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Renee Parsons

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LBJ, Medicaid and the Supreme Court

Posted: 07/19/2012 2:36 pm

Mostly overlooked in the hoopla of the Supreme Court's recent validation of President Obama's Patient Protection and Affordable Care Act (ACA) and lost in whether the 'mandate' penalty is a tax or not a tax has been the Court's finding that a section of the Act's Medicaid expansion is "unconstitutional."

With twenty six States and the National Federation of Independent Business (NFIB) bringing suit against the individual mandate and the Medicaid expansion, the Act would expand Medicaid coverage to 17 million (out of 30 million uninsured citizens targeted by the Act) currently uninsured Americans living in poverty. It was Section 1396c that gave the Secretary of Health and Human Services the authority to withhold existing Medicaid payments to any State for failure to comply with the expansion that was directly challenged. While Medicaid has been voluntary since 1965 with no state refusing to participate, the goal of expansion has been to increase the scope of Medicaid, making citizens with an income up to $30,700 for a family of four eligible for health coverage.

In its decision, the Court ruled that while the Federal government may encourage participation in Medicaid expansion, it cannot threaten to withdraw existing Medicaid funds and penalize States for refusing to expand the program. At issue is whether the Congress has the authority, under the Spending Clause of the Constitution (Article I, Section 8, clause 1) which requires the Federal government to "provide for the general welfare" or whether the expansion requirement was, as Chief Justice Roberts declared in a precedent-setting opinion, "impermissibly coercive."

Earlier, the Court of Appeals for the Eleventh Circuit upheld the expansion of Medicaid in its entirety as a "valid exercise of Congress' spending power." The Obama Administration had argued that the expansion was merely a modification of the existing Medicaid program.

Little noticed and buried within the Court's decision was Chief Justice Roberts' opinion which may constitute the real objection to the Medicaid expansion that "Under the Affordable Care Act, Medicaid is transformed into a program to meet the healthcare needs of the entire non-elderly population with income below 133% of the poverty level" as it provides "an element of a comprehensive national plan to provide universal health insurance coverage." So according to the Chief Justice's interpretation, the Medicaid expansion would provide health insurance coverage to too many Americans.

So here's where it get tricky -- while the majority of the Court agreed in a 7-2 vote (with Sotomayor and Ginsburg dissenting) that Congress does not have the authority to expand Medicaid as cited above, the bottom line is that, in a 5-4 opinion, Court liberals (Ginsburg, Sotomayor, Breyer, Kagan) voted with the Chief Justice to severe the penalty of depriving the States of all their Medicaid funding from the Act while retaining the remainder of the Medicaid expansion. In other words, the States would be allowed to 'opt out' of the Medicaid expansion; thereby losing the benefit of Federal funding for the expansion. Justices (Thomas, Scalia, Alito and Kennedy) in the minority voted to entirely eliminate the Medicaid expansion thus deprive 17 million Americans an opportunity for health insurance.

While the Chief Justice was the unexpected swing vote, no doubt mindful of how the "Roberts Court" would be historically viewed, and without first hand confirmation from knowledgeable Court insiders, speculation continues on whether Kagan and Breyer had politically strategic reasons for voting with Roberts in order to at least preserve the core of the Medicaid expansion -- perhaps in the hopes that no rational Governor would reject Federal money for its neediest citizens. Conceivably, if the Chief Justice had been left on his own regarding Section 1396C, the hard-core Justices would have swooped him up and could have prevailed in totally eliminating Medicaid from the Act.

Only time and a candid memoir will provide the necessary details on the inner workings of the Court during their consideration of the Act describing the dynamic between the Justices that influenced the final outcome. Clearly, the stage is set for future Court action to complete what they started on Medicaid and/or to target Federal funding for other social safety net programs down the road. In what might fall under the category of a hindsight is always easier, a valid question might be whether any legal beagle in the Obama Administration considered the long-term legal implications of requiring State participation since Medicaid has always been a strictly voluntary program?

Despite Medicaid cost-sharing providing the largest source of Federal revenue to the States and the Federal government's willingness to provide 100% of the funds to cover the cost of expansion for the first three years at $258 billion, picking up a $931 billion tab between 2014-2022 with the State's share at $73 billion (7%) over the same period, ultra-conservative Republican Governors who, presumably have not yet done the math, have announced that they will refuse expansion of the program. The question is whether these Governors will deprive local hospitals and health clinics of desperately needed Federal funds with states like Louisiana potentially losing up to $8.9 billion in Federal money and Texas potentially losing $100 billion due to what Governor Perry refers to as "massive government intrusion."

With matching Federal funds determined on a per capita basis, Medicaid is a means-tested program with each State determining its own rules and eligibility requirements as it provides a broader range of health services than Medicare such as dental care -- despite a woeful lack of participation by dentists. Medicaid covers almost 60 million low income Americans, 29 million of which are children, as well as 60% of all nursing home residents, 37% of all childbirths, qualifying seniors and disabled citizens. In 2009, Federal outlay for Medicaid to the states was $216 billion, approximately 10% of the State's budget.

Even prior to the recent Supreme Court decision, the perception that Medicaid offers a reliable solid safety net is far from the reality. Thanks for Congressional budget cuts and State "reforms" over the years, Medicaid is not a universal health care program for all indigent citizens and while parents of Medicaid children may be covered at 1997 welfare levels, thousands of parents are denied health services. Prior to the ACA, parents with a qualifying child in Alabama, Arkansas, Indiana, Louisiana or Texas with an income of $4,850 a year actually earn too much to qualify for Medicaid. In some states, there is no Medicaid available for those with no personal income. Even with the new ACA, it is anticipated that more than half of the newly insured will earn less than 133% of the poverty line with the poor still a significant percent of the uninsured.

The evolution of providing health care for 20th century Americans has been a long, arduous and difficult road as the Republican party (with few exceptions in the 1970's) have consistently resisted a Federal role in providing solutions to social problems as unconstitutional. After the devastation of the Depression and the demands of World War II, an exhausted country, looked for political leadership to respond to the needs of the People. Activist presidents who followed FDR understood the Federal Government's legitimate role to serve the American people with a coordinated set of ideals, presidents who were advocates of addressing social problems as a Constitutional and moral responsibility.

In 1945, seven months after taking office, President Harry Truman proposed a comprehensive national health care program describing the lack of health care professionals in rural and low income areas as an "urgent need' and citing that 40% of all counties in the country had no hospital. Truman's plan would have included federal funds for construction of public hospitals and a national health insurance fund with optional participation that would charge a monthly fee with the Federal government picking up the tab for medical services by participating doctors. Citing that the "health of American children, like education, should be recognized as a definite public responsibility," Truman's plan was opposed by the Republican party that raised fears of communism and 'socialized medicine' accusing Truman staffers as 'followers of the Moscow line" with the AMA threatening a national boycott of doctors.

It was not until the landslide election of President Lyndon Johnson and a Democratic Congress in 1964 that a national health insurance program being planned by JFK moved forward. Growing up along the Pedernales River, Johnson's political consciousness was shaped by a reform-minded grandfather, a 'civil libertarian' father who served five terms in the state legislature and a pervasive poverty that permeated the desolate rural Texas hill country.

Elected to the House of Representatives in 1937 on a New Deal platform, Johnson became a protégé of FDR and, in what became typical Johnson style, finagled and persisted in bringing rural electrification to his District fully aware of forever improving the lives of his constituents. He was elected to the Senate in 1949, was chosen Senate Majority Whip in 1951, became Minority Leader in 1953 as Democrats lost the majority and finally became, what some historians believe, was the century's most powerful Majority Leader in 1954.

Despite an imperfect, complex nature of personal contradictions, Johnson was capable of great compassion when it came to the country's neediest citizens. When signing the Higher Education Act of 1965 which offered financial aid to students, Johnson recalled his tenure as a teacher in 1927 in Cotulla, Texas. Deeply affected by Hispanic students that came to school hungry and dressed in rags, the experience influenced the President that Johnson would become as he recalled, "I shall never forget the faces of the boys and the girls ... and I remember even yet the pain of realizing ...that college was closed to practically every one of those children because they were too poor. And I think it was then that I made up my mind that this nation could never rest while the door to knowledge remained closed to any American."

In 1964, Congress adopted the Economic Opportunity Act of 1964 which contained many elements of Johnson's Great Society with its war on poverty creating innovative programs like Head Start, Job Corps, Neighborhood Youth Corp, VISTA (Volunteers in Service to America), Model Cities Program, Upward Bound, Community Action programs, food stamps, Work Study, increased Social Security benefits, Medicare and Medicaid in addition to the Civil Rights Act of 1964, the Voting Rights Act of 1965 and the Civil Rights Act of 1968 which included the Fair Housing Act and extended constitutional rights to Native American reservations in addition to the Immigration Act of 1965 which eliminated national origin quotas. There is a general agreement among many Presidential historians that if not for the tragedy of the Vietnam war, LBJ would be considered as the truly great American president.

Modeled after Truman's 1945 proposal, the Social Security Act of 1965 created Medicare with Title XIX establishing Medicaid for low income citizens who were not yet 65 years of age. With Johnson aware that the AMA could have its doctors boycott participation, a face to face meeting with Dr. James Appel, President of the AMA and other opponents of the Act was scheduled. One version of the meeting tells of its beginning with tense small talk as Johnson stood and sat down several times, signaling the AMA members to also stand in recognition of when the president stood, everyone stood. By the end of that meeting, Johnson had asserted his authority so thoroughly that the AMA agreed to participate in a rotation program for American doctors to serve the civilian population in Vietnam.

At the conclusion of the meeting, Johnson steered Dr. Appel to the waiting press for an impromptu press conference heaping praise on the AMA with the assertion that the group would never, as loyal Americans, subvert the 'law of the land' to which Dr. Appel could only agree that the AMA would obey the law. Several weeks later, the AMA officially endorsed Medicare and Medicaid with Hollywood actor Ronald Reagan warning that government-run health care would 'invade every area of freedom.' (See Indomitable Will by Mark Updegrove and Flawed Giant by Robert Dallek.)

The Act became law on July 30, 1965 as Johnson moved the bill signing ceremony to the Truman Library in Independence Missouri in recognition of the 'real daddy' of Medicare. As former President Truman and his wife Bess became the country's first Medicare enrollees, issuing them the first Medicare cards, Johnson reminded the country that it was "Harry Truman who planted the seeds of compassion and duty which have today flowered into care for the sick and serenity for the fearful."

On the afternoon of January 20, 1973, after having been inaugurated for a second term, President Richard Nixon announced the beginning of what would become decades of Republican efforts to dismantle FDR's New Deal and LBJ's Great Society. The next afternoon, Lyndon Johnson died of a heart attack.

 
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