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Why the Obamacare Ruling Isn’t the Slam Dunk Most People Think

Given the immense attention rightly being devoted to the Supreme Court’s treatment of the individual mandate, it’s not surprising that far fewer words are being spilled on the Court’s other big finding: that the federal government cannot withhold all Medicaid funds from states refusing to accept the Medicaid expansion that contributes so much to the law’s goal of covering the uninsured. Among those writing about this issue, moreover, there’s a general consensus, articulated earlier today by Jonathan Cohn, that the “super-match” being offered to states accepting the expansion is just too “sweet” for any state to turn down, even without what the Court calls “coercion.” Indeed, as Matt Yglesias pointed out, the deal is particularly sweet for the southern states with large low-income populations and stingy existing Medicaid programs.

Makes sense, on the surface. But it raises a rather obvious question: if the expansion is an offer no one could refuse, why did 26 states go to court in the first place to make it possible to turn it down without losing all their Medicaid money? Were they trying to make a theoretical point they had no practical plans to pursue?

The sad truth is that Republican governors and state legislators have been claiming ever since ACA was enacted that the expansion, even with the “sweet” super-matches, would bankrupt their budgets. And the even sadder truth is that many of these solons don’t think of this as primarily a fiscal issue, but as an ideological test of their hatred of the “welfare state.” There’s a reason southern Republicans, perhaps even more than their compatriots elsewhere, love Paul Ryan’s Medicaid “block grant” proposal. They want significant reductions in the existing Medicaid program, along with structural changes that would make it unrecognizable as a low-income entitlement. This involves a philosophical objection to giving poor people free health insurance, not just a budgetary concern.

Moreover, southern GOP lawmakers aren’t entirely free to cut the best fiscal deal they can. Let’s say you are Gov. Nikki Haley of South Carolina, a fiery conservative who sees no problem with openly crusading to drive perfectly legal private-sector labor unions right out of your state. Is it a no-brainer to accept the Medicaid expansion when the most powerful politician in the neighborhood, Sen. Jim DeMint, has this to say after the Court’s decision?

I urge every governor to stop implementing the health care exchanges that would help implement the harmful effects of this misguided law. Americans have loudly rejected this federal takeover of health care, and governors should join with the people and reject its implementation.

In reality, if states do refuse to set up exchanges, ACA allows the federal government to set them up on behalf of the uninsured in those places (and indeed, that will be the ultimate recourse for those affected by a state refusal to expand Medicaid). But the Medicaid expansion does require affirmative state action.

Assuming it survives a potential Republican president and Congress in 2013, the Medicaid expansion is going to be a red-hot issue in many states, particularly in the South, illogical as that might seem. So I agree with Alec MacGillis: The beneficiaries of the Medicaid expansion better get mobilized, not just to protect the national law but to insure it is not sabotaged in their own states.