Michael F. Cannon

Unfortunately for supporters of President Obama’s health law, the Supreme Court ruling does nothing to validate or lend the law legitimacy. Half of the ruling was a clear defeat for “Obamacare.” And the portion that supporters are hailing as a victory will prove hollow.

The court invalidated a key part of the Obama health law designed to expand health insurance coverage. Each state has a Medicaid program that provides health insurance to the poor (among others). Federal grants to states cover 56 percent of overall Medicaid spending. That comes to an average 12 percent of a state’s entire budget.

The Obama health law threatened to withhold the federal share of Medicaid funding — which amounts to hundreds of billions of dollars over a 10-year period — unless states dramatically expanded their programs. A Cato Institute colleague estimates that, for example, this mandate would cost New Jersey taxpayers $35 billion and New Yorkers $52 billion over the next 10 years. This mandate was so expensive that 26 states sued to block it.

Michael F. Cannon is director of health policy studies at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Health Care and How to Free It.

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The Supreme Court agreed. Though the particulars of the ruling will take some time to sort out, the court told states they can refuse to expand their Medicaid programs without sacrificing their existing Medicaid funding. It is difficult to interpret that holding as anything but a defeat for the Obama health law.

And while supporters hail the court’s refusal to strike down the law’s “individual mandate” requiring Americans to purchase a private health insurance plan, it is not the case that the court affirmed that mandate as constitutional.

Michael F. Cannon

Michael F. Cannon is the Cato Institute's director of health policy studies.
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