The clock is rapidly ticking down as we wait for the Supreme Court to release its decision on King v. Burwell. We are back to our habit of checking www.scotusblog.com daily as the Supreme Court releases all of its decisions for the year before June 30. The court typically releases its “biggest” decisions last and they often release decisions on the third Monday of the month and then on Tuesday, Wednesday and Thursday mornings, but at the end of its term it’s basically anyone’s guess which morning in the next two weeks that we will get the decision.
While we wait, Washington wonks have been upping the ante in terms of potential market implications should the high court find in favor of the plaintiffs. Everyone knows about the 7.5 million or so people who will experience an average of a 256% increase in out-of-pocket premium expenses and are therefore likely to drop coverage and the impact that chaos and adverse selection will have on the individual market. Lots of people realize the potential employer-confusion impact if the employer-mandate enforcement mechanism implodes in 34 states. But few realized until this week the potential impact on Medicaid and the CHIP programs.
This week various policy experts began highlighting the potential Medicaid fallout a ruling for the plaintiffs could cause. One provision of the law requires states to link their Medicaid systems up with their exchange as a condition of getting federal funding and to enroll people into Medicaid and CHIP when they’ve been identified as eligible by an “exchange established by the state.” If the federal exchange doesn’t qualify as an “exchange established by the state” for subsidy purposes, legal experts have pointed out that it also logically wouldn’t qualify for Medicaid purposes and therefore all 34 states could lose their Medicaid funding for not meeting this requirement.
In addition, the law links Medicaid’s state “maintenance of effort” requirements to the subsidies and the creation of an “exchange established by a state.” States were not allowed by the law to change adult Medicaid eligibility standards until the exchanges and subsidies were up and running. Once they were, many federal exchange states did change their adult Medicaid standards. The ruling could force them to reinstate Medicaid coverage for these people or at minimum maintain current rates, at the very same time their federal Medicaid match could be in jeopardy. However, since the NFIB v. Sebelius ruling limited how much the federal government could do to force a state’s hand regarding Medicaid coverage levels and expansion, this potential outcome of an opinion favoring King could generate even more lawsuits. Only time will tell!