Supreme Court makes Medicaid expansion optional for states in NFIB v. Sebelius

The Supreme Court rules 5-4 in National Federation of Independent Business v. Sebelius on June 28, 2012, upholding the Affordable Care Act's individual mandate as a tax but striking down the mandatory Medicaid expansion. Chief Justice John Roberts writes that Congress lacks the power to coerce states into expanding Medicaid by threatening to eliminate all existing Medicaid funding. The decision makes expansion optional, allowing states to refuse. As of 2010, all 50 states participated in traditional Medicaid and stood to lose existing funding if they refused expansion — a threat Roberts calls unconstitutional coercion. The ruling creates a coverage gap affecting millions of low-income adults in states that decline to expand, since they earn too little to qualify for ACA marketplace subsidies but too much for traditional Medicaid.