Medicaid, Exchanges, and the Dynamics of Resistance to Obamacare

Joseph Fishkin

In the wake of NFIB v. Sebelius, Republican state governments face two policy choices regarding the implementation of the Affordable Care Act/Obamacare: whether to set up health insurance exchanges and whether to participate in the Medicaid expansion.  The first is easy.  Refusing to set up an exchange is probably [although see below] a low-cost form of symbolic resistance.  The Medicaid expansion is different: rejecting it involves leaving massive piles of federal money on the table—money that is intended to help politically powerless poor people, it’s true, but that would also be a huge and direct benefit to hospitals, which have considerable political clout.  A number of Republican governors have now come out forcefully against accepting the federal money for the Medicaid expansion.  But this is campaign season.  The real decisions won't be made until after November’s election.

As Jack argued in his piece in the Atlantic (and as I argued here), the importance of the Court’s decision in NFIB v. Sebelius is that it amounted to a judicial ratification of a significant change in the nation’s social policy.  Many people, including more or less the entire Republican party, continue to vehemently oppose this change.  But the Court’s decision has changed the terms of that opposition: the rhetoric has shifted from talk of unconstitutionality to talk of electoral vindication.  This post explores what that shift might mean for the possible endgame—the possible future consolidation of the new health policy regime that the Court’s decision has ratified—as we move closer to January 1, 2014.

The Medicaid expansion choice is in some respects analogous to the choices Republican state governments faced in 2009 about whether to accept federal money for stimulus projects.  In that case, after much bluster and posturing, most states that had threatened to turn down the money went ahead and took most if not all of it in the end.

But there are important differences.  Political opposition to Obamacare among Republicans has been deeper and more enduring than opposition to the stimulus measure.  The Medicaid expansion is central to the policy architecture of Obamacare in a way that individual stimulus projects were not central to the stimulus measure: stimulus funds refused by one state could be reallocated to other states, but the Medicaid expansion is simply the only way that most uninsured poor people—especially most poor adults without children—in each state* will have any hope of gaining medical coverage under Obamacare.  And that brings up another potentially very significant difference between the Medicaid expansion and the stimulus funds: the Medicaid expansion is, fundamentally, a program for poor people.  (In many respects, Obamacare is a remarkably redistributive piece of legislation.  The vast majority of its tax burden falls on the wealthy and the vast majority of its benefits go to the middle class and the poor.)

For all these reasons, there is a serious danger that Republican state officials will decide to turn down the money for the Medicaid expansion.  Obviously the Court’s Spending Clause holding makes this option much more viable: states can turn down the expansion and keep the federal funds for their existing, much smaller Medicaid programs.  After the decision came down, it didn’t take long for Florida Governor Rick Scott to put out a statement asserting that his state will turn down the money.

This morning, Texas Governor Rick Perry sent a similar letter to HHS decrying the Medicaid expansion, as well as the exchanges, as “brazen intrusions into the sovereignty of our state.”  The letter is quite a thing to behold.  It reads like a zombie press release from his dead presidential campaign. “I stand proudly with the growing chorus of governors who reject the PPACA power grab,” he writes.  “Thank God and our nation's founders that we have the right to do so.”  (Perry’s letter is not the last word; this is really a legislative decision, and it is one that can be made after November’s election, in a different political atmosphere.)

There is one important word that does not appear in Perry’s letter: “unconstitutional.”  To be sure, Perry’s letter is laced with language about sovereignty and states’ rights.  But he never comes out and says Obamacare is unconstitutional, which was by far the predominant argument Republicans made just weeks ago, before the Court’s decision came down.  The predominant argument then was about liberty, not federalism (although some, including certain Justices, argue that the two are closely linked).  But anyway it was the main line of attack and the main justification for states' resistance to implementing the law.  After the decision came down, Mitt Romney similarly pivoted on a dime, from talk of unconstitutionality to talk of repeal.

To a degree that is somewhat breathtaking when you think about it, the Supreme Court’s decision took all the wind out of the sails of the “it’s unconstitutional” argument.  It seems that in regard to these important questions of federalism, the taxing power, and so on, we live in a time of judicial super-supremacy, where the political and rhetorical space for saying “x is unconstitutional even though the Court just said it was constitutional” is quite limited.  Limited does not mean nonexistent; I’m sure many Republicans continue to assert that Obamacare is unconstitutional, whatever the Court decided.  But this is surprisingly weak ground to stand on in our current constitutional culture.

The stronger ground now for Republican resistance to Obamacare is to look to November’s election and argue that states need not and should not implement this law because when Romney is elected, he will repeal the law.

As an empirical matter, this factual premise is debatable: even assuming that Republicans win the Senate, House, and the White House in November, it would seem to require generous interpretations of the reconciliation rules, or, I suppose, implausible predictions of a massive Senate sweep, to imagine that Republicans could actually overcome the Senate Democratic filibuster of any complete-repeal bill.  (For the record: I’m not saying this is impossible.  A determined enough Republican party could fire the Senate parliamentarian again if they have to and jam almost anything through reconciliation.)  But when push comes to shove, some political constraints will also come into play and make total repeal unlikely.  While it’s easy to campaign against “Obamacare,” it will be more challenging politically for Republicans to unite around a statute that would end guaranteed issue and go back to the world of insurance denials based on pre-existing conditions.  (The Times reports that “some Republicans, facing re-election in swing districts, are openly suggesting that some measures should remain.”)  The moving parts of the law work together in a way that makes it difficult to repeal the mandate, which is unpopular, without also repealing guaranteed issue, which is popular.  Overall, total repeal is very unlikely.

But regardless of Republicans’ actual probability of repealing the law, it makes tactical sense today for Republicans to try to argue that Obamacare is still somehow on probation—that a further election is necessary to test the stability and permanence of this new regime.  This argument helps block the consolidation of the new regime.  It helps delay the point of no return, when the basic elements of Obamacare become a permanent part of our social order.

By focusing their arguments about Obamacare on November’s election, Republicans deepen the problems they will face if Obama wins.  An Obama victory then looks more like a ratification of the change this statute has wrought.  In fact, at that point, it’s not obvious what arrows opponents of Obamacare would have left in their quiver.  If you first set up the Court as the big contest in which Obamacare will be defeated constitutionally, you lose, and then you set up the November election as the big contest in which Obamacare will be defeated politically, and you lose again, for a lot of people it will look like the issue has been settled.

Even at that point states can, and some probably will, resist implementing the statute.  Republican governors may actually turn down the money for the Medicaid expansion, as utterly boneheaded a move as that is from a fiscal point of view (this is a program, remember, at least 90% of whose costs are paid for by the federal government even in the out-years).  Another somewhat more speculative strategy, previewed in the Times over the weekend, would be to try to argue that in Republican states that refuse to set up exchanges, where the federal government sets up the exchanges instead, the federal government cannot then provide the subsidies that otherwise would flow to middle-class taxpayers to help them buy the plans on the exchanges.

But if President Obama is re-elected, Republican governors pursuing either of these strategies will have some serious explaining to do.  Why exactly, their critics will ask, is it so important for the poor and middle-class people in our state not to have the insurance coverage that similarly situated folks in neighboring states have—when all of us are paying for this coverage anyway, through our federal taxes?  If we have to pay anyway, why shouldn’t we at least get the benefits we’re paying for?  Is this really in the best interests of our state?

In other words, now that Obamacare has been ratified by the Supreme Court, and especially if it is also ratified at the ballot box, moves by state-level Republicans to deny their citizens important benefits under the statute start to look more ideological, more political in the “low politics” sense.  No longer is it about refusing to implement an unconstitutional law.  Instead, it may start to sink in that certain state governments are choosing to deny their citizens medical coverage for no good reason beyond political opposition to President Obama.  My strong suspicion is that before things reach that stark point, some Republican state officials will quietly switch gears and take the money for the Medicaid expansion for their people.

On the other hand, if Obama loses in November, the meaning of his signature law will be thrown into considerable doubt.  Even absent complete “repeal,” a Romney HHS Secretary could do much to undermine the law, and an Obama loss would give new fuel to state governments’ own efforts to resist implementation.

Thus, both the Court’s decision and November’s election should be understood as key junctures on the path to the (potential) consolidation of a new health policy regime in the United States.  This is a place where high politics and low politics meet.  It may be true that fundamental questions about the shape of the American social order always end up in court.  But at the same time, the Court is not the last word.

And probably that is as it should be.  Far from being the Great Decider, the Court is one important actor here in a dynamic process of proposal, enactment, ratification, and consolidation of landmark statutory changes like Obamacare—a process very closely analogous to processes of constitutional change, if indeed it is not itself a kind of process of constitutional change.



*each state other than Massachusetts, of course.  In Massachusetts, some crazy socialist governor seems to have already put in place a system of universal coverage with a mandate, an insurance exchange, and a Medicaid expansion.
Posted 6:00 PM by Joseph Fishkin [link]