Medicaid's Roach Motel Coming to Michigan?

Once we get in, we'll never get out

If Michigan Republicans capitulate to special interests and accept the Obamacare Medicaid expansion, they’re likely to make a big deal about a supposed “opt-out” clause in the instrument of surrender, declaring the state can bail at some future time if certain promises and expectations don’t come true.

Don’t bet on it.

Although as many as half the states may ultimately refuse the expansion, this year has seen some high-profile GOP defections, beginning with Ohio Gov. John Kasich in March. Gov. Kasich also used the “we can always escape” line, citing a memo from a Columbus law firm. On March 15 the Wall Street Journal deconstructed the argument, and it’s worth reviewing some what they said:

…These supposed sunset clauses are really a roach motel. Once states check into new Medicaid, the almost certain legal reality is that they can never check out.

The Affordable Care Act mandated that states convert this joint state-federal program into a new, larger and far more expensive project in perpetuity. Democrats did not include any provision or opt-out clause that would let states leave new Medicaid in the future or revert to Medicaid in its old form. Democrats even wrote the bill so that if states failed to join new Medicaid, they would lose every federal Medicaid dollar, including the ones for the old program.

The Supreme Court said this coercion was unconstitutional. But unfortunately for Mr. Kasich and his fellow flippers, Chief Justice John Roberts and six of his colleagues did not stipulate a right to leave Medicaid at any time when they rewrote ObamaCare. They merely ruled that the threat to take away all federal funding if states did not join new Medicaid violated the Constitution's separation of powers.

New Medicaid is "a shift in kind, not merely degree," Chief Justice Roberts wrote. The High Court's precedents say Congress can attach conditions to federal funds, akin to a contract, but Congress cannot use the spending power to force states to sign it. So while Congress can't commandeer the states to do its bidding, it can offer them more or less any bargain it likes and states have the choice to voluntarily accept the terms or not. In the case of new Medicaid, the states can now freely take the contract as originally offered: accede to the new program, the free money and the lack of an opt-out clause.

…But there's no evidence in the original law or the Supreme Court opinion that states can join or leave at their own whim. The logic of Justice Roberts's opinion suggests that once states adopt new Medicaid, the program immediately becomes the old program for the purposes of the law and then states can't leave.

…(The memo Kasich relied on) also cites "guidance" from the federal Health and Human Services Department that states "may decide later to drop the coverage." But these informal documents on the HHS website lack the force of law or even of regulation; they aren't part of the Federal Register. In any case, HHS doesn't have such authority. Congress didn't grant the Administration any more statutory leeway than it did the states.

We wouldn't be surprised if HHS is promising flexibility now only to revoke it later as a deliberate bait and switch. That wouldn't be any more deceptive than Mr. Kasich's legal claims. Republicans tempted to sign up for ObamaCare's Medicaid expansion had better think twice because once they do, the likelihood is they're ceding control forever.