The Health Care Ruling: What Does It Mean For Medicaid?

Today's ruling on the President's health care law is a disappointment for taxpayers in several ways, the first and most obvious being the decision that the individual mandate is constitutional. For many advocates of limited government, the Court has wandered into dangerous waters by offering Congress such broad authority to mandate behavior under threat of punitive taxation.

What's more, observers should note that it was the President's legal team that cleverly cast the individual mandate as a tax - the President himself emphatically rejected this defense in the fall of 2009, after campaigning on the "firm pledge" not to raise taxes on anyone making over $250,000.

Secondly, the Court questioned constitutionality of provisions in the Affordable Care Act (ACA) that allowed the federal government to withhold funding if states refused to implement new Medicaid provisions in the law. Remember, the ACA is expected to force 20 million people onto state Medicaid rolls by 2019, increasing the cost of the program to $819 billion in that same timeframe.

Here, the court attested:

"When Congress threatens to terminate other grants as a means of pressuring the States to accept a Spending Clause program, the legislation runs counter to this Nation's system of federalism."

Because the ACA overhauled the purpose of Medicaid - taking it from a program intended to cover medical expenses for the indigent to a program required to undertake the costs of an entire population of elderly and impoverished individuals - the law fell outside the Congress's powers to merely alter existing programs.

The Court opinion, however, does not repeal the ACA changes to Medicaid entirely. Instead, the federal government is simply prohibited from withholding existing funds when states choose not to participate in the new provisions in the law. This does not ameliorate the problem states are facing if they do increase their caseloads - under the ACA, the federal government will pay 100 percent of the cost of a new employee initially, but states are on the hook after those funds run out. This will not be unlike the battle states have been waging the past two years, when they were left holding the bag for expanded “stimulus” programs after federal funds dried up.

While the ruling offers tepid protection for American federalism, it does nothing to rectify the billions in new taxes, little to stem the trillions in new spending and allows for continued bankrupting the nation's entitlement programs. Hardly a win for taxpayers.

TAGS: Spending, Entitlement Reforms