Washington ( CNN ) -- A divided Supreme Court spent this week 's final oral argument on health care reform Wednesday examining whether states would be `` coerced '' by the federal government to expand their share of Medicaid costs by the risk of losing funding if they refused to take part . The session concluded three days of public debate on the 2010 Affordable Health Act and focused on the contentious legal issue of federal versus state powers , in this case involving the Medicaid government-run health care for the poor and disabled . Medicaid , which operates on federal and state funding , would be expanded under the health care reform law , and 26 states filed legal challenges against what they contended was an unfair burden forced on them by Washington . Court tackles question : Would all of health law be scrapped ? The debate on Medicaid was especially divided along ideological lines . Paul Clement , arguing for the states that say they would suffer under the new Medicaid requirements , met skepticism from many on the left . Justice Elena Kagan noted that 90 % of current Medicaid funding comes from Washington and asked if it would be a bad deal `` if the government were to give boatloads of money to the states . '' When Clement replied yes , Kagan erupted , saying `` Wow , wow ! '' and shaking her head . However , Chief Justice John Roberts and his conservative colleagues worried the states would be powerless to refuse the new requirements . `` Why not be concerned about the authority the federal government is exercising ? '' Roberts said to Solicitor General Donald Verrilli , who represented the government . `` That is the leverage '' the central bureaucracy holds , Roberts noted . The `` coercion '' issue was surprisingly added to the health care debate by the Supreme Court justices . Medicaid is administered by the states with a combination of federal and state money . It currently required coverage only for poor children and their parents or caretakers , adults with disabilities and poor individuals 65 or older . Both sides of the issue agree that what the high court decides on Medicaid could have broad implications for the regulatory ability of the federal government to set long-term national policy goals in areas such as the environment , education and the workplace . Some states have long complained their autonomy is being eroded by creeping federal intervention on spending matters . Article 1 of the Constitution gives Congress the power to `` lay and collect ... taxes to pay the debts and provide for the common defense and general welfare of the United States '' and to `` regulate commerce ... among the several states . '' Such authority has long been broadly interpreted , including when imposing conditions on recipients , be they individuals or states . No federal court has ever ruled states have been unlawfully coerced when they accept conditions or strings attached to federal funds . The Supreme Court in 1987 affirmed that congressional discretion . Starting in 2014 , the health care law 's Medicaid changes would make millions of additional Americans eligible for benefits by raising the income cap for qualification . That would include all adults up to 133 % of the federal poverty line . The tricky point is that states are not forced to agree to the law 's incremental Medicaid increases , spread out over six years . The states could instead abandon their participation in the program , but they say that would be a financial , social and political catastrophe -- one that they can not realistically accept . Lawsuits by 26 Republican-led states say the new law 's significant expansion of the social safety net unconstitutionally `` coerces '' state governments . Supporters of the health care law say the Medicaid issue involves political motivations rather than real policy concerns . `` These arguments are n't based on Medicaid 's health outcomes among children or seniors , '' Dr. L. Toni Lewis , the health care chair of the Service Employers International Union , said at a news conference Wednesday . `` They are n't based on testimony from those who have received services from Medicaid . They are n't even based on data that shows how well Medicaid controls costs compared to private insurance . That 's because the challenge to Medicaid in the Supreme Court is n't based on what 's good for our health . It 's just based on politics and posturing . '' CNN 's Tom Cohen contributed to this report .
26 states challenged a federal expansion under health care reform . The justices are divided on ideological grounds on the issue . The issue touches on the legal question of federal and state powers . The high court debate on Medicaid concludes a series of health care reform cases .