Obamacare and Medicaid Expansion

The recent SCOTUS decision uphold the Affordable Heathcare Act has spawed a great deal of controversy for sure.  The decision has resolved for the nation that "Obamacare" as it is called is a permissible Congressional act, including the individual mandate, as a Congressional taxing power.  What is left to be resolved is the Medicaid expanssion provisions of the bill and how that program will develop in application. 

The law provides for the expansion of the Medicaid program to cover all individuals who either earn less than 133% of the federal poverty guideline or make more than that amount but chose not to purchase health insurance and pay the penalty.  Medicaid currently covers only the impoverished, elderly, pregnant women, young mothers, children, and the blind/disabled.  In contrast, the new expansion would provide coverage to many groups currently not covered by Medicaid, for example, single adults with no children.   In order to esure the states accept the new Medicaid expansion, the bill required that states either adopt the new plan or lose their current Federal Medicaid funding.  The Supreme Court's ruling, however, held this particular provision unconstitutional.  

Instead, of upholding the Medicaid expanssion, the Court determined that the plan was a new Medicaid program for which the states were free to either accept or reject without regard to their current Federal Medicaid funding.  Therefore, a state can choose not to adopt the Medicaid expansion and still receive their current Federal funding.  This takes the enforcement mechanism out of the Federal framework.  

With this being an election year, many state governors will be pressured to reject the new healthcare law and the Medicaid expansion.  However, if they do so, their state will also lose the Federal funding that comes with it.  The Federal program provides the states with full funding for the first 3 years of the program.  Since businesses will now have to provide healthcare to all their employees by 2014, they will likely need the Federal subsidies, and states that are opposed to the law may have no choice but to accept its provisions and funding in order to remain fiscally sound.  

Agree or disagree, it is now the law of the land.  It is still unknown how states will adopt and deal with the new law's requirements.  Only time will tell as this new law develops.