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High court takes up Medicaid dispute

WASHINGTON – The Supreme Court justices opened their new term Monday by hearing a major health care case that tests whether judges can stop California and other cash-strapped states from cutting payments to doctors and hospitals who serve low-income patients.

The case heard Monday will likely affect how much money is available to pay for medical care for more than 50 million Americans, about half of them children, who depend on Medicaid.

Since its creation in 1965, Medicaid has been a cooperative effort and jointly funded by the federal government and the states. But that cooperation is being tested at a time when states face huge budget deficits. Over the past three years, the California Legislature voted a series of cuts, up to 10 percent, in its payments to providers of Medi-Cal, the state’s Medicaid program.

They went to court in San Francisco arguing California was violating federal law by imposing the cuts. They said the reduced payments were so low that patients would be denied the care they need. In response, federal district and appeals court judges issued orders blocking the cuts from going into effect.

Lawyers for California, backed by 31 other states, appealed to the high court, and were joined by the Obama administration. Together, they argued that disputes over Medicaid funding should be resolved by health care administrators in Washington, D.C., and Sacramento, not by judges in San Francisco.

This dispute “cries out for administrative review,” California’s Deputy Attorney General Karin Schwartz told the justices, not an order from a judge blocking the state’s action.

Chief Justice John G. Roberts Jr. said he agreed with the state’s view, since Congress had not given private parties a right to sue under the Medicaid Act.

But Justices Ruth Bader Ginsburg and Elena Kagan spoke up for the medical providers who sued. They said California was seeking to cut its reimbursements even before the state had cleared the move with federal Medicaid officials in Washington. Ginsburg said there is no effective way to enforce the Medicaid Act if patients and providers cannot go to court when spending is slashed.

“My people have a life or death problem,” said attorney Carter Phillips, arguing on behalf of the doctors and hospitals. He said judges must be permitted to act if the state violates the Medicaid Act by slashing payments.

The justices sounded closely divided, but several of them showed interest in a middle-ground position. This view held that judges could issue temporary orders to block proposed state cutbacks, but only until Medicaid officials in Washington could review the proposed cuts.

The chief justice began the first session by noting the 25th anniversary of the day Justice Antonin Scalia took his seat and heard his first argument.