Supreme Court should strike down Medicaid expansion: Vanderbilt expert

The Supreme Court should strike down President Obama’s proposed expansion of Medicaid because it puts too much of an unforeseeable burden on the states, says James F. Blumstein of Vanderbilt University Law School.

The high court has agreed to hear oral arguments on the Medicaid expansion issue 1 p.m. Wednesday, March 28. The Medicaid challenge to the Affordable Care Act focuses on the mandated expansion of Medicaid coverage to include adults with incomes under 133 percent of poverty. Medicaid is a joint federal-state partnership, with the federal government matching state expenditures. All states have existing Medicaid programs, but previously states had flexibility to determine income eligibility.

The Supreme Court is expected to announce its decision in June, as the November presidential election approaches.

Blumstein, Vanderbilt’s University Professor of Constitutional Law and Health Law and Policy, believes the Affordable Care Act is unconstitutional because it presents “substantial, unforeseeable, and expensive mandatory modifications” to the states.

Blumstein, who filed a brief with the Supreme Court Jan. 17 in favor of the state’s objections, believes that the plan violates the federal government’s “clear-notice” obligation, based on the 1981 Supreme Court decision in Pennhurst State School and Hospital v. Haldermann. He argues that the clear-notice obligation attaches when states signed up for Medicaid, not when the federal government imposed additional and costly obligations on state Medicaid programs when it enacted the Affordable Care Act.

James Blumstein (Daniel Dubois / Vanderbilt)

“The law of contract draws a critical distinction between the contract-formation stage and the contract-modification stage,” Blumstein said. “At contract formation, parties have maximum freedom to determine whether or not to enter into an agreement and to settle on the terms of that agreement. At contract modification, concerns about excessive leveraging significantly constrain the behavior of the contracting parties.”

Blumstein argues that the unforeseen expense the federal government is attempting to get the states to take on through Medicaid expansion violates legal precedent because an existing contract is being modified so that “the fiscal implications of remaining in the program have been substantially and unforeseeably ratcheted up.”

Blumstein believes that the federal government can only make the changes if it allows states to choose whether to accept the new terms without affecting their ability to participate in their pre-existing Medicaid programs or expressly terminates traditional Medicaid and takes political responsibility for that termination. President Obama’s plan allows for individual states to “opt out” of the expanded program but not to retain their traditional pre-existing Medicaid programs. It is an all-or-nothing proposition for the states.

“States should be able to determine knowingly and voluntarily whether or not to participate in new Medicaid,” Blumstein said.