In just one month the Supreme Court will decide whether health insurance subsidies issued under the Affordable Care Act shall only be distributed to insurance companies in state-based exchanges. While it is widely known that there is mounting political pressure for federal exchange states like North Carolina to make the switch to a state exchange so individual marketplace customers will not lose their taxpayer funded health plans, there could also be consequences for federal exchange states’ Medicaid programs. As written in the federal health law, federal Medicaid funding is contingent upon states creating their own exchanges.

Modern Healthcare columnists Virgil Dickson and Lisa Schencker explain how current Medicaid enrollees in federal exchange states could end up being on the budgetary chopping block:

The first is a section of the law that says federal Medicaid funding is contingent on a state ensuring coordination and secure communication between its Medicaid program, its Children’s Health Insurance Program, and ‘an exchange established by the state.’

‘The Medicaid and CHIP programs in all 34 states relying on the federal exchange would be at risk if the court buys the (King challengers’) argument,’ said Tim Jost, a law professor at Washington and Lee University and supporter of the law. ‘This demonstrates how crazy and how dangerous their argument is.’

Another issue is an ACA provision known as the Maintenance of Effort. That part of the law dictates states must maintain the eligibility and enrollment policies and procedures that were in effect on March 23, 2010, until an exchange established by the state is up and operational. Since, HHS reportedly has allowed some reduction in eligibility in Illinois, Indiana, Louisiana, Maine, Nebraska, Ohio, Oklahoma, South Dakota and Wisconsin. Those states have not established their own exchanges.

 ‘If the government loses and Congress does not revise the ACA, HHS might tell the states that they have to return to their former eligibility rules or lose future federal funding for their Medicaid programs,’ said Jesse Witten, a partner at Drinker Biddle in Washington.

In the case of a favorable plaintiff ruling, lawsuits would certainly arise questioning these provisions’ constitutionality. Redacting federal Medicaid funds from a federal exchange state’s traditional Medicaid program sounds a bit coercive, and would probably be deemed as such. Much like when Congress deemed Obamacare’s original Medicaid expansion provision unconstitutional in a 7-2 ruling back in 2012. Essentially, Congress was effectively holding states at gunpoint — either expand medical assistance eligibility or lose all federal program dollars.