Though somewhat lost in the background of the recent U.S. Supreme Court ruling on the constitutionality of the federal health care law, the Court’s decision to give states discretion on whether to pursue the law’s expansion of Medicaid could have the biggest impact on state budgets going forward.

The Supreme Court ruled:

“As for the Medicaid expansion, that portion of the Af­fordable Care Act violates the Constitution by threatening existing Medicaid funding. Congress has no authority to order the States to regulate according to its instructions. Congress may offer the States grants and require the States to comply with accompanying conditions, but the States must have a genuine choice whether to accept the offer. The States are given no such choice in this case:

They must either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding. The remedy for that constitutional violation is to preclude the Federal Government from imposing such a sanction. That remedy does not require striking down other portions of the Af­fordable Care Act.”

Should the Medicaid expansion remain on the books after the November election, state policy makers will now the opportunity to do a thorough fiscal analysis before taking the leap of faith that Congress won’t change the 90/10 ratio in the future to help address federal deficit reduction efforts.

While some states have already gone on the record saying they won’t pursue the Medicaid expansion, Washington policy makers are taking a wait and see approach.

Here are comments at WPC’s 10th Annual Health Care Conference yesterday by Senator David Frockt (D-Seattle), State Rep. Joe Schmick (R-Colfax), and Jonathan Seib (Office of the Governor) on the potential Medicaid expansion:

(Click here for video)

It was encouraging to hear them take a cautious approach to moving forward. Lawmakers across the country would be wise to refrain from opting in to the ACA’s Medicaid expansion without first fully understanding the long-term fiscal impacts on an already tenuous state budget outlook.

Perhaps one way federal officials could alleviate state cost concerns (should the Medicaid expansion remain on the books in 2014) is to allow states to receive all their Medicaid funds (not just for the expansion) in the form of a block grant to provide state policy makers with the flexibility to design a health safety net that makes sense locally and with the ability to control costs.

The topic of Medicaid block grants also came up at WPC’s health care conference yesterday:

(Click here for video)

While having the broader conversation of whether to pursue the Medicaid expansion, state officials should move forward with the original directive passed unanimously by the Legislature in 2011 to pursue a Medicaid demonstration waiver.

As noted by the sponsor of this law, Sen. Parlette, the state did not move forward with the Medicaid waiver request:

“’The Supreme Court’s decision to limit the Medicaid expansion shouldn’t be taken lightly,’ Parlette said. ‘I’ve worked hard to make Washington’s Medicaid program more sustainable, but the truth is the program in its current form is a sinking ship. The court said that states cannot be forced to participate in the Medicaid expansion and we need to give the matter careful consideration before agreeing to potentially add hundreds of thousands of new enrollees.’

In 2011 Parlette introduced Senate Bill 5596, which directed the governor to pursue a waiver for the state’s Medicaid program that would have allowed flexibility and innovation while increasing stability in the program. The bill passed the Legislature unanimously, but the waiver effort was halted last winter.”

As for the federal health care law, WPC recommends Congressional action to repeal the ACA, legalize the interstate purchase of health insurance, turn Medicaid into a block-grant program for the states, and change the tax code to allow individuals to deduct their health expenses, WPC recommends a number of state-level reforms as well:

  • Refrain from opting in to the ACA’s Medicaid expansion without first fully understanding the long-term impacts on an already tenuous state budget outlook.
  • Reform our state’s nascent health insurance exchange so it offers a true range of options instead of just a few narrowly-defined plans.
  • Remove government barriers that block health care choices.
  • Repeal mandates that force people to pay for coverage they don’t want or need.
  • Strengthen safety net programs for those who can’t afford care.
  • Incentivize patients to control their own health care dollars.

WPC 10th Annual Health Care Conference Video

  • “WA State Health Insurance Exchange update” with Phil Dyer (Kibble & Prentice), Doug Conrad (Univ. of Washington) and moderator Tom Curry (CEO, WA State Medical Association).


[Reprinted with permission from the Washington Policy Center blog; featured photo credit: 401(K) 2012]