Federal Judge Rejects Medicaid Work Requirements in Two States

Medicaid work requirements in Arkansas and Kentucky approved last year by the Trump administration were blocked by a federal judge on Wednesday.

It was the second time in less than a year the same District of Columbia district court judge, James Boasberg, rejected Kentucky’s plan.

The pair of rulings he issued marks a setback for a push by Republican governors and the Trump administration to adopt requirements that some Medicaid enrollees work to stay on the program, which provides health insurance coverage for poor and lower-income Americans.

Kentucky and Arkansas are among 36 states that expanded Medicaid eligibility under the Affordable Care Act. But in Arkansas about 18,000 people lost Medicaid coverage due to their failure to comply with the new requirements in 2018, according to the Kaiser Family Foundation.

The foundation notes that the state is one of eight that has received approval from the Centers for Medicare and Medicaid Services for what’s known as a Section 1115 waiver, clearing the way for the states to link Medicaid eligibility to work mandates.

Arkansas’ requirements called for most able-bodied adults between 19 and 49 years old to complete 80 hours of work or other approved activities each month.

These people had to report that they were complying each month mostly using an online portal—a provision that was widely criticized as recipients said they weren’t computer savvy or lacked reliable internet access.

Several Arkansas residents filed a lawsuit last August asserting that Health and Human Services Secretary Alex M. Azar’s approval of the state's requirements earlier in the year was “arbitrary and capricious” under the Administrative Procedure Act, exceeded his legal authority and violated the “Take Care Clause” of the Constitution.

They asserted HHS did not adequately consider whether the "Arkansas Works" program would promote Medicaid’s objectives—namely providing health coverage to people who can’t afford it.

“In sum, the Secretary’s approval of the Arkansas Works Amendments is arbitrary and capricious,” Boasberg wrote in his 35-page ruling. “It did not address—despite receiving substantial comments on the matter—whether and how the project would implicate the ‘core’ objective of Medicaid: the provision of medical coverage to the needy.”

Arkansas Gov. Asa Hutchinson said he was “disappointed” by the ruling, and would comment on it further on Thursday morning.

Kentucky’s program was designed in a way that it effectively targeted people covered under the state’s Medicaid expansion.

Among other requirements, it mandated that certain Medicaid enrollees spend at least 80 hours a month on work, job training, education, community service, or drug or alcohol abuse treatment.

The program was set to take effect on July 1 last year, but days before Boasberg issued an opinion that found the federal government’s approval of the program was “arbitrary and capricious” for similar reasons as those he cited in the Arkansas ruling.

Last year’s opinion noted that HHS failed to consider Kentucky’s estimate that 95,000 people would leave its Medicaid rolls over a five year period if the requirements were adopted. The opinion vacated the program’s approval and sent it back to HHS for reevaluation.

In November, after further public comment, the Trump administration again approved the program, although Boasberg notes that it largely resembled the version he had previously rejected.

His latest opinion says the earlier ruling made it clear coverage considerations needed to be central to the analysis of Kentucky’s plan.“Rather than follow that direction, the Secretary doubled down on his consideration of other aims of the Medicaid Act,” he wrote.

The opinion adds: “Given a second failure to adequately consider one of Medicaid’s central objectives, the Court has some question about HHS’s ability to cure the defects in the approval.”

Kentucky is facing budget pressure and Gov. Matt Bevin has threatened to end the state's Medicaid expansion—initiated by his Democratic predecessor, then-Gov. Steve Beshear—if the proposed overhaul of the program is not allowed to proceed.

Adam Meier, Kentucky’s secretary of the Cabinet for Health and Family Services said Judge Boasberg had “illogically concluded” Medicaid “is all about paying for healthcare for as many people as possible without regard to whether this coverage actually makes people healthier.”

“In Kentucky, we want more than to simply give someone a Medicaid card they can put in their wallet,” he added in a statement. “Although a setback to our implementation schedule, we believe that we have an excellent record for appeal and are currently considering next steps.”

Total Medicaid enrollment at the close of the 2017 federal fiscal year was around 75 million people, with about 17 million falling under the expansion group. During that year figures published by the Kaiser Family Foundation show federal spending on the program totaled around $354 billion and state spending around $221 billion.