Thanks to last week's ruling on President Barack Obama's overhaul, states can opt out of the expansion without fear that Washington will shut down all their federal Medicaid financing. And if some states do opt out, a lot of their residents are going to have to find another way to get coverage, or continue to go without.
Roughly 15 million uninsured are expected to get private insurance through new exchanges — marketplaces to be set up in each state by 2014 — that will be shored up by the individual coverage requirement that helps create a big pool of consumers. That mandate, vital to the law, was upheld by the court.
Another 15 million people or so—mainly adults with incomes just above the poverty line—are expected to be reached through Medicaid, and the federal government has generous subsidies to entice the states to come on board. That's not to say all of them will; Florida Gov. Rick Scott announced over the weekend that his state will opt out, and others will probably follow.
It's unclear how many of these low-income people would be able to get private health insurance in states that decide not to expand Medicaid. Even modest co-payments may be a barrier for some of them.
"We're talking about individuals making less than $15,000 a year who do not qualify for Medicaid today and who cannot afford to pay for private health insurance," said Sen. Jay Rockefeller (D-W.Va.). About 60% of the more than 265,000 uninsured people in his state are potentially eligible for the Medicaid expansion, also scheduled for 2014.
The Congressional Budget Office, the nonpartisan budgetary scorekeeper for lawmakers, is reassessing its estimate of the coverage impact of the law in light of the court's Medicaid ruling.
"I'm very worried that the court's decision makes coverage for these very low-income individuals optional for the states," said Rockefeller.
Officials at HHS say they are not particularly concerned. They may have lost the stick, but they still have carrots.
The law calls for Washington to cover the full cost of the first three years of the expansion, eventually dropping to a 90% share. That's still far above the average 60% federal share of Medicaid costs the federal government currently is paying.
"We believe that states will in fact take advantage of the coverage for these individuals because of many factors," said Mike Hash, director of the HHS office responsible for the health overhaul. "One is the available federal funding."
Not every state took part when the Children's Health Insurance Program was launched in the 1990s, Hash noted. But within two years they were all aboard.
Jonathon Turley, a constitutional law scholar at George Washington University, says the ruling on Medicaid could go a long way toward undermining the overall law, in giving states a possible exit option.
"I look at this law and I see potential chaos if states start opting out," he said. "In the end," he said of the law's standing after the court decision, "it can be viewed as a success only to the extent a crash landing is still considered a landing."