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States of Confusion

John Roberts, unwitting health care visionary.

The Supreme Court’s decision in the health care case is best understood as an attempt to maximize damage to established legal precedent while minimizing damage to the particular law under consideration. On the one hand, Chief Justice John Roberts wanted to maintain the Supreme Court as a playpen for anti-government sophistry. On the other, Roberts wanted to avoid getting pilloried as a right-wing extremist who doesn’t care whether people get health insurance or not. Out of this jumble of warring impulses, Roberts crafted a ruling that inadvertently strengthens the liberal case for further consolidating health care policy at the national level. The Court is practically begging Washington to take over the state-federal Medicaid program.

Roberts provided the critical fifth vote upholding Obamacare’s most contentious feature—the individual mandate, which will require virtually all Americans to acquire health insurance. He did so by the (slightly circuitous) route of interpreting the penalty for not being insured as a tax. That strategy allowed Roberts to join the conservatives in restricting, at least theoretically, future applicability of the Commerce clause—which horse-and-buggy “originalists” maintain has been, since Franklin Roosevelt’s day, distorted to justify illegitimate government expansion.

More surprising, though, was the decision to strike down a separate provision in the law: the requirement that states choosing to participate in Medicaid, as they all now do, offer the program to a much larger class of people. Such federal mandates are, as a matter of law, utterly routine. The conservative legal case against the Medicaid mandate is weak, since the states have the option not to join Medicaid. The program, created in 1965, didn’t enjoy full state participation until 1982, when Arizona climbed aboard. On practical grounds, governors and state legislators have often complained that federal mandates in general, and Medicaid mandates in particular, impose costly state-spending requirements. But that’s a difficult argument to make against Obamacare’s Medicaid expansion, because the federal government will fund 100 percent of it for the first three years, starting in 2014, before gradually lowering its share to 90 percent in 2020 and thereafter. Prior to the Supreme Court decision, no court had given the Medicaid part of the legal challenge to Obamacare any credence.

Somehow, Roberts was persuaded that the health law’s (prepaid!) liberalization of Medicaid eligibility and benefits was an unconstitutional curtailment of states’ rights. So were four other Republican-appointed justices. And so—most surprising of all—were the Democrat-appointed Justice Elena Kagan and Justice Stephen Breyer. (Their concurrence on this point may have been Roberts’s price for not tossing out Obamacare altogether.)

The argument that Roberts made against the Medicaid expansion is that Medicaid spending had become so large a portion of state budgets—typically 20 percent or more, with at least half of that paid by the feds—that states no longer had the option of dropping out. According to Roberts and his six colleagues, that made the Obamacare Medicaid mandates inherently coercive. Wait, wouldn’t that mean the federal government could never make any future changes to Medicaid? Well, no, Roberts said. Obamacare’s Medicaid mandates were particularly meddlesome because they represented “a shift in kind, not merely degree.”

Here Roberts’s argument turned positively Dickensian. Originally, wrote Roberts (and Kagan! and Breyer!), Medicaid had been designed for “the disabled, the blind, the elderly, and needy families with dependent children.” But under Obamacare, Medicaid would be “transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level. It is no longer a program to care for the neediest among us. ... ”

Are there no prisons? Are there no workhouses? In a blistering response, Ruth Bader Ginsburg demolished Roberts’s obtuse suggestion that Medicaid, under Obamacare, would turn into a middle-class entitlement. “Single adults,” she pointed out, “earning no more than $14,856 per year—133 percent of the current federal poverty level—surely rank among the nation’s poor.” Set those worries aside, Mr. Chief Justice. Medicaid is still a poverty program.

To Roberts, it didn’t matter that Congress was asking states to bankroll at most 10 percent of the Medicaid expansion. “‘Your money or your life’ is a coercive proposition,” he reasoned hyperbolically, “whether you have a single dollar in your pocket or $500.” And besides, he argued, nothing would prevent the feds from changing the funding formula down the road (though why we should litigate that before it happens is anybody’s guess). Roberts didn’t invalidate the Medicaid expansion altogether, as his four conservative colleagues would have. (They proposed striking down the entire law.) Roberts instead ruled that the states could decide for themselves, at no risk to existing Medicaid funding, whether to participate in the new Medicaid expansion. Several Republican governors are already saying their states won’t.

Most, if not all of them, are posturing; eventually they will take the money, if only because of pressure from hospitals, doctors, and local officials struggling to pay for charity care. But even if the ruling’s effect on the Medicaid expansion is relatively minimal, the Roberts Court has rendered Medicaid’s existence as a state-federal program extremely tenuous. The Court has invented a capricious new distinction between legitimate federal mandates and illegitimate ones. Henceforth, states will challenge Congress’s every Medicaid change (and probably other state mandates, too) to find out which is which. Even funding future mandates to near-entirety may not guarantee legal approval. The federal government has lost considerable leverage over what type of program Medicaid will be, giving states unprecedented leeway to do less for their low-income uninsured.

The upshot is that this 47-year partnership between state capitals and Washington may now be obsolete. If the federal government can’t protect its future investment in Medicaid, if it can’t impose much accountability as it bankrolls expansions, then why collaborate with the states at all? Medicaid may have to become a national program, financed and operated by the federal government, just like Medicare is. It probably should have been one all along. Who knew a conservative chief justice would hasten that outcome? 

Timothy Noah is a senior editor at The New Republic. This article appeared in the August 2, 2012 issue of the magazine.