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The final argument the Supreme Court will hear about the health care law later today could actually have the most far-reaching consequences. At issue is whether by expanding the Medicaid program for the poor, does the law unfairly force states to participate?

As NPR's Julie Rovner reports, if the Supreme Court finds that the federal government is coercing the states, that decision could reach far beyond health care.

JULIE ROVNER, BYLINE: Medicaid is already one of the nation's largest providers of health care services.

DIANE ROWLAND: It provides health coverage really to one in three American children, so it's a fundamental part of the way in which we deliver health care services today.

ROVNER: Diane Rowland is a Medicaid expert with the Kaiser Family Foundation. She says right now, as large as the program is, Medicaid is not available to people simply because they're poor. They have to be poor and something else, such as a child, a pregnant women, or over age 65. Under the health law, however, that would no longer be the case.

ROWLAND: Medicaid changes from a program that covers certain categories of low income individuals to a program available for health coverage for all individuals.

ROVNER: All individuals, that is, with incomes under 133 percent of poverty, which this year is just under $15,000. According to the Congressional Budget Office, that will add about 17 million new people - mostly adults without children - to Medicaid's 60 million or so enrollees by the year 2016. Currently, states share the cost of Medicaid with the federal government. Wealthier states pay half, poorer states pay a smaller share. But the federal government recognized that states are strapped for cash these days. So most of the new cost - 90 percent eventually - is being paid by the federal government. But that's not stopping states from claiming that this expansion amounts to unconstitutional arm-twisting. That's because if they don't follow through with the new changes, they have to pull out of Medicaid altogether. Former Bush administration Solicitor General Paul Clement is representing the 26 states that are suing over the Medicaid provision to the health law.

PAUL CLEMENT: What they've said is if you don't make these new changes, we're going to take away all of your money, including all of the money that you've kind of gotten used to, all of the money that you used for different groups of people. And that does seem a little more coercive.

ROVNER: Medicaid is, in fact, a voluntary program. States don't have to participate. But they all do. And Clement says so much money is at stake - more than $400 billion in 2010 - that dropping out is simply unrealistic.

CLEMENT: So how any state at this point could say, you know, we're just going to turn down Medicaid funding from the federal government - I don't think any set of citizens would allow that to happen. Because it's all this money that's being taken from the state taxpayers that would then be going to every state in the union but that state. It just wouldn't work.

ROVNER: But is this latest expansion of Medicaid really coercive? Sara Rosenbaum, a law professor and Medicaid expert at the George Washington University, says it's hardly different from many of the expansions that have come before.

SARA ROSENBAUM: States already cover a lot of adults. They cover parents, they cover adults with disabilities, they cover adults who are pregnant. And so all this expansion does is really to fill in the remaining gaps. And it's something that many states have wanted to do over the years.

ROVNER: But what really has people are watching the Medicaid arguments actually has nothing to do with Medicaid. It's the potential impact on the relationship between the federal government and the states. This is one of the few times the court has taken up what's known as the spending clause of the Constitution, says Elizabeth Wydra. She's with the Constitutional Accountability Center, a liberal think tank.

ELIZABETH WYDRA: It's long been established by the Supreme Court that Congress can attach conditions to federal funds that it gives the states. States can follow the requirements that the federal government sets on those funds or they can opt out of receiving the funds altogether.

ROVNER: But while earlier cases have suggested that there could be limits to those conditions, the court has never said what those limits are. And it's not just Medicaid at stake, she says.

WYDRA: That places in jeopardy, in addition to the entire Medicaid program, a host of other very beneficial federal grant programs in the education context, child welfare.

ROVNER: And many other programs - in fact, virtually any program in which the federal government gives money to the states with conditions attached. So far no lower court has agreed that the Medicaid expansion coerces the states. But no one expected the Supreme Court to hear this part of the challenge against the health law either. Julie Rovner, NPR News, Washington.

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