AK: the legal basis for and against Medicaid expansion

The legality of Governor Bill Walker’s unilateral expansion of Medicaid has come into question recently. Initially, those opposed to expansion decried the Governor’s disregard for the legislative process, but seemed to concede the executive authority to expand Medicaid on his own. Since then, arguments have emerged on whether or not the Governor’s actions are backed by legal authority.

Representative Bill Hawker (R-Anchorage) commented that the Governor is operating in a “grey area” and may not be taking into account the Supreme Court’s 2012 ruling in NFIB v. Sebelius. Governor Walker contends that previous Alaska governors have made similar strategic moves on seven separate occasions.

The Governor’s Authority

Alaska Statute (AS) 37.07.080(h) states:

(h) The increase of an appropriation item based on additional federal or other program receipts not specifically appropriated by the full legislature may be expended in accordance with the following procedures:
(1) the governor shall submit a revised program to the Legislative Budget and Audit Committee for review;
(2) 45 days shall elapse before commencement of expenditures under the revised program unless the Legislative Budget and Audit Committee earlier recommends that the state take part in the federally or otherwise funded activity;
(3) should the Legislative Budget and Audit Committee recommend within the 45-day period that the state not initiate the additional activity, the governor shall again review the revised program and if the governor determines to authorize the expenditure, the governor shall provide the Legislative Budget and Audit Committee with a statement of the governor’s reasons before commencement of expenditures under the revised program.

This is the legal justification the Governor is using to move forward with Medicaid expansion unilaterally. This justification hinges on two assumptions being true:

  1. Expanding Medicaid is not a new program but a revision of the current Medicaid program in Alaska
  2. Medicaid expansion is mandatory, not voluntary

Alaska’s Legislative Legal Services (LLS) seems to think that this is a valid justification for the Governor’s actions, with the caveat that only a judicial ruling will provide a clear answer.

Opposition Argument: Expansion is not mandatory

The Governor’s justification has begun to come under fire because of the assertion that expansion is mandatory. Senate Majority Leader Tom Coghill (R-North Poll) has joined Rep. Hawker in his concerns over the Governor’s action. In his argument, Sen. Coghill cites AS 47.07.020(a), which states:

All residents of the state for whom the Social Security Act requires Medicaid coverage are eligible to receive medical assistance under 42 U.S.C. 1396-1396p (Title XIX, Social Security Act).

Under the current federal statute governing the ACA, this state law may be interpreted as affirmation of the justification that Medicaid expansion is mandatory. However, Sen. Coghill references the NFIB v. Sebelius ruling, stating that the Court clearly states that Medicaid expansion is optional for states. If this is the case, expansion requires legislative approval in Alaska. In addition, Coghill rejects the claim that expansion is a revision to an existing program. Since expansion allows childless adults earning less than 138 percent of the federal poverty line to be eligible for Medicaid, the argument is that this constitutes a new program. Concerning the state’s Medicaid program, AS 47.07.020(d) states:

Additional groups may not be added unless approved by the legislature.

As Rep. Hawker and LLS have previously stated, a court ruling will likely be necessary in order to determine which parts of the argument prevail.

What NFIB v. Sebelius says

Optional vs. mandatory

The intent of the ruling in NFIB v. Sebelius was to give states a “genuine choice” in whether or not to expand Medicaid. However,  the Court’s ruling does not appear to overturn the language in the ACA that made expansion mandatory for states, it only overturned the federal government’s ability to withhold Medicaid funding if states did not expand. This would appear to maintain the federal government’s ability to mandate expansion, but restrict its ability to penalize those states that do not expand. Chief Justice John Roberts’ opinion stated:

The constitutional violation is fully remedied by precluding the Secretary [of Health and Human Services] from…[withholding] existing Medicaid funds for failure to comply with the requirements set out in the expansion.

Under federal law, the expansion population remains mandatory under 42 U.S.C. 1396a(10)(VIII):

A State plan for medical assistance must provide all individuals… who are under 65 years of age, not pregnant, not entitled to, or enrolled for, benefits under part A of subchapter XVIII, or enrolled for benefits under part B of subchapter XVIII, and are not described in a previous subclause of this clause, and whose income…does not exceed 133 percent of the poverty line applicable to a family of the size involved, subject to subsection (k)

Under current federal statute, Medicaid expansion is a mandate that the government cannot enforce due to the NFIB ruling, but can incentivize through additional federal funding.

Expansion as a new program

The Court was much clearer on whether or not Medicaid expansion constitutes a new program or an amendment of an existing one, stating:

Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level. It is no longer a program to care for the neediest among us, but rather an element of comprehensive national plan to provide universal health insurance coverage.

Potential legal action

There appears to be an opportunity for a legal challenge to the Governor’s action. A strict reading of state and federal statutes may favor the Governor, but the intent of the Supreme Court’s ruling in NFIB v. Sebelius raises valid questions regarding the realities of expanding Medicaid.

Engage directly with health care leaders and policy makers on this and other important issues at the 2015 Alaska State of Reform Health Policy Conference on October 8th.