Under existing federal law, the federal government provides states with Medicaid funds for the assistance of pregnant women, children, needy families, the blind, the elderly, and the disabled. 42 U. S. C. §1396d(a).
The Affordable care act seeks to expand state coverage of the Medicaid program by 2014 by drastically increasing the amount of the people states are required to cover in order to obtain federal funding for their respective programs. Under 42 U.S.C.§1396a(a)(10)(A)(i)(VIII), the Affordable Care Act requires that states make Medicaid funds available to all adults with incomes up to 133 percent of the federal poverty level. While the Affordable Care Act significantly expands federal funding to states to cover this expansion under 42 U.S.C. §1396d(y)(1), the federal government will only provide 100 percent increased funding for expansion in fiscal years 2014 through 2016; these additional federal funds are due to phase down to as little as 90 percent by 2020. 42 U.S.C. §1396d(y)(1)(A)-(D). This winding down of federal assistance provides a disincentive for state governments to expand Medicaid coverage.
Several states attorney generals, including Texas’ Greg Abbott, challenged the portion of the affordable care act which provides that states who do not comply with the Medicaid expansion will lose all federal funding for the program as whole. 42 U.S.C. §1396C. Citing New York v. United States,505 U.S. 144 (1992) and Printz v. United States, 521 U.S. 898 (1997), the Supreme Court in National Federation of Independent Business et al. v. Sebelius concluded that the provisions of 42 U.S.C. §1396C were unduly coercive and represented unconstitutional interference with state sovereignty and policy making processes.
The Texas legislature is currently not in session, and thus has taken no official position on Medicaid expansion in the wake of the Supreme Court’s recent decision. On July 9, 2012 Governor Rick Perry announced that Texas would be joining Florida, Louisiana, South Carolina and Wisconsin in opting out of the Medicaid expansion mandated by the Affordable Care Act, as well as the mandate to set up state insurance exchanges. In a recent statement, Governor Perry declared that: “I will not be party to socializing healthcare and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government.” Such conduct demonstrates that absent the penalties imposed by §1396C, there is little incentive to expand states’ Medicaid programs and the funding limitations placed on the expansion by 42 U.S.C. §1396d(y)(1)(A)-(D) actually disincentivize compliance.