Digesting the Supreme Court’s ACA Decision? Questions Emerging? A Roundup of Initial Interpretations

We know that as you digest the Supreme Court’s decision, and its impact on states, you will have many questions.  In the coming months, HHS will provide information to states in the form of guidance and regulations that clarify the ruling’s implications. But, given that states have limited time in which to make health reform implementation decisions, I thought it was useful to share a preliminary interpretation of laws by NASHP and other experts we have heard from and consulted with so far, including: Alan Weil, Sara Rosenbaum, and Tim Westmoreland.
NOTE: We have not received any information from the U.S. Department of Health and Human Services (HHS); the initial explanations described here come from the opinions of experts and should not be taken as official guidance from a federal agency.
We will be discussing some of these questions on our upcoming State Refor(u)m webinar. We encourage you to post your questions and reactions on these issues, and we will do our best to provide a response, either during the live webinar or within the online discussion.
Q: Can states decide to put people with income at or below 133 percent of the federal poverty level (FPL) in the exchange instead of in Medicaid?
A: Experts have noted that states can open up the exchange to people at any income level, but the tax credits that make coverage more affordable are not available to everyone.  The tax credits are available to citizens with income above 100 percent of FPL to 400 percent of FPL. Tax credits are also available to some non-citizens who are legally present in the U.S. and have income from 0 to 400 percent of FPL.
This is based on a strict reading of the Affordable Care Act. The ACA defines an applicable taxpayer who can receive a tax credit as a citizen or lawfully present non-citizen who has a household income for a taxable year above 100 percent of FPL, but does not exceed 400 percent of FPL (ACA S. 1401(c)(1)(A)). The ACA also says that if the taxpayer is a lawfully present noncitizen who is not eligible for Medicaid by reason of their immigration status, and the taxpayer’s income is not greater than 100 percent of FPL, the person can receive the tax credit (ACA S. 1401(c)(1)(B)). The ACA generally envisioned that low-income people would receive coverage through Medicaid.  However, there is a five-year bar in Medicaid that prevents many lawfully present noncitizens from enrolling in Medicaid in their first five years in the United States.  Legally present noncitizens in this five-year bar period are eligible for a tax credit.
Q: Does the ACA’s Maintenance of Effort (MOE) requirement still stand?
A: All three experts who have examined this issue believe that the MOE requirement still stands. The ACA’s MOE provisions generally require states to maintain their current eligibility standards and procedures for Medicaid and CHIP until 2014 for adults and 2019 for children. The Supreme Court’s decision does not make changes or take away federal enforcement provisions for the existing, pre-ACA Medicaid program.
As Sara Rosenbaum explores in her recent Health Affairs blog post, the Chief Justice basically divided Medicaid into two programs:

• Program 1: the existing, pre-ACA Medicaid Program, and
• Program 2: the ACA’s Medicaid expansion program (ACA S. 2001(a))

The Supreme Court decision strikes the enforcement provision for Program 2 by saying that the enforcement provision violates the Spending Clause of the Constitution to take away funding from Program 1 if a state does not adopt Program 2.  However, enforcement for Program 1 is untouched by the decision and still stands (the enforcement provisions are in the Social Security Act S. 1936(c)).
Q: Are states still required to use the Modified Adjusted Gross Income (MAGI) standard to determine eligibility for Medicaid?
A: The three experts also believe that states are still required to use the MAGI standard to determine eligibility in both the existing, pre-ACA Medicaid program and the ACA’s Medicaid expansion program.  The MAGI requirement is an incremental change to the existing, pre-ACA Medicaid program. It is also a way to define eligibility for the ACA’s Medicaid expansion program (MAGI provisions are in ACA S. 2002).
Q: Can states expand to a smaller subset of the eligibility group, or is expansion up to 133 percent of FPL the only possibility?  Will states have the option to expand for some of the years or on their own timeframes?
A: It is unclear at this at this point whether states can expand Medicaid partially, for example to people at 100 percent of FPL, or whether a state could choose to implement after 2014, or only until the full federal funding expires. The Supreme Court’s decision does not change the Affordable Care Act’s provisions that describe the class of people or the levels of funding or the timing for the ACA’s Medicaid expansion. The Supreme Court decision does change HHS’s ability to enforce the Medicaid expansion by removing a state’s funding from the existing, pre-ACA Medicaid program.
Q: Can HHS clarify parts of the decision that may be unclear? Can states challenge HHS and will they be successful?
A: HHS will interpret the ACA and share guidance in the coming months. Legal precedent gives federal agencies substantial leeway to interpret federal laws. The Chevron v. NRDC case says that courts must defer to a federal agency’s interpretation of a statute, unless the interpretation is “arbitrary, capricious or manifestly contrary to the statute.” In the wake of the Supreme Court’s decision, HHS retains considerable discretion to interpret the statute.