Power struggle: the Supreme Court's recent term focused on whether the Constitution limits federal authority and power.

• Author: Savage, David G.
• Position: SUPREME COURT

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The Supreme Court's decision upholding the constitutionality of President Barack Obama's health care law made headlines this summer. But for states, its ruling allowing them to opt out of the Medicaid expansion is likely to have the biggest impact over the months and years ahead.

For the first time ever, the high court struck down a federal spending law on the grounds that the federal money was being used as a club to force states to comply with Washington, D.C.'s, wishes.

"In this case, the financial inducement Congress has chosen [for expanding Medicaid coverage] is much more than relatively mild encouragement. It is a gun to the head," said Chief Justice John G. Roberts Jr.

The major theme of the court's term concerned the power of the federal government and whether the Constitution limits federal authority. On that score, the result was mixed.

The justices, by a 5-4 vote, said Congress cannot use its power to "regulate commerce" as the basis for requiring all Americans to have health insurance. At the same time, however, a separate 5-4 majority agreed Congress does have the power to impose a tax penalty on those who can afford insurance, but choose not to buy it.

On the immigration front, the court said federal authorities had "broad discretion" to enforce, or not, laws against illegal immigrants. The decision in Arizona v. United States blocked three key parts of the state's law from taking effect.

Medicaid Expansion

The high court's Medicaid decision was most important because of the huge sums of money at stake and its potential effect on other federal spending programs. Since the 1930s, the federal government has steadily increased grant money and extended its grip over state and local governments. "As of 2010, federal outlays to state and local governments came to over $608 billion, or 37.5 percent of state and local expenditures," the dissenters in the health care case noted.

The money, of course, has come with strings attached in the form of rules and regulations. Grumbling aside, practically no one before this year had considered these regulations unconstitutional. The golden rule of government has long been, "He who has the gold makes the rules."

When a group of state attorneys general, led by Florida's Bill McCollum, sued to challenge the Affordable Care Act, they targeted the Medicaid expansion. Before 2010, Medicaid had long been "the largest federal program of grants to the states," the justices noted, with states in turn devoting "a larger percentage of their budgets to Medicaid than to any other item."

The federal law seeks near-universal health care coverage and expands government-paid insurance for the poor to achieve it. The law required states to expand Medicaid by 2014 to cover everyone under age 65 with incomes below 133 percent of the federal poverty line, which would have added an estimated 17 million people.

"There is no doubt," said Chief Justice Roberts, that the law "dramatically increases state obligations under Medicaid .... It is no longer a program to care for the neediest among us, but rather an element of a comprehensive national plan to provide for universal health insurance coverage."

The administration's lawyers argued that the federal government would be paying 100 percent of the cost of...