In addition to holding the Individual Mandate unconstitutional under the Commerce Clause (but upholding it as a tax), the Supreme Court also invalidated vital portions of the Medicaid expansion requirements. Obamacare forces states to expand eligibility for Medicaid, on pain of losing all their Medicaid funding. The problem with that is that Congress may not force states to do things—it can pay them in exchange for them doing things, but cannot force them. And the Court has warned that there may be times when the amount of money involved, or the threat of losing that money, is so significant that it transforms a purportedly “voluntary” act into an unconstitutional compulsion.
The Court today struck down the portions of the Medicaid expansion that it found to be too much like compulsion. It ruled that the Secretary of Health & Human Services does not have the power to withhold all of a state’s Medicaid funding if the state refuses to comply. To allow such power would be “beyond” the limits of federal power and would “conscript state [agencies] into the national bureaucratic army.” That part of the opinion is endorsed by Chief Justice Roberts, as well Justices Kagan and Breyer, and the same argument is endorsed by the four dissenters. Roberts goes on, however, to uphold the rest of the Medicaid provisions, which the dissenters, of course, do not.
In other words, on the broader principle of whether the Medicaid provisions unconstitutionally expand federal power at the expense of the states, the Court ruled in favor of limited government and struck down the offending provisions, and endorsed—seven to two, by my count—limits on the Spending Clause power.