on the Dramatic Constitutional Challenges to the Patient Protection and Affordable Care Act

PPACA's Adult Child Coverage Mandate

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