Some states have previously experimented with many of the elements of the PPACA but without the individual mandate. That left pre-existing conditions covered and community rating. Insurers had to accept all applicants and could not charge higher premiums for those with pre-existing conditions.
In Kentucky all of the insurance companies but two closed shop and left the state. (One of the remaining companies was a state-run high risk insurer.) Premium rates skyrocketed. Similar financial disaster faced the insurance sector in Washington state. Ginsburg wrote in her opinion of the history of just such instances.
States can opt out of Medicaid expansion.
The PPACA stated the Secretary of Health and Human Services could pull all of such a state’s Medicaid funding. The court pulled that such a penalty was “dragooning” and unconstitutional.
The court looks at such agreements between the federal government and a state as a contract. The court essentially said that the PPACA was a new contract and that it changes the terms of a pre-existing contract. Because the financial coercion was so extreme the state did not reasonably have a choice and that is not constitutional.
After the ruling on the PPACA a state can opt out of the Medicaid expansion. If a state does so it simply will not get the additional federal funding that would have been given to cover newly eligible persons.
A state opting out of Medicaid expansion in no way affects the individual mandate provisions of the law. Residents of that state will still have to have insurance, pay a penalty, or have an exemption.
Certain individuals can opt out of Obamacare
The PPACA contains provisions for individuals to apply for an exemption to the individual mandate. Controversially, exemptions have been sought by, and granted to, members of certain labor organizations. They argue that their insurance policies are adequate even though the policy may lack some element that is deemed mandatory under the law.
Additionally certain persons or groups of persons may seek religious exemption to the requirements of the PPACA. Old order Amish, for example, have a long history of shunning government programs. Some Muslims argue that insurance is a form of gambling, prohibited by their faith.
Such exemptions are tied to a part of the IRS code regarding whether that religious group typically shuns Social Security benefits. Old order Amish traditionally refuse to receive Social Security benefits, and have a history of caring for their own. They will likely be eligible for an exemption to the PPACA.
Muslims more often accept Social Security as a means of taking care of the elderly and infirm. Those who do typically accept Social Security may not qualify for an exemption to the PPACA even if they consider such insurance contrary to their faith.