THE BIG NEWS a couple of weeks ago was that the U.S. Supreme Court upheld the constitutionality of the individual-mandate portion of the Affordable Care Act. But the second shoe that dropped was of almost equal importance: The court disallowed the section requiring states to expand their Medicaid programs. What's at stake now, and what will Virginia do?

Under Medicaid, the federal government gives funds to states to help pregnant women, children, the disabled, and various needy Americans get medical care. The states each set up their own rules, so benefits vary from state to state. Predictably, some states (California, New York) provide liberal benefits, while others (Virginia, Texas) are more restrictive.

Obamacare originally required that all states cover every person (excluding the disabled and pregnant, covered under different rules) whose annual income was up to 133 percent of the federal poverty level beginning in 2014, including nondisabled adults. For many states, including Virginia, this would represent an enormous expansion of Medicaid programs. The feds said they'd cover 100 percent of the cost of the expansion for 2014-16 and a reduced percentage after that. States that failed to expand Medicaid would not get a penny from Uncle Sam, not even funding for the original program.

The Supreme Court ruled, however, that the penalty states would incur for noncompliance was "economic dragooning that leaves the states with no real option but to acquiesce." Chief Justice John Roberts called the expansion a "shift in kind" from the original Medicaid law--which aimed to cover children and the disabled, not healthy adults--and disallowed it.

Now the states face a decision: Should they expand Medicaid or not? Some, like Minnesota, jumped on the bandwagon at once. Seven states, including Texas, have announced they're boycotting. In Virginia, Gov. McDonnell hasn't said. The problem is that Medicaid is the fastest-growing component of any state's budget, and federal funds to cover the newly eligible population start declining after just a few years. Texas, for example, found it would have had to spend $15 billion over 10 years to meet the new standard.

Lt. Gov. Bill Bolling, in letter to Mr. McDonnell, urged that the commonwealth reject the expansion, citing the "tremendous fiscal pressure" it would put on the state. He estimates that complying with the new standards would add another 425,000 Virginians to the Medicaid rolls at the cost of $31.3 billion over 10 years. The state's share would be at least $2.1 billion, with no guarantee that wouldn't rise.

Adding insult to injury, the federal government itself has pegged Medicaid as "high risk" for fraud, waste, and abuse. Improper payments in fiscal year 2010 alone totaled $22.5 billion!

Providing for Virginia's poor kids and disabled adults is a moral imperative. But jumping to expand an already problem-riddled program is unwise. Mr. Bolling is right: Medicaid is not working now, and "it will not be improved by simply making it bigger."