Supreme Court Challenge

The constitutionality of the Patient Protection and Affordable Care Act (ACA) has been challenged in several legal cases since the law’s passage.

One of these cases resulted in a fundamental alteration to the intended structure and functions of the law.

Medicaid Expansion

A case brought before the Supreme Court in 2012, filed by 26 states, challenged the required Medicaid Expansion under the ACA in each state.

The law, as originally passed, required all states to expand their  Medicaid program to cover all individuals and families up to 137% of federal poverty level.

On June 28, 2012, the Court declared that although the law requiring the states to expand the Medicaid program was valid, the Federal government cannot force participation in the expansion, by removing all federal funding for those states that do not comply.

Policy Outcome for Medicaid Expansion

The Court’s decision effectively left states with the ability to opt-in or opt-out of the proposed expansion of the Medicaid program. In 2011, guidance from HHS was issued clarifying that the Medicaid expansion would be available to states in perpetuity – meaning that even states that did not initially expand the Medicaid program in 2014, would have the option of taking up the Medicaid Expansion at any time in the future.

Starting in 2014, states that expand Medicaid, receive federal funding for the Expansion, included in the law.

Under the law, as it was originally passed, the Medicaid Expansion should have made coverage available to every citizen in a state, up to 133% of the federal poverty level (FPL). Those with incomes higher than that amount, would have been able to purchase insurance in the State Insurance Exchanges, using tax subsidies provided by the law provided for those with incomes between 133% to 400% FPL.

However, this court decision created a situation where, in states that forgo the Medicaid expansion, low-income persons may not earn enough to be eligible for the government subsidies for purchasing insurance, and also may not have access to the state’s Medicaid program. These low income families who would have otherwise qualified for the expanded Medicaid were left with a requirement to obtain coverage, but no financial assistance to do so.