High court ruling opens Medicaid escape hatch for states

Back to TopCommentsE-mailPrintBookmark and Share

While upholding President Barack Obama’s health care law, the U.S. Supreme Court on Thursday also opened an escape hatch for states that do not want to take on the project of expanding their Medicaid programs.

Whether Indiana decides to opt out of the expansion — which was projected to cover an extra 500,000 Hoosiers — remains to be seen. But the ruling will give states more leverage with the federal government to create favorable arrangements, noted Mike Grubbs, a health care attorney at Barnes & Thornburg LLP in Indianapolis.

“It changes the states’ bargaining position from ‘boot on neck’ to traditional bargaining,” Grubbs said. He added, “If they choose to expand Medicaid, they don’t have to do it through traditional Medicaid. I think it’ll give more flexibility to the states in how they propose to do that.”

For example, Grubbs said, the Obama administration might be more likely to approve Gov. Mitch Daniels’ proposal to expand Medicaid coverage by using his Healthy Indiana Plan, which creates health savings accounts for low-income Hoosiers. The Obama administration had delayed ruling on Daniels’ proposal, pending the Supreme Court decision.

Traditional Medicaid is a state-federal health insurance program for low-income citizens under which Indiana pays about 25 percent of the costs.

Daniels spoke out forcefully against the expansion when the law was being debated and just after it passed in March 2010. He issued a statement Thursday, saying the immediate implications for Hoosiers are a huge increase in health insurance rates – especially for young people – and the need to decide whether to try to construct an “exchange” or let the federal government do so.

“The Court’s ruling that the federal government has the constitutional power to do what it has done must be respected,” he said. “But many actions that are constitutional are still unwise. The now undisputed facts that this federal takeover of one-fifth of our economy will worsen deficits, increase the national debt, raise health care costs, and force Americans off insurance coverage they have chosen, still argues for repeal of a dangerously misguided law and its replacement by major reforms based on individual freedom and consumerism.”

But Daniels is on his way out of office and will be replaced by Republican Mike Pence or Democrat John Gregg in January. So the decision might ultimately fall to the winner of that contest.

The Medicaid expansion would raise eligibility for the program to people with incomes up to 133 percent of the federal poverty limit. Currently, adults in Indiana can only qualify for Medicaid coverage if their incomes are no more than 26 percent of the federal poverty level, although the income thresholds are higher for children and mothers with children.

Dr. David Orentlicher, a law professor and former state legislator, said he does not expect Indiana to opt out entirely from the Medicaid expansion.

“I think we’ll see few people opt out of the Medicaid expansion,” said Orentlicher, who is co-director of the Hall Center for Law and Health at the Indiana University Robert H. McKinney School of Law in Indianapolis. “The new Medicaid costs to the states really don’t kick in for a while. What they’re really worried about is the impact of the individual mandate on the Medicaid expansion.”

Orentlicher was referring to the likelihood that the health law’s requirement for all Americans to obtain health insurance coverage — the individual mandate — would lead more Hoosiers who are currently eligible for the Medicaid program to sign up, thereby driving up the state of Indiana’s costs.

Indiana will have no new federal aid to help pay for such an occurrence. However, for Hoosiers that qualify for Medicaid under the new, higher income thresholds, the federal government will pay for all of their Medicaid coverage.

Still, an analysis of the law commissioned by the Daniels administration found that expanding Medicaid to 133 percent of the federal poverty limit could, by itself, cost the state an extra $95 million per year.

"This is going to be an immorally — and I choose that word carefully — immorally huge burden we're about to place on our children,” Daniels said in a speech to the Economic Club of Indiana shortly after the health care law passed.

Otherwise, the Supreme Court ruling left the rest of the Patient Protection and Affordable Care Act in place by finding that the controversial individual mandate can be enforced under Congress’ powers to tax.

Chief Justice John Roberts joined the court’s four liberal justices in affirming that view. Roberts, however, also agreed with the four conservative justices who dissented from the ruling in their finding that the individual mandate could not be justified under Congress’ power to regulate interstate commerce.

Lawyers for the Obama administration had advanced both arguments in their defense of the law in March.

The ruling had wild effects on health care stocks. Indianapolis-based WellPoint Inc. saw its share price plunge nearly 8 percent right as the court starting reading decisions Thursday morning — but before the substance of the health care ruling was known.

The New York Stock Exchange halted trading of the health insurance giant’s shares until after the ruling, and WellPoint’s shares recovered some of their losses.

In a statement, WellPoint spokeswoman Kristin Binns said, “The road to implementing health care reform will be a challenge; however, we look forward to working constructively with policymakers and other key stakeholders to build a health care delivery system that provides security and affordability to all Americans.”

Some hospital stocks spiked on the news — since the law’s attempts to insure 30 million more people should bring them more paying customers.

The same will likely be the case for medical device and drug firms, such as Indianapolis-based Eli Lilly and Co.

“Even with today’s decision, we expect that the debate about health care and health coverage will continue, and that further reforms and changes are likely in the years ahead,” Lilly CEO John Lechleiter said in a statement.

That’s largely because government budgets are already crimping payments to hospitals, drug companies and medical device firms. Belt-tightening by private employers is adding to the effect.

That is why many predicted that the trend of health care reform would have continued even if the Supreme Court had struck down the law. Thursday’s ruling just makes the coming changes a certainty, noted Ken Weixel, a senior advisor at the Deloitte Center for Health Solutions.

“It’s kind of, here we go,” Weixel said.



Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
Subscribe to Indiana Lawyer
  1. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  2. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  3. Paul Hartman of Burbank, Oh who is helping Sister Fuller with this Con Artist Kevin Bart McCarthy scares Sister Joseph Therese, Patricia Ann Fuller very much that McCarthy will try and hurt Patricia Ann Fuller and Paul Hartman of Burbank, Oh or any member of his family. Sister is very, very scared, (YES, I AM) This McCarthy guy is a real, real CON MAN and crook. I try to totall flatter Kevin Bart McCARTHY to keep him from hurting my best friends in this world which are Carolyn Rose and Paul Hartman. I Live in total fear of this man Kevin Bart McCarthy and try to praise him as a good man to keep us ALL from his bad deeds. This man could easy have some one cause us a very bad disability. You have to PRAISAE in order TO PROTECT yourself. He lies and makes up stories about people and then tries to steal if THEY OWN THRU THE COURTS A SPECIAL DEVOTION TO PROTECT, EX> Our Lady of America DEVOTION. EVERYONE who reads this, PLEASE BE CAREFUL of Kevin Bart McCarthy of Indianapolis, IN My Phone No. IS 419-435-3838.

  4. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  5. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.