The court held that Indiana could not disqualify abortion providers from receiving traditional Medicaid funds (i.e., federal and state matching funds that cover general medical care for the poor), because they perform abortions. However, the court reached this decision based on language in the federal Medicaid statute that restricts states’ discretion to define who is “qualified” to provide Medicaid services—not the Constitution. In other words, if Congress amends the federal Medicaid statute to give states more discretion to determine who is qualified to receive Medicaid funds, states can use that discretion to cut off abortion providers.
Background: The Indiana Law
Enacted in 2011, House Enrolled Act 1210 (the Act)[i] prohibits Indiana agencies from contracting with or making grants of state or state-administered federal funds to entities that perform abortions or maintain or operate facilities where abortions are performed.[ii] The Act also cancels existing contracts with abortion providers. In 2011-2012, at least 11 states, including Indiana, diverted or withheld federal and/or state family planning funding from abortion providers. Notably, Indiana’s law is the most comprehensive in that it applies to all public funds, including traditional Medicaid funds.
The 7th Circuit court described the Act this way: It “fills a gap in Indiana law regarding public funding of abortion . . . [by] aim[ing] to prevent the indirect subsidization of abortion by stopping the flow of all state-administered funds to abortion providers.”[iii]
Not surprisingly, the law was promptly attacked by abortion providers and the Obama Administration.[iv] Planned Parenthood challenged the Act in federal court and sought an immediate injunction against its implementation, and the Obama Administration rejected the state’s proposed amendment to its Medicaid plan excluding abortion providers. Without the Administration’s approval of its plan, the state faced the possibility of losing Medicaid funding.