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Medicaid Expansion for 16 Million
at Stake

Dec. 16 hearing likely leading to Supreme Court

Much is at stake — but little will be resolved — Dec. 16 when attorneys for Florida and 19 other states clash with federal attorneys in U.S. District Court in Pensacola over the new federal health law.

In the closely watched case, lawyers representing the 20 states and the National Federation of Independent Business will argue that the Patient Protection and Affordable Care Act unconstitutionally infringes on individuals' and states' rights. The Justice Department will defend the law as within established limits of congressional power.

The two big issues in the case: the law's mandate that everyone have health insurance and provisions expanding Medicaid. The law's health insurance mandate has captured most of the public's attention. But the Medicaid provisions affect millions of people and cost billions of dollars.

Because Medicaid is a federal-state program, both levels of government share its costs and make its rules. At issue in the states' suit is the degree to which the federal government can control the program over states' objections.

Medicaid began in 1965 as a health insurance program for the poor and has expanded to include children, pregnant women, those over 65 and the disabled. While older people make up only about 10 percent of Medicaid enrollees, Medicaid spending on them accounts for about 25 percent of the total, principally for nursing home care.

Medicaid currently covers some 58 million Americans, about one-fifth of the U.S. population. Under the new health law, Medicaid will expand by about 16 million participants in 2014.

Among the newly eligible will be people under 65 — regardless of whether they have children living at home — whose incomes are up to 133 percent of the federal poverty level. That was $14,404 for an individual and $29,327 for a family of four in 2009. Previously, most adults under 65 without children at home were not eligible.

The law also expands state options for home- and community-based services, which help older people stay in their homes as they age.

Focus of the argument

In court documents, the state attorneys general contend the new law uses Medicaid to try to reach universal health care coverage and will force states to "assume billions of dollars of additional costs and other responsibilities against their will." They warn that the law will drive already-strapped state budgets "off a cliff."

The states argue that Congress has made them "an offer they can't refuse," and "violated the fundamental principles of federalism" by dictating how Medicaid ­ — established as a state-federal partnership — should operate.

The new health care law, the attorneys general say, forces states to "face an all-or-nothing proposition: either accept the Act's new Medicaid regime and suffer devastating consequences to their already-strained budgets, or forgo access to billions of dollars annually which the federal government collects from the States' taxpayers and then returns to those States that remain in Medicaid."

Proponents of the new law say it will save states the money they usually spend on care for the uninsured. The new law requires the federal government to reimburse the states 100 percent of what they spend on the newly eligible participants for three years. After that, the federal government match drops to 95 percent in 2017 and then gradually decreases to 90 percent by 2020.

The Urban Institute, a nonpartisan Washington think tank, estimates that state costs from the Medicaid expansion range from $21.1 billion to $43.2 billion from 2014 to 2019, depending on the extent of beneficiary participation. The institute also estimates that state and local governments could save $70 billion from 2014 to 2019 by shifting the costs of uncompensated care to Medicaid.

More than 20 groups, including AARP, have joined a friend-of-the-court brief drafted by the National Health Law Program in support of the law's Medicaid changes.

The brief argues that the health law reforms payment methods for providers and includes new options to expand home- and community-based services.

Stu Cohen, the AARP Foundation's director of legal advocacy, warned that "those innovations could fall apart if the judge strikes down [the] Medicaid [provisions]."

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