Amy Newlin, who lost her job cutting pipes in November 2008, fills out an application for government health insurance at a Medicaid clinic being held in the basement cafeteria of Fairfield Elementary School in Fort Wayne, Ind., on Feb. 19, 2009. - 

Adriene Hill: The Supreme Court kicks off a new term today. They'll be tackling some interesting business cases -- involving generic drugs, copyrights, and patents. But one of the most-watched cases this term focuses on Medicaid, a federal state program that provides medical care for the poor.

Marketplace's Nancy Marshall Genzer reports.

Nancy Marshall Genzer: The case looks at whether Medicaid patients and providers, like doctors, have the right to sue a state if it slashes Medicaid payments. The state in question? Cash-strapped California. In 2008, it cut Medicaid rates by 10 percent.

Federal law says states, which set Medicaid rates, have to pay enough to ensure that providers accept Medicaid patients. A group of providers sued California, saying the state was violating that law.

Barbara Jones: They do have the right to sue. It's critical to ensure access to health care.

That's AARP lawyer Barbara Jones. She says, as it is, Medicaid patients can hardly find doctors because Medicaid pays so little.

Matt Salo is executive director of the National Association of Medicaid Directors. He says if Medicaid providers are allowed to sue, they will choke the courts with lawsuits.

Matt Salo: And it will drag every state into prolonged litigation that they can't afford to fight.

Salo says that would leave states with even less money to pay Medicaid providers.

In Washington, I'm Nancy Marshall Genzer for Marketplace.