Health Care Battle Moves to Florida

Lawsuit challenging Medicaid expansion, individual mandate, poses challenges.

ByABC News
December 15, 2010, 6:17 PM

Dec. 16, 2010— -- A federal judge in Florida today heard oral arguments in a lawsuit challenging the constitutionality of the individual mandate in the new health care law and the expansion of Medicaid.

The proceedings come just days after a Virginia judge dealt a resounding blow to the Obama administration. He ruled that the federal government is overstepping its constitutional boundaries by requiring Americans to carry health insurance by 2014.

What sets the Florida case apart, though, is that it's brought on behalf of 20 states and is the first court challenge against Medicaid expansion.

The new law's requirement that Medicaid be expanded to cover Americans whose incomes are at or below 133 percent of the federal poverty level (about $14,000 in 2010 for a person living alone) has triggered a flurry of protests from some states.

Arizona's incoming state Senate president has rejected billions in federal help. Republican lawmakers in Texas recently threatened to eliminate Medicaid altogether because of rising costs. And incoming Florida Gov. Rick Scott has called the health care law the "biggest job killer in the history of this country."

The 20 states that are part of the lawsuit in Florida argue that Medicaid expansion will further burden their already crumbling budgets. But the federal government is supposed to pick up much of the tab, paying $443.5 billion -- or 95.4 percent of the total cost -- between 2014 and 2019, according to an analysis by the non-partisan Kaiser Family Foundation. The states would contribute $21.2 billion, Kaiser said.

Under the new law, Medicaid enrollment will climb by 15.9 million more people by 2019 than it otherwise would have, and the number of uninsured will fall by more than 11 million.

Supporters say the expansion is desperately needed because the current income threshold is dismally low.

In 43 states, dependents who don't have any children are ineligible for Medicaid even if they don't have any source of income. In Florida -- the battleground for this case -- if an individual's annual income is above $9,074, they cannot apply for Medicaid, an eligibility standard that health reform supporters say is dismal.

"For the states to complain that this is a real problem for them is somewhat ridiculous because remember, when you get all these people newly into health care coverage, the states' other expenses like providing charity care and those kinds of things, those things come down," said Ron Pollack, executive director of non-profit Families USA.

The Florida case will also once again shed a spotlight on the individual mandate -- the requirement that everyone get medical insurance -- that has brought much criticism from states.

"The act would leave more constitutional damage in its wake than any other statute in our history," David Rivkin, the lawyer representing the 20 states in the Florida lawsuit, said today.

That issue is ultimately expected to end up in the Supreme Court, but at a time when the Obama administration is working vigorously to roll out the new plan, it creates more uncertainty and challenges.

Eleven similar cases were dismissed and two federal judges in Virginia and Michigan ruled in favor of the administration when faced with a similar case. But, like Virginia's U.S. District Judge Henry E. Hudson, Florida U.S. District Judge Roger Vinson has expressed some skepticism of the administration's position.

Vinson was appointed by Republican president Ronald Reagan.

The 20 states in the lawsuit include Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Indiana, Idaho, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

The individual mandate is a central feature of the new health care law. Its proponents argued that the mandate was necessary to prevent people from exploiting the system and only buying insurance when they had to, thus making health care more costly across the board.