The coming Medicaid wars

Chief Justice John Roberts Part 2 of 2

The effect of the Supreme Court's decision on the Medicaid expansion component of the Affordable Care Act was the focus of my previous Part 1 post on the coming Medicaid wars. Since the publication of that piece, two new data points have been added to the mix: (1) a number of Republicans and conservatives have framed an argument that the federal subsidies for purchase of health insurance on exchanges would not be available in states where the federal government is forced to step in because the state refuses to establish an exchange (an interesting side issue is whether such refusal could jeopardize such state's  participation in the "existing" Medicaid program). The argument is that the express language of ACA does not provide for subsidies in federal exchanges, only in state established exchanges. The IRS has already rejected the argument and I am not at all sure who would have standing to to challenge the IRS' ruling. No state or entity would be harmed by the offer of subsidies on federal exchanges so why they would have the right to challenge the decision is not apparent to me. But courts hear cases when they want to. (2) The Congressional Budget Office (CBO) issued a (PDF) revised report considering the effect of the Supreme Court's decision on Medicaid expansion. The CBO concluded that the cost of ACA would be reduced by $89 billion but that 3 million less Americans would have health insurance.

The CBO appears to accept that subsidies can be offered on federal exchanges. The CBO states:

Why are the projected Medicaid and CHIP savings stemming from the Supreme  Court's decision greater than the projected additional costs of subsidies provided through the exchanges? [...]: With about 6 million fewer people being covered by Medicaid but only about 3 million more people receiving subsidies through the exchanges
and about 3 million more people being uninsured, and because the average savings for each person who becomes uninsured are greater than the average additional costs for each person who receives exchange subsidies, the projected decrease in total federal spending on Medicaid is larger than the anticipated increase in total exchange subsidies[.]

The reason for this is not because subsidies can not be offered on federal exchanges, but rather "[o]nly a portion of the people who will not be eligible for Medicaid as a result of the Court's decision will be eligible for subsidies through the exchanges."

The CBO is constrained by what the laws and regulations say now and can't consider potential additional measures by the federal government. Thus, the CBO writes:

Future legal or administrative actions will probably change the scope of what is possible under the ACA and the Court's decision; CBO and JCT's assessments should not be viewed as representing a single definitive interpretation of those possible outcomes.

One of the possibilities is one I suggested in Part 1'that the federal government offer Medicaid expansion through a federal exchange in those states (which appear to fully overlap with those states that are threatening to reject Medicaid expansion) that do not create state exchanges.

I'll explore how this might work on the other side.

(Continue reading on the other side.)