U.S. Supreme Court Issues Ruling on the Affordable Care Act
The U. S. Supreme Court issued its decision on the Affordable Care Act (ACA) this morning. In a 5-4 decision, the Court ruled to uphold as constitutional the ACA, including the individual mandate requiring virtually all Americans to enroll in health insurance coverage. The mandate is upheld based on Congress’s power to tax, but not on the basis of the commerce clause that gives Congress the ability to regulate interstate commerce.
The Court deemed the required expansion of Medicaid under the ACA as constitutional except for the provision that threatens loss of existing Medicaid funds for states that do not participate in the expansion. In other words, it appears that Congress may offer additional funds under the ACA to states that choose to expand Medicaid eligibility, but may not withhold existing federal funds for Medicaid from states that do not participate in the expansion.
The full text of the opinion is available on the U. S. Supreme Court website. Additional information on this decision and its fiscal impact on states will be forthcoming from NASBO.
Also, NASBO was referenced several times in the justices' opinions. Below are passages from the U.S. Supreme Court dissenting and majority opinions that reference NASBO data (listed in order by page number).
Pages 39-40, dissenting opinion:
Medicaid has long been the largest federal program of grants to the States. See Brief for Respondents in No. 11– 400, at 37. In 2010, the Federal Government directed more than $552 billion in federal funds to the States. See Nat. Assn. of State Budget Officers, 2010 State Expenditure Report: Examining Fiscal 2009–2011 State Spending, p. 7 (2011) (NASBO Report). Of this, more than $233 billion went to pre-expansion Medicaid. See id., at This amount equals nearly 22% of all state expenditures combined. See id., at 7.
The States devote a larger percentage of their budgets to Medicaid than to any other item. Id., at 5. Federal funds account for anywhere from 50% to 83% of each State’s total Medicaid expenditures, see §1396d(b) (2006 ed., Supp. IV); most States receive more than $1 billion in federal Medicaid funding; and a quarter receive more than $5 billion, NASBO Report 47. These federal dollars total nearly two-thirds—64.6%—of all Medicaid expenditures nationwide.15 Id., at 46.
But the sheer size of this federal spending program in relation to state expenditures means that a State would be very hard pressed to compensate for the loss of federal funds by cutting other spending or raising additional revenue. Arizona, for example, commits 12% of its state expenditures to and relies on the Federal Government to provide the rest: $5.6 billion, equaling roughly one-third of Arizona’s annual state expenditures of $17 billion. See NASBO Report 7, 47.
Page 42, dissenting opinion:
In South Dakota v. Dole, the total amount that the States would have lost if every single State had refused to comply with the 21-year-old drinking age was $614.7 million—or about 0.19% of all state expenditures combined. See Nat. Assn. of State Budget Officers, 1989 (Fiscal Years 1987– 1989 Data) State Expenditure Report 10, 84 (1989), State Expenditure archives. South Dakota stood to lose, at most, funding that amounted to less than 1% of its annual state expenditures. See ibid. Under the ACA, by contrast, the Federal Government has threatened to withhold 42.3% of all federal outlays to the states, or approximately $233billion. See NASBO Report 7, 10, 47. South Dakota stands to lose federal funding equaling 28.9% of its annual state expenditures.
Page 51, Roberts opinion:
In fact, the federal funds at stake constituted less than half of one percent of South Dakota’s budget at the time. See Nat. Assn. of State Budget Officers, The State Expenditure Report 59 (1987); South Dakota v. Dole, 791 F. 2d 628, 630 (CA8 1986).
Medicaid spending accounts for over 20 percent of the average State’s total budget, with federal funds covering 50 to 83 percent of those costs. See Nat. Assn. of State Budget Officers, Fiscal Year 2010 State Expenditure Report, p. 5 (2011); 42 U. S. C. §1396d(b).