The PPACA Decision

The SCOTUS has issued its ruling (PDF) on the Patient Protection and Affordable Care Act.  A couple of months ago I attempted to guess at what the outcome would be.  I didn't get it spot on, but was reasonably close (at least in my own opinion).  The tax-and-spend powers of Congress were critical to upholding the individual mandate, there were end-of-the-world dissents, etc.  Kennedy's was the only vote I got wrong with respect to the mandate.  The surprising part was the decision on the expansion of Medicaid -- that the threat to withhold all Medicaid funding from a state that failed to expand its program per the PPACA is unconstitutional.  It seems to me that this opens a heck of a can of worms.

Congress has a long history of making funding for programs available to the states, and the funding almost always comes with strings attached.  When I worked as a legislative budget analyst looking at human services programs, knowing about the strings was one of the most important parts of my job.  It was one of the basic messages that I tried to communicate to new members of the General Assembly: federal money has strings; ignoring the strings can get you in trouble; please speak with the budget staff or the Department of Human Services staff when you propose shuffling money around.  The episode that made me look the least competent on the job occurred because there was a string I didn't know about.

A majority of the Court ruled that, in effect, the expansion of Medicaid included in the PPACA wasn't an expansion of an existing program, but a whole new program.  And that because federal Medicaid money was such a big part of state budgets, it was unconstitutional to threaten to take the old money away if a state didn't buy into the new program.  Historically, Medicaid is an all-or-nothing deal; states must meet certain minimum conditions or they get zero funding.  From time to time, Congress has raised the level of those minimums so that states must cover additional people, or provide more extensive services.  But according to the Court, there are limits to how much established requirements can be changed.

You have to wonder how far this goes.  If Congress had said, instead, that effective 1/1/2014, Medicaid is repealed and a new PPACA program commenced, which just happens to look exactly like Medicaid plus today's PPACA extensions, would that have passed muster?  Or if Congress wants to simply repeal Medicaid and replace it with nothing, is that okay?  Is the money now an entitlement for the states that Congress can't take away?  Rep. Ryan's budget proposes to convert today's Medicaid into a block grant program where there is a cap on the amount the states receive and far fewer strings on how the money can be spent; will those changes meet with the approval of the Court when liberal states sue because the block grant is less than they would have received under the old rules?

I've always thought that the purpose of the Court was to provide clarity.  In this case, they appear to have achieved exactly the opposite.  The decision looks to me like an invitation for states to sue any time Congress changes the Medicaid rules in ways those states dislike.  Or federal funding for roads.  I'm sort of a closet states' rights guy, in the sense that there are things the federal government should leave to the states, even if that list is shorter than it was in bygone days when 50% of the population was involved in agriculture, acquiring land was a matter of walking far enough west, and getting mail from the Ohio Valley to an East Coast city took weeks.  And while there's no question that this part of the Court's decision has made the states stronger relative to Congress, there will be considerable pain involved in figuring out how much more powerful.