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The Supreme Court’s Medicaid Disaster

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Brad DeLong is excellent on the consequences of the Supreme Court arbitrarily re-writing the ACA:

This is the piece of the article that leaves me most annoyed because of the absence of context. Why have 20 states refused to take part in Medicaid expansion? It’s not because of how the Affordable Care Act was written. All states currently participate in Medicaid–it is a good deal for a state to do so. The ACA changed Medicaid. But John Roberts rewrote the law from his post on the Supreme Court to give states the option of (a) simply continuing with Medicaid-as-it-exists-in-2013 in addition to the options of (b) participating in Medicaid-as-it-exists-in-2014 and (c) dropping Medicaid entirely.

When John Roberts rewrote the ACA from the bench, he did so very badly. The expansion of Medicaid meant that a great many people who used to show up at safety-net hospitals without any insurance at all will now be covered by Medicaid, so the rationale for the Disproportionate Share Payments to safety-net hospitals that treat the uninsured will go away, hence the ACA eliminates the no longer-needed DSP. But in states in which Medicaid isn’t expanded, the need for the DSP remains. When Roberts rewrote the law, did he rewrite the law so that the DSP remains for states that do not accept Medicaid expansion? No. Will safety-net hospitals in non-expanding states close as a result? Some of them, probably, without some other emergency fix. Did Roberts know what he was doing? Almost surely not. If you rewrite a law from the bench, shouldn’t you and your clerks first familiarize yourself with the law enough so that you know what you are doing? Next question!

When John Roberts rewrote the ACA from the bench, he did so very badly. The expansion of Medicaid meant that people with incomes less than 133% of the poverty line will now be covered by Medicaid, so they will not need to be eligible for subsidies to make the policies offered on the exchange affordable to them. But in states in which Medicaid isn’t expanded, people with incomes less than 133% of the poverty level will need to purchase heath insurance on the exchanges if they are to have any form of coverage at all. When Roberts rewrote the law, did he rewrite the law so that people not covered by Medicaid with incomes less than 133% of the poverty line become eligible for exchange subsidies? No. Will there thus be millions of people left out in the cold? Yes. Did Roberts know what he was doing? Almost surely not. If you rewrite a law from the bench, shouldn’t you and your clerks first familiarize yourself with the law enough so that you know what you are doing? Next question!

An additional wrinkle–a wrinkle that may have pushed Arizona into the Medicaid expansion camp–is that non-U.S. citizen legal residents of the United States with less than five years of residency and incomes less than 133% of the poverty line are eligible for exchange subsidies. Thus the ACA, as rewritten by John Roberts, treats working-poor non-citizen immigrants with less than five years of residency much more favorably than it treats working-poor citizens. Did Roberts know what he was doing? Almost surely not. If you rewrite a law from the bench, shouldn’t you and your clerks first familiarize yourself with the law enough so that you know what you are doing? Next question!

Now, you could blame Congress rather than the Supreme Court for this if they had any reason to believe that the Supreme Court would strike down the mechanism for expanding Medicaid, but of course they had no reason whatsoever to expect such an unprecedented intervention. (If Congress can use highway spending to enforce a tenuously related national drinking age, why should the umpteenth expansion of Medicaid have even been in question?) The lack of precedent might not be an issue if the Supreme Court was enforcing a specific constitutional provision, but it was doing no such thing. The argument has a Shelby County problem — not only is there no specific prohibition the Medicaid expansion violated, Congress is explicitly authorized to tax and spend for the general welfare. The Constitution does structurally establish a federal system, and I suppose I could come up with a hypothetical where the federal spending power was so coercive that it threatened the very structure of federalism itself (“not a penny of federal money if you don’t modify your divorce laws!”), although trying to come up with any such law that could actually be enacted by Congress I get nothing but a loud buzzing noise.

If the Court is going to freelance and invent prohibitions that swim against the text of the Constitution, it faces a particularly high burden of proof — there had better be a crucial liberty interest at stake and the logic needs to be airtight. We’ve been through most of this before, but the Medicaid expansion part of Sebelius fails spectacularly on this score:

  • If Congress had just created the ACA’s version of Medicaid from scratch, it would be unquestionably constitutional.
  • If Congress had just repealed Medicaid outright this would unquestionably be constitutional.  Roberts’s logic seems to imply some sort of permanent state entitlement to receive federal money once it’s been given, but he can’t possibly believe that.
  • If Congress expanded Medicaid by just making it a Medicare-style federal program, this would unquestionably be constitutional even though it would give less autonomy to the states than the ACA’s Medicaid expansion did.
  • And the fact that the decision is based on this transparently results-oriented, farcically incoherent formalist hair-splitting  means that by definition there’s no meaningful liberty interest being protected by the Court, even you believe that that extratextual “rights” of states should be privileged over the statutory rights of actual citizens.   The ACA’s Medicaid expansion did not threaten to deprive state governments of anything they’re constitutionally entitled to, and Congress remains free to pursue identical goals in ways that are actually more “coercive” towards state legislatures.  The decision is also a disaster on a pragmatic policy level for the reasons cited above.
  • The fact that the decision is based on this transparently results-oriented, farcically incoherent formalist hair-splitting also means that Congress is given little guidance going forward.
  • And, please, save the “but it was 7-2, just like the permanently unassailable Dred Scott v. Sandford!!!!!” argument.  Even in the enormously unlikely event that Breyer and Kagan weren’t voting strategically, all this would prove is that Breyer and Kagan joined a terrible opinion and were probably extremely naive about the consequences of doing so.  In Breyer’s case, at least, this would have been far from the first time.

Whether 5-4 or 9-0, what the Supreme Court did to the Medicaid expansion was terrible constitutional law and worse policy.

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