Judicial Challenge to MOE Likely to Be Less Relevant than Congressional Challenge

A lawsuit filed Tuesday by the State of Maine could have very significant implications in Wisconsin and many other states if the courts strike down the portion of the Affordable Care Act (ACA) requiring states to maintain their current levels of Medicaid coverage for children and low-income adults. However, most nonpartisan Medicaid experts think it’s unlikely that Maine will prevail, in which case decisions made by the next Congress and President will be more important in determining whether states are authorized to cut hundreds of thousands of people from Medicaid coverage.

Wisconsin’s DHS Secretary, Dennis Smith, has suggested that the Supreme Court ruling on the ACA invalidates the law’s “maintenance of effort” (MOE) requirements. The Maine lawsuit will put that argument to the test. 

The issue is a very important one in Wisconsin because DHS proposed changes to BadgerCare that the department estimated would result in more than 64,000 people losing their coverage – including more than 29,000 children.  After federal officials said the original plans would have violated the MOE requirements, DHS revised its plans and won approval of scaled-back changes that are expected to cause roughly 17,000 adults  to lose their BadgerCare coverage.If the MOE requirements are struck down, either by the courts or by act of Congress, DHS could resubmit its initial Badger Care proposal (or even greater reductions in eligibility) and federal officials couldn’t reject those plans. Maine argues that the courts should invalidate the MOE requirements because the ACA authorizes federal officials to withhold all of a state’s Medicaid funding for not maintaining coverage, which is the same maximum penalty the ACA authorized and the court struck down for failing to expand coverage. (You can access the full text of the Maine lawsuit through a Washington Post blog.)

I haven’t read everything written on the topic, but in a wide variety of material that I’ve studied, nonpartisan Medicaid experts – including the Congressional Research Service (CRS) – have concluded with confidence that the ACA ruling does not overturn the MOE standards. A recent Kaiser Family Foundation synopsis of Medicaid-related provisions of the ACA reinforces that conclusion and summarizes the reasoning (on page 2, question #4).  Although I agree with the Kaiser summary, predicting what courts will do is never a sure thing. 

While Maine is trying to move quickly to implement cuts in eligibility that seem to violate MOE requirements, Wisconsin is sticking for now with its amended plans, which were approved by federal officials in late April.  There’s a chance that the DHS budget proposal for the 2013-15 biennium, which needs to be submitted to the Dept. of Administration by September 17, could reveal plans for a new round of cuts to BadgerCare; however, I’ll be surprised if they make any such proposals in the next two months.  BadgerCare is an extremely popular program, and I doubt that executive branch officials want to make it a higher profile issue in the fall campaigns.

Yet regardless of whether BadgerCare is debated much in the next couple of months, its future dimensions will be influenced greatly by the outcome of the November elections. Court rulings on the MOE requirements might be important, but the matter of whether DHS makes BadgerCare cuts like the ones proposed last fall will probably depend on whether the next Congress and President repeal MOE requirements and turn Medicaid into a block grant.

Jon Peacock