Federal judge blocks Medicaid work requirements in Kentucky and Arkansas

March 28, 2019

By Amy Goldstein, Washington Post

A federal judge in Washington threw a significant roadblock into the Trump administration’s efforts to compel poor people on Medicaid to work in exchange for health benefits, rejecting a Kentucky program for a second time while saying that rules in effect in Arkansas “cannot stand.”

The twinned opinions Wednesday afternoon, in a pair of states that have been national leaders in the move toward Medicaid work requirements, cast doubt on the Trump administration’s approvals of efforts to re-envision the public insurance program. The opinions undo the permissions that the U.S. Health and Human Services Department gave those two states, telling the agency it must reconsider the applications with an eye on the effect on poor people who depend on the coverage.

Judge James E. Boasberg of the U.S. District Court for the District of Columbia concluded that in letting Kentucky go forward with its requirements, HHS had been “arbitrary and capricious” — the same criticism he leveled once before. He wrote that he “cannot concur” that Medicaid law leaves the HHS secretary “so unconstrained, nor that the states are so armed to refashion the program Congress designed in any way they choose.”

The 48-page Kentucky opinion is the more emphatic of the two rulings. The judge walks through the reasons he remains unpersuaded by even a second set of arguments by the administration as to why the program should be allowed to go forward.

But the 35-page Arkansas decision has more immediate impact. It strips away the federal basis on which that state added work requirements last June that apply to more than 115,000 poor and working-class Arkansans under a part of Medicaid, known as Arkansas Works, that was expanded under the Affordable Care Act. So far, about 18,000 people have lost coverage for failing to meet the rules or failing to report to the state that they complied.

Jane Perkins, legal director of the National Health Law Program, a District-based plaintiff in both cases, said that based on the judge’s ruling, Arkansas officials “are going to, at the very least, have to put [the requirements] on hold,” while federal officials reconsider them.

Arkansas Gov. Asa Hutchison (R), said Wednesday in a statement he was “disappointed in the decision.” After digesting it overnight, he said he would “provide further comment tomorrow morning on the future of the Arkansas Works work requirement.”

While the judge’s rulings touch the two states most directly, they have potential ripple effects for six others that already received permission from the Trump administration to begin work requirements — and for seven more states waiting in line.

Seema Verma, administrator of HHS’s Centers for Medicare and Medicaid Services, struck a resolute tone: “We will continue to defend our efforts to give states greater flexibility to help low-income Americans rise out of poverty. . . . States are the laboratories of democracy and we will vigorously support their innovative, state-driven efforts to develop and test reforms that will advance the objectives of the Medicaid program.”

The rulings came nine months after Boasberg, an appointee of President Barack Obama, first signaled his disapproval of the way President Trump’s health aides were handling the issue. Two days before Kentucky was to begin implementing the new rules, the judge stopped the state.

Kentucky had been the first to win permission to impose “community engagement” requirements in January 2018, a day after Verma announced that the government would for the first time allow states to require low-income people to work, prepare for jobs or volunteer as a condition of coverage.

The question of work requirements has emerged as a bright line in the ideological debate over the role and nature of the nation’s social safety net.

Administration officials and a growing cadre of Republican governors contend that such rules motivate low-income people to find work that will help them climb the economic ladder and eventually become self-sufficient.

The idea had been opposed by Obama’s HHS and many Democrats, who regard it as a sharp break in Medicaid’s half-century history as an entitlement program that is open to anyone eligible. Progressives contend that most poor people who can work already do and that access to health care is a precondition for some to hold jobs.

In his earlier, June 29 opinion in the Kentucky case, Boasberg also held that federal officials who approved the new rules had been “arbitrary and capricious,” neglecting to consider adequately whether the requirements “would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

His ruling sent Kentucky’s request to begin its program back to HHS for another review. Five months later, the department reapproved Kentucky’s plan without any changes. The state had been preparing its delayed launch of Kentucky HEALTH, as it calls its program, for April 1, with the work rules to begin this summer.

In June 2018, Arkansas became the first state to impose work requirements. Approximately 18,000 people were denied coverage between September and December for failing to comply for three months with requirements to work, train or volunteer for 80 hours per month — or for failing to report that they met the rules.

April 1 is a significant date in both states: Under the Arkansas Works rules, the clock starts over each January, allowing people removed from the program to reapply, and a new three-month countdown begins. So the next group of people to be cut off will be announced within a few weeks. This time, in a first, the denials were to include young adults, 19 to 29, for whom the rules have been phased in more slowly.

In legal briefs and court hearings, attorneys for both states and the U.S. Justice Department argued the requirements help ensure states can continue to afford the additional costs of their Medicaid expansions to include people with slightly higher incomes — less than 10 percent of total costs, with the federal government covering the rest. The states also argued the work rules will lead people into jobs.

But at a court hearing earlier this month, the judge foreshadowed his decision, telling attorneys that neither the affordability of Medicaid’s expansion nor incentives to get jobs were at the core of the insurance program’s purpose.