[I]f a state doesn't expand its Medicaid program, most of those who would've been eligible for Medicaid will now become eligible for subsidies through ObamaCare's health-insurance exchanges. And those subsidies are paid in full by the feds.Given the potential for chaos in the Obamacare scheme if the states decline to participate, it's surprising that Justices Breyer and Kagan went along with the Chief Justice's opinion on the spending power. The original legislation had the states locked in, because they'd lose all their Medicaid funding if they didn't participate. That was held to be coercive, and thus not supportable by the spending power, which requires that states be given a choice whether to run federal programs and accept various related conditions. Under the Court's ruling, the states only lose the funding for the expansion of Medicaid, which makes it possible for them to say no, as many seem to be doing.
Thus, New York, for example, would shift most of that $52 billion in new costs back to the federal government.
Of course, if states do shift those costs back to the feds, that will cause the federal cost of ObamaCare to skyrocket. If every state were to refuse to expand its Medicaid program, the feds would save roughly $130 billion in their share of Medicaid costs in 2014, but would have to pay $230 billion more in new exchange-based subsidies — for a net added cost of $100 billion. And that's just for the first year...
ObamaCare gives the feds the authority to step in, setting up and operating an exchange in any state that doesn't set up its own... [But f]ederal subsidies are available only through exchanges that the states set up. The feds can't offer subsidies through a federally run exchange.
Thus, if states neither expanded Medicaid nor set up exchanges, that would effectively block most of ObamaCare's new entitlement spending.
There's an elaborate set of moves in the future, and I wonder how far ahead the Chief Justice looked when he chose his position. Perhaps Obamacare is doomed by the seemingly modest, miminalist hit it took on the spending power issue. But wouldn't Breyer and Kagan have seen ahead too? Why did they join him? I'm not ready to give him genius points for skillful playing of the long game.