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Supreme Court Just Getting Started on Health Care Rulings

Last week’s ruling in the Supreme Court on the Affordable Care Act has been framed as an end to all the uncertainty about the law. As we’re seeing with the Medicaid expansion, that’s not true. But it’s not even true in a legal context. As Jennifer Habenkorn points out, there are several other challenges to the law, on discrete parts rather than the entire thing, working their way through the courts.

The next wave of lawsuits likely wouldn’t put the whole law at stake, as the challenge to the individual mandate could have. But they’re going after pieces of the law that happen to be red meat for many conservative voters — like the law’s contraception mandate and a new Medicare panel that Republicans call a “rationing board.”

And one possible legal challenge, which would try to block the feds from offering subsidies in a federal health insurance exchange, is meant to exploit a loophole in the law. But it could also be a good “messaging hit” — allowing them to attack the subsidies they see as a budget-busting new entitlement.

Setting aside the “messaging hit,” this is a serious problem. The courts could rule that, while the federal government can take over the exchanges from states which decide not to enact them, they cannot deliver subsidies on a federal exchange. There is no specific authorization for subsidies in a federal exchange in the law, although the federal exchanges are just backstops for states that don’t provide their own. The Administration allowed the tax subsidies when they wrote the regulation for the reversion to federal exchanges, but opponents could argue to the courts that this regulation misread the law. A ruling in favor of the opponents would mean that states resisting implementation of Obamacare would not only subject their poor residents to ineligibility for Medicaid, but they would stop anyone in their state from receiving subsidies for the exchanges. This seems like a tiny loophole to exploit, but considering that four Justices wanted to take down the entire law as unconstitutional because of Commerce clause questions about the individual mandate, it’s definitely worth some awareness.

Meanwhile, the biggest implications from the ruling could come outside the health care space:

Chief Justice John Roberts’s surprise opinion, which allows states to opt out of the law’s Medicaid expansion, could set up a series of legal showdowns between states and the federal government over the strings attached to billions of dollars in federal grants for everything from transportation to education and the environment.

It’ll take many years — and many lawsuits — before the full effects of Roberts’s health care ruling are sorted out. Still, legal experts on both the right and the left agree that the door is now open for states to challenge everything from the Clean Air Act to No Child Left Behind and anti-discrimination protections.

“When you’ve got 50 different states and possibilities of 50 different objections to something that Congress does, I think it’s very hard to be very specific, but I think this decision is going to embolden states to challenge federal mandates,” Sen. Chuck Grassley (R-Iowa) said in an interview.

I think the problem could come about when the feds try to add on new regulations and condition them to existing state-federal partnerships. For example, a new regulation that’s part of the acceptance of existing highway funds could be seen as unnecessarily coercive, like the Medicaid expansion was. But again, you have a court that could take the thin crack in federal mandates made by the health care ruling, and widen it. Remember that they got 7 votes on the court for the Medicaid ruling.

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David Dayen

David Dayen