By James Vicini
WASHINGTON (Reuters) - Administration attorneys defended on Friday the part of President Barack Obama's healthcare law that expands the Medicaid program for the poor and disabled and said Congress has the power to set the terms under which it will disburse funds to the states.
In a written brief filed with the U.S. Supreme Court, the attorneys disagreed with the argument by 26 states that have challenged the law that the Medicaid expansion was unprecedented and will impose a significant, onerous financial burden on the states.
The states had said that by threatening a loss of federal funds, Congress unconstitutionally coerced them into expanding their Medicaid programs. The states said they have no real alternative but to keep participating in Medicaid.
But administration attorneys disagreed and defended the provision that extends eligibility for Medicaid to certain individuals with income up to 133 percent of the federal poverty level, beginning in 2014.
Previously, states did not have to observe a baseline income level for eligibility. The expansion could assure coverage for an estimated 17 million uninsured Americans by 2021.
The administration attorneys said the federal government will bear nearly the entire cost of medical assistance for individuals made newly eligible under the law.
From 2014 through 2016, the federal government will pay 100 percent of the costs associated with the expanded eligibility, but that gradually decreases. In 2020 and later years, the federal government will pay 90 percent of the costs.
The attorneys said the states are free to turn down federal Medicaid funds if they view the program conditions as too burdensome or contrary to their interests.
"It is well settled that Congress's spending power includes the power to fix the terms on which it will disburse funds to the states," Solicitor General Donald Verrilli wrote. "Congress has broad authority to attach conditions to federal spending in order to further policy objectives."
A federal judge and a U.S. appeals court ruled against the states. The administration urged the Supreme Court to uphold the appeals court's ruling.
The Supreme Court has scheduled three days of oral arguments in the legal battle over the healthcare law for March 26-28, with an election-year ruling expected by the end of June.
The Supreme Court cases are National Federation of Independent Business v. Sebelius, No. 11-393; U.S. Department of Health and Human Services v. Florida, No. 11-398; and Florida v. Department of Health and Human Services, No. 11-400.
(Reporting By James Vicini; Editing by Philip Barbara)