On Obamacare, Democrats Defy the Supreme Court
The multitrillion-dollar tax, climate and entitlement spending bill the House passed last week cuts funding for hospitals that treat uninsured patients. It likely violates the Constitution in the process by punishing states that have declined ObamaCare's Medicaid expansion.
Seven states, including expansion and nonexpansion states, still use uncompensated-care pools to reimburse providers for charity treatment. Section 30608 of the Build Back Better bill contains two separate provisions that would apply solely to nonexpansion states. The first would reduce by 12.5% their Medicaid disproportionate-share hospital payments, which offset the costs of hospitals that treat high numbers of uninsured patients.
Some states have availed themselves of Section 1115 Medicaid waivers, which allow them to pay hospitals for uncompensated care using federal dollars. The Build Back Better bill would ban nonexpansion states from reimbursing hospitals for uncompensated care provided to patients who would be eligible for Medicaid if the state expanded.
The Biden administration has already attempted to use the uncompensated-care pools as leverage to dragoon states like Florida, Texas, Tennessee and Kansas into Medicaid expansion. The Centers for Medicare and Medicaid Services in April revoked an extension of Texas' 1115 waiver, a decision that a federal judge struck down in August. The language in the House bill would give CMS new grounds to reject, or at minimum scale back, the nonexpansion states' uncompensated-care pools.
A Democratic summary of the bill claims that Section 30608 would end "wasteful and duplicative payments" in nonexpansion states. Because low-income people in these states would now qualify for no-premium coverage via insurance exchanges under a separate section of the bill, Democrats see no reason to devote additional funds to uncompensated care for this population.
But that line of reasoning has major flaws. While the new subsidies authorized under the bill would expire in 2025, the reductions in Medicaid payments—which the Congressional Budget Office estimates at approximately $4 billion a year—are permanent.
That clearly violates the Supreme Court's 2012 ruling in NFIB v. Sebelius, which declared ObamaCare's mandatory expansion of Medicaid unconstitutionally coercive on states. Chief Justice John Roberts wrote for a seven-justice majority: "What Congress is not free to do is to penalize States that choose not to participate in that new program" by "taking away their existing Medicaid funding."
Tennessee's uncompensated-care pool began in 2002—eight years before ObamaCare's enactment—and Texas and Florida created theirs in December 2011, before the Medicaid expansion took full effect in 2014. If, as the court said in 2012, ObamaCare "violates the Constitution by threatening existing Medicaid funding" for states that don't expand, then so does the House bill.
Section 30608 also gives the lie to the claim that the Build Back Better Act costs "only" $2.4 trillion. Lawmakers might have a realistic argument for scaling back nonexpansion states' uncompensated-care funds, but only if they extended the expanded subsidies to low-income people in perpetuity. Instead, to conceal the bill's true costs, Congress offers a temporary reduction in the uninsured in exchange for permanent cuts to hospital payments. That's not responsible budgeting—and it isn't constitutional, either.
This post was originally published at The Wall Street Journal.
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