In 2012, the Supreme Court ruled 7-2 in NFIB vs Sebelius that Medicaid expansion under the Affordable Care Act cannot be mandatory.  Rather, states have the option to expand the entitlement program.

Prior to this majority ruling, the Affordable Care Act forced states to comply with this provision.  If states did not comply, Congress threatened to withdraw federal funds for a state’s existing Medicaid program.

The Supreme Court concludes this mandate as unconstitutional because it satisfies the two-part coercion test for determining whether the conditions Congress places on an existing grant are coercive: (the “condition” refers to the withdrawal of existing federal Medicaid funds if a state chooses not to expand its program)

1.  Does Congress place this condition on a significant federal grant?

2. Does Congress threaten to take away current or existing funds for a program so as to force states to comply with a new program?  

Answers: Yes and Yes – The withdrawal or loss of federal funding for a state’s existing Medicaid program would result in significant losses of over 12% of a state’s revenue.  And, the law attempts to take away existing funds for the creation of new programs under Medicaid ( i.e. enrolling childless adults up to 138% of the FPL).

What remains largely ignored, however, is that the Supreme Court did not explicitly limit its ruling to Medicaid expansion providing benefits to just childless adults. Rather, the ruling implies that other Medicaid expansionary provisions under the Affordable Care Act remain optional as well.  States need to capitalize on this rule to prevent further federal takeover of a historically incompetent program.

Although North Carolina has not opted to enroll childless adults and takes positive steps to reform its current Medicaid program, read more here on how the state still expands Medicaid.