Those who liked yesterday’s 5-4 verdict in NFIB v. Sebelius, the formal name of the Affordable Care Act lawsuit, have made two arguments knocking down concerns that the ruling could have negative ramifications. One of them I completely disagree with, and one I think needs to be looked at a bit differently. I want to take both of them in turn in separate posts. Let’s start with the one where I disagree.

As I explained yesterday, the part of the ruling around the Medicaid expansion, where 7 justices agreed that this was basically a new program, and existing Medicaid funds could not be taken back by the federal government if states declined to comply, has the most near-term consequences for health care itself. Given that Medicaid expansion created half of the coverage increases in the bill, this offered half of the states the opportunity to really take an axe to the program by simply refusing to expand their Medicaid programs. And it leaves the poor between around 50% and 133% of the poverty line in a real no man’s land, because they would both be ineligible for Medicaid AND the coverage subsidies in the exchanges (and ineligible for the mandate, but that just puts them in the status quo, which is terrible).

This has been dismissed by the Democratic establishment as implausible. But it’s such a good deal for those states, they say. But everyone’s in Medicaid now, they say. Nancy Pelosi has a representative sample:

“I don’t think governors will turn that down. People have the need, the urgency is there,” the House Democratic Leader told reporters on a press call Thursday afternoon.

Pelosi argued that it will be extremely difficult for conservative states to opt out once their residents see how other states are benefitting from the Medicaid expansion. “Once this bill is rolling and people experience benefits of it, it’s very hard for a state to say [no],” she said. States will also receive full federal funding for the first three years of the expansion before they have to take up more the expense, which Pelosi described as a major incentive to get them to participate.

It’s true that it’s a very good deal for states. As Pelosi says, the first three years is basically free, and after that the state only has to pick up less than 10% of the costs. In the example of Texas, by 2019, the state will have spent a mere $2.6 billion on the expansion, while the federal government will have shelled out $52.5 billion. And Pelosi even hinted that the feds could pick up more of that cost (which sounds close to federalizing Medicaid, which is really the killer app here).

Furthermore, looking to history, Medicaid itself was created in 1965. It remains a voluntary program, and Arizona held out for 17 years, until 1982, becoming the last to create their own program for their state. So if all states, including the red states, have Medicaid now, doesn’t that suggest all states will take the expansion over time?

Perhaps. But Pelosi’s response strikes me as the typical Democratic dismissal of conservative ideological intransigence. This is a far more conservative era than 1965. These state governors are well to the right of the crop that held out in Arizona. And Obamacare is seen as the devil’s handiwork. I’d argue that these governors are ideologically far to the right of even 2009, when all of them took stimulus money eventually. The resisters just paid lip service and eventually took the funds. But there wasn’t a Tea Party to pressure them to the right on these grounds. Scott Walker and Rick Scott and John Kasich came right into office and denied the high speed rail funds for Wisconsin and Florida and Ohio, for example. That’s the crop we’re talking about.

And being on the hook for even a small amount of funds isn’t going to make any of these governors happy. Heck, here’s a Democrat, former West Virginia Governor and current Senator Joe Manchin, making the argument for them:

We should all recognize that the health care challenges that many West Virginians and Americans face are not going to go away unless Congress takes additional action to repair this bill. Now that the Court has ruled, we can move forward with fixing what is wrong with this bill and saving what is right. I have always been determined to reduce the burden on states from the Medicaid expansion, and this ruling affirms my position – and makes clear that states must have the flexibility to live within their means by determining Medicaid eligibility as each state sees fit. I have always said one size doesn’t fit all.

That’s going to be a compelling set of logic for a non-trivial number of governors. They’ll also distort how much the expansion would put their states “on the hook.” 26 states sued to eliminate the Affordable Care Act entirely, and they almost got there. Why wouldn’t they jump at the chance to eliminate the portion that creates half of the coverage benefits?

This isn’t going to be universal. New Mexico’s Republican Governor Susanna Martinez, for example, certainly sounds like she’ll take the money. But Southern states in particular, who paradoxically house the citizens most in need of the Medicaid expansion coverage, will be likely resisters at the outset. And it’s not like a lot of success in modern America comes from rallying at the grassroots level for poor and disenfranchised people.

The one hope, as Kevin Drum articulates, is if interest groups get involved:

There’s going to be a lot of pressure from various interest groups to accept the funding. That includes pressure from within government agencies as well as from outside groups. After all, state and local governments are already on the hook for indigent healthcare, and that includes caring for those who fall in between the current Medicaid cutoff and ACA’s new one (roughly speaking, those who are between 50% and 133% of the poverty line). Even the stingy states may discover that they’re already spending enough money on that group that they’d be better off simply enrolling them all in Medicaid and paying their small share of the new benefits instead.

This has logic on its side, but I want you to think about the last time that mattered in politics. Brute force usually wins, and unless the hospital industry delivers that, Southern red states will hold out.

The crazy thing is that if Democrats just changed the structure of the ruling to incorporate the old Medicaid program into the coverage expansion, everything would have passed Constitutional muster. Which makes the Court’s argument really shallow.

It sounds as though if the ACA had been structured in this way:

Title 15: Title XIX of the Social Security Act, as amended, is repealed.
Title 16: New Medicaid = ACA Expansions + the old Title XIX of the SSA are mereby enacted

that that would, formally, pass Roberts’s scrutiny.

But nevertheless, that’s the law, and ideological conservatives are poised to exploit it. They need to be fought. And I don’t think you do that by saying “oh, they’d never do that.”