How the Obama administration made it possible to gut Medicaid

The American Health Care Act — as passed by the U.S. House — and President Trump’s proposed budget combined assume $1.45 trillion in Medicaid cuts. Such cuts would both erase the Medicaid expansion that occurred under the Affordable Care Act and devastate Medicaid care.

The prospect of such cuts is terrifying to beneficiaries and care providers alike, and a focal point of progressive criticism. Yet it is worthwhile to note that it was the Obama administration that effectively removed all obstacles to such cuts in a little-noticed U.S. Supreme Court case.

{mosads}Medicaid is a federal-state partnership dating back to 1965, in which the federal government matches state contributions based on a formula that accounts for per capita state incomes.

Prior to 2015, private parties could sue to enforce the Medicaid Act’s requirement that state “payments are con­sistent with efficiency, economy, and quality of care” — which had been interpreted to require those payments bore some reasonable relationship to Medicaid care costs.  That changed with a case centering upon the adequacy of Idaho Medicaid rates. There, in Armstrong vs. Exceptional Child Center, the Obama administration sided with Idaho and argued before the U.S. Supreme Court that no private right-of-action should exist.

The court, in a 5-4 decision, agreed. Under the court’s decision, only the secretary of the Department of Health and Human Services may determine whether state Medicaid rates are adequate or not — and then only disapprove them by employing the drastic, and improbable, remedy of withholding federal matching funds.

In making its argument before the court, the Obama administration was opposed by disabilities’ advocates, medical provider groups and even Democrats in Congress. A brief for the American Association of People with Disabilities demonstrated what was at stake: “Before the injunction in this case, Idaho had not changed its payment rates for home- and community-based services since 2006, even though the state itself recommended that rates be increased substantially and the federal Center for Medicaid and Medicare Services approved that increase.”  It was only after the injunction that the state was forced to pay adequate rates — an additional $12 million in 2013 alone.

As the American Hospital Association argued, “States are balancing their budgets on the backs of the providers that care for the neediest Americans.” And what redress would exist absent private enforcement? The American Civil Liberties Union noted that, if private parties were denied access to the courts to enforce the adequacy of Medicaid payments, “both political considerations and procedural hurdles make withdrawal of federal funding an illusory remedy.”

Perhaps most tellingly — attorneys representing congressional Democrats, including then-Senate Majority Leader Harry Reid (D-Nev.) and House Democratic Leader Nancy Pelosi (D-Calif.), argued in their brief that “the approach suggested by Idaho and the Solicitor General would upend centuries of settled understanding and would undermine the effectiveness of Medicaid.” 

They noted that the states themselves “are not the intended beneficiaries of Medicaid.” Instead, “Medicaid’s purpose is to ensure that poor and developmentally disabled people have access to basic medical care by guaranteeing payment to medical providers who serve these vulnerable populations. And when a state fails to live up to its responsibilities to these beneficiaries, Congress intended to preserve the private cause of action for injunctive relief.”

These logical arguments did not move the court, where the late Justice Antonin Scalia, inferring a hidden congressional intent deviating from what these congressional leaders argued, wrote a majority referring to the statutory language at issue as “judicially un-administrable” despite longstanding judicial practice to the contrary. His opinion received a concurrence from Justice Stephen Breyer, an ostensible liberal, who rhapsodized about the infallibility of administrative oversight.

It’s poignant that an amicus brief urging this ruling was filed by Greg Abbott, then the Texas attorney general. Since becoming governor, Abbott has presided over huge Medicaid cuts, including, (not unlike the facts in the Idaho case) cuts devastating for special needs children — $350 million alone for therapy for roughly 60,000 kids. It has driven many therapy providers out of Medicaid care.

We face a future in which the federal commitment to the half-century-old Medicaid program may be effectively eviscerated, making inadequate state payments even more parsimonious. We can — quoting The Police — thank the Obama administration for effectively conferring upon Trump’s health secretary, Tom Price, the title of “King of Pain.”  

Brendan Williams is the president/CEO of the New Hampshire Health Care Association, which represents 90 long-term care facilities. Williams is also an attorney, former Washington state deputy insurance commissioner and former Washington state representative. 

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