Maine sues to roll back Medicaid coverage

September 5, 2012

(Source: Flickr)

Remember the health law's Medicaid expansion, the part of the Affordable Care Act that the Supreme Court ruled states are not required to participate in? Maine certainly has not forgotten: It filed a lawsuit Tuesday that could become central to the next chapter in the fight over Obamacare.

A quick refresher course: Half of the health law's insurance expansion comes from growing Medicaid, the entitlement program for low-income Americans. As written, the Affordable Care Act would require states to expand Medicaid to cover anyone under 133 percent of the federal poverty line ($14,893 for an individual). That was estimated to extend coverage to 17 million Americans.

The Supreme Court threw a wrench in those plans. It ruled that the Medicaid expansion was an unconstitutional overreach of federal power and that states would have the option of deciding whether to participate.

That brings us to Maine. Top officials there think the Supreme Court ruling does even more than allow them to opt out of the Medicaid expansion. In their view, the Supreme Court allows them to drop hundreds of thousands of residents from their Medicaid rolls right away. They filed a lawsuit Tuesday seeking permission to do just that.

The legal argument is two fold and has everything to do with something called "maintenance of effort." That's the Obamacare provision that requires states to maintain the exact same Medicaid eligibility levels they had back in 2010 , when the law passed. Maintenance of effort is set to expire in 2014, when the Medicaid expansion kicks in -- and sets the same eligibility level for each state.

If Maine does not comply with this provision, it stands to lose all its Medicaid funding -- 20 percent of the state budget. So, the stakes are big. But Maine wants to drop people from its Medicaid program -- people who were eligible back in 2010 -- and has two arguments for why the Supreme Court ruling creates the authority to do so.

The state first argues, in the lawsuit filed Tuesday, that this is pretty similar to the federal overreach that the Supreme Court rejected in its Obamacare ruling, where it said states could not lose all Medicaid funding for not participating in the expansion.

"This 'economic dragooning' is unconstitutional," the state contends. "This is exactly the type of federal action rejected by the Supreme Court in NFIB."

The Obama administration, for its part, has refused the idea that states can now tighten eligibility standards. The Congressional Research Service bolsters the administration's viewpoint. In an analysis this summer, it found that maintenance of effort was "unaffected by the Supreme Court's ruling and [is] enforceable under the current Medicaid statute."

Still, the Congressional Research Service does not issue the final ruling on the Maine lawsuit -- that's left to a federal court. It will be ruling on such a case and, depending on the verdict, could tell us more about whether more, similar challenges will follow.

For those who are curious, the full text of the lawsuit is embedded below.

http://www.washingtonpost.com/blogs/ezra-klein/files/2012/09/maine.pdf

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Dylan Matthews · September 5, 2012