Medicaid and the ACA: What's the Deal?

A blog about business and economics.
June 28 2012 11:22 AM

Medicaid and the ACA: What's the Deal?

147343983
WASHINGTON, DC - JUNE 28: Obamacare supporters demonstrate in front of the U.S. Supreme Court June 28, 2012 in Washington, DC.

Photo by Alex Wong/Getty Images

While the Supreme Court did not invalidate the much-discussed individual mandate, it did rule one of Congress' other tactics for expanding health insurance out of bounds—a particular approach to expanding Medicaid coverage.

Explaining what happened here requires some background, so please have patience.

Advertisement

Medicaid is a program to provide health coverage to low-income people. It's run as a partnership between the federal government and the states, where states design their own programs within bounds set by federal regulations, and the federal government ponies up a large share of the money. How much of the money? It's complicated. But basically the more a state spends, the more the federal government kicks in—but you get diminishing returns in terms of how much extra money you can get. So the upshot is that a stingy, conservative state can expand for cheaper at the margin than can a generous liberal state.

Medicaid is also basically the cheapest health insurance program around. It's for poor people, it's pretty stingy, and it pays providers poorly.

So somewhere in the legislative sausage-making, budget-conscious centrists realized that it would be cheaper to rely heavily on Medicaid expansion to achieve the Affordable Care Act's coverage goals. To an extent this is exactly what liberals have been saying about single-payer all along. But in this case it played as a centrist desire to keep the bill relatively cheap. The problem is that most of the Medicaid expansion that would have to happen would have to come from politically conservative states. So Congress' approach was essentially to make Red America an offer it couldn't refuse—expansion could be done on very generous terms with the federal government picking up over 90 percent of the tab, but failure to expand would come with a hefty financial penalty in terms of lost matching Medicaid grants.

Chief Justice Roberts joined with the other conservatives on the court to argue that this penalty—withdrawing of existing federal money unless states kicked in new money of their own—overstepped the constitutional bounds of the spending power. So now states have the carrot to expand Medicaid but not the stick.

Since your state's citizens have to pay taxes to the federal government one way or the other, you'd have to be pretty crazy to refuse the carrot, if you ask me. But ideological zeal may well lead some states to turn it down. In that case, substantially more people than the law's authors expected might find themselves eligible for either hardship waivers from the mandate or subsidies to buy insurance on exchanges. How much of each of those things happened will depend on exactly what states do, and figuring out the budgetary implications of the whole thing is going to require some hard work by the little modeling gnomes at the Congressional Budget Office.

TODAY IN SLATE

Jurisprudence

Scalia’s Liberal Streak

The conservative justice’s most brilliant—and surprisingly progressive—moments on the bench.

Colorado Is Ground Zero for the Fight Over Female Voters

There’s a Way to Keep Ex-Cons Out of Prison That Pays for Itself. Why Don’t More States Use It?

The NFL Explains How It Sees “the Role of the Female”

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

Culturebox

Theo’s Joint and Vanessa’s Whiskey

No sitcom did the “Very Special Episode” as well as The Cosby Show.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Cliff Huxtable Explains the World: Five Lessons From TV’s Greatest Dad

Why Television Needs a New Cosby Show Right Now

  News & Politics
Weigel
Sept. 18 2014 8:20 PM A Clever Attempt at Explaining Away a Vote Against the Farm Bill
  Business
Moneybox
Sept. 18 2014 6:02 PM A Chinese Company Just Announced the Biggest IPO in U.S. History
  Life
The Slate Quiz
Sept. 18 2014 11:44 PM Play the Slate News Quiz With Jeopardy! superchampion Ken Jennings.
  Double X
Doublex
Sept. 18 2014 8:07 PM Crying Rape False rape accusations exist, and they are a serious problem.
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Brow Beat
Sept. 18 2014 4:33 PM The Top 5 Dadsplaining Moments From The Cosby Show
  Technology
Future Tense
Sept. 18 2014 6:48 PM By 2100 the World's Population Could Be 11 Billion
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.