Final answer:
The US Supreme Court decision in 2012 stated that states would not lose existing Medicaid funding if they did not expand Medicaid under the ACA. The ruling made Medicaid expansion optional for the states without the threat of losing federal subsidies.
Step-by-step explanation:
The US Supreme Court ruling in 2012, specifically in the case of National Federation of Independent Business v. Sebelius, held that states do not face a withholding of federal subsidies for the Medicaid program if they choose not to expand Medicaid under the Patient Protection & Affordable Care Act (ACA), also known as Obamacare.
The Supreme Court found that the federal government could not penalize states by taking away existing Medicaid funding for non-compliance with the expansion mandate. Instead, the expansion was made effectively optional, without the risk of losing current levels of Medicaid funding.
Furthermore, while the ACA intended to provide significant Medicaid expansion to increase coverage for low and moderate-income citizens, some states, particularly those with Republican majorities, chose not to expand Medicaid, thus leaving segments of their populations without coverage.
The ACA's funding mechanism also saw some challenges, as it included several taxes, like increasing the Medicare tax and imposing a fee on health insurance providers. However, the individual mandate was upheld as a constitutional exercise of Congress's power to tax.