Politico (01/10/12) Haberkorn, Jennifer

Twenty-six states have asked the U.S. Supreme Court to overturn the health care reform law’s mandatory state expansion of the Medicaid program, an issue in the health care reform lawsuit that could determine how much leverage the federal government has with the states on any issue. Attorney Paul Clement, who is representing the states, said in a brief, “While some individuals are exempt from the penalties designed to enforce the mandate, no state is exempt from the massive penalty—the loss of the entirety of funding under the single largest grant-in-aid programs for the states—and so Congress did not even contemplate the possibility of a state opting out of Medicaid.”

The expansion of Medicaid under the reform law is one of four issues being targeted by states, but if the Supreme Court agrees with the states, it could limit the federal government’s power to use money as an incentive for the states to act on any issue. The states have said that expanding Medicaid is “an illegal commandeering of states’ autonomy” because it ties all federal funding for the program to the expansion, which amounts to coercion.