The Private Option: Let's Quit While We're Behind

Anyone interested in the intersection of law and politics that Arkansas’s private option creates should remember what Oliver Wendell Holmes wrote more than a century ago – namely, that a good lawyer must be able to speak intelligently about what courts will do in the future, not just about what they’ve done in the past.
Yesterday, at the joint meeting of the state legislature’s Public Health Committee, attendees saw an excellent example of Holmes’s dictum. The experts who testified before the committee — Andy Allison (Arkansas’s Medicaid director), Ed Haislmaier (of The Heritage Foundation), and Jonathan Ingram (of the Foundation for Government Accountability) — were asked by Rep. Kim Hammer whether rolling back the private option could lead to a successful lawsuit against the state of Arkansas.
Haislmaier: When a state adopts the Medicaid expansion… if somebody was later removed because the state drops the coverage, then they could go to court. [The reasoning of the litigant would be:] the statute says this is mandatory that I be covered, the state agreed to that, and now the state’s backing out of it. I don’t know how that court case would be resolved, but neither does anyone else who argues that, oh, we can just back out anytime we want. 
Ingram: Seven of the nine members [of the Supreme Court] addressed this in their opinions. They foresaw the chance that the federal government would roll back the funding to the states. And you have to keep in mind why the Supreme Court has said that Medicaid expansion is optional. They said states couldn’t foresee when they signed up for Medicaid back in the 1960s that it would be changed in this way to create new entitlements to this able-bodied adult group. But it would be very difficult for the state to now say: well, we couldn’t foresee that the federal govt would break its promise on funding this, because the Supreme Court has explicitly said: “States, you can foresee this.”
Haislmaier: The only way to provide states with certainty and beneficiaries with certainty is for Congress to amend the statute … to transfer that from the section where it’s mandatory to the section where it’s state optional. If Congress were to do that, then a state could go in and out of that expansion, and nobody would have any grounds to sue.
Allison: I would just beg the opportunity to clarify that the 7 of 9 did not address this precise question of whether a state could back out. Isn’t that correct?
Ingram: What I said was that 7 of 9 addressed specifically the potential for the federal government to renege on their promise. Given that the Supreme Court decision hinges on the fact that the states could not foresee changes to the Medicaid program created by the Affordable Care Act, it would be difficult for the state to then say ‘we could not foresee this thing that you told us could potentially happen.”
Haislmaier: Essentially, the argument is that if you got up in front of the Supreme Court, 7 of the 9 justices could say ‘we told you so.’
Allison: The Supreme Court … clearly did not say ‘This becomes the Hotel California, and when you get in you can’t get out’ … We’re having a Washington debate here about whether Medicaid expansion becomes the Hotel California, whether Judge Roberts decides that he’s going to change his role in history and unwind easily one of the most significant decisions that he’s authored. I recognize the legal debate. It’s a very interesting question, but the likelihood that were going to face a Supreme Court who says “Now that you are in, regardless of what we’ve said in our opinion, you cannot get out” — is that what you’re arguing?
Haislmaier: Can anyone be definitive? No: that is my point. I cannot definitively tell you how the court would rule, nor can anyone be definitively say that the court would definitively say that states can come and go in this expansion, because the ruling simply did not address it. I simply point to the fact that the Supreme Court did not strike the statute, and that the statute has not been amended.
Ingram and Haislmaier have the better argument here. Allison, despite the concern he expresses about “Washington debates” here, is a pretty fair Washington debater himself. Allison notes that the Supreme Court didn’t say expressly that a state cannot leave expansion, but that isn’t the issue; that is a largely irrelevant point that nobody disagrees with. Rather, the issue is whether one can rely on the logic that the Supreme Court seems to have used – namely, that states have been given fair warning that the federal government might unilaterally change the terms of the Medicaid deal it makes, and therefore when the federal government changes the terms of that deal, this change won’t permit a state to back out of it. Allison’s suggestion that what we really need to rely on is Chief Justice’s Roberts’s concerns about his own reputation, and not the text of his decision, is very strange – especially because a subsequent Supreme Court decision to the effect that Arkansas can’t withdraw from the private option, contrary to what Allison says, wouldn’t seem to require any unwinding of any Supreme Court precedent at all. I am willing to take some credit for publicizing the danger of our state’s “Hotel California” problem, and I think Allison’s attempt to dismiss it fails. In short, there is a reasonable prospect that private-option expansion is like a one-way street; namely, that Arkansas will be unable to get out, or that we can only extricate ourselves with great difficulty. One implication of this is that the promises of private-option advocates that “you can get out any time you like” were empty — like so many of their other promises.
AAI first raised this issue in a paper I co-authored with law professor Robert Alt last year. At a debate in Saline County over the private option about a year ago, I discussed this concern; Republican legislators who were private-option advocates responded with eye-rolls, sneers, and giggles. I wish I could view it as a laughing matter.
The bottom line here is that private-option advocates have placed us into a climate of extraordinary legal uncertainty. This is only one of many respects in which the promises of the private option have fallen short of reality. I tend to think that the best way to extricate ourselves is to quit while we’re behind — by extricating ourselves from the private option in the most expeditious way possible. In my view, the more rapidly we abandon the private option, the more likely it is that we will be able to cast off the legal encumbrances that its architects have created for us.