Section 1396c of the Medicaid Act provides that if a State’s Medicaid plan does not comply with the Act’s requirements, the Secretary of Health and Human Services may declare that “further payments will not be made to the State.” 42 U. S. C. §1396c. A State that opts out of the Affordable Care Act’s expansion in health care coverage thus stands to lose not merely “a relatively small percentage” of its existing Medicaid funding, but all of it.”Could the concern for state’s rights that undermined the Federal effort to expand Medicaid, save the Exchange subsidies?

The statutory amendments implementing this expansion were structured so that if a state refused to implement the mandatory expansion, the Secretary of Health and Human Services could use her existing enforcement authority to withhold part or all of that state’s Medicaid funding. The Court’s narrow holding was that the use of that enforcement authority (42 U.S.C. § 1396c) to withhold existing Medicaid funds based on a state’s failure to implement the ACA’s Medicaid expansion is unconstitutional. The Court did not invalidate any provision of the ACA, but instead limited the federal government’s ability to enforce the specific Medicaid expansion requirements in those states that are unwilling to undertake the dramatic Medicaid eligibility expansion that would have been mandated by the ACA.