October 15, 2019

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit on Friday heard oral arguments in a pair of cases challenging the Trump administration's approval of Medicaid work requirements, and the judges appeared likely to support a lower court's ruling against the requirements.  

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Background: Judge strikes down Medicaid work requirements in Arkansas, Kentucky

In March, U.S. District Court Judge James Boasberg issued rulings striking down Medicaid work requirements in both Arkansas and Kentucky.

In the Kentucky case, the National Health Law Program (NHeLP), Kentucky Equal Justice Center, and the Southern Poverty Law Center in early 2018 filed a lawsuit seeking to block Kentucky from implementing Medicaid work requirements. Boasberg in June 2018 vacated HHS' approval of the state's Medicaid waiver request for work requirements, noting that HHS "never adequately considered whether [the requirements] would … help the state furnish medical assistance to its citizens, a central objective of Medicaid." Boasberg sent the waiver request back to HHS "for further review."

In response to the ruling, CMS launched a new 30-day public comment period on Kentucky's waiver request and, in November 2018, re-approved the work requirements, which were set to take effect in April. NHeLP, Kentucky Equal Justice Center, and the Southern Poverty Law Center then filed an amended complaint asking the court to declare CMS' latest approval of the work requirements "arbitrary and capricious."

The Arkansas lawsuit is similar to the Kentucky cases and came after Boasberg first vacated HHS' approval of Kentucky's Medicaid waiver. However, Arkansas' work requirements took effect last year, and the lawsuit seeks to suspend the requirements.

Boasberg in his rulings for both cases said the federal government failed to demonstrate how work requirements would advance Medicaid's purpose of providing health coverage.

He wrote that HHS' approval of the work requirements "is arbitrary and capricious because it did not address ... how the project would implicate the 'core' objective of Medicaid: the provision of medical coverage to the needy." Boasberg added, "The [c]ourt cannot concur that the Medicaid Act leaves the [HHS] Secretary so unconstrained, nor that the states are so armed to refashion the program Congress designed in any way they choose."

In addition, Boasberg in his rulings wrote that HHS failed to adequately assess what effects Medicaid work requirements would have on health coverage in Arkansas and Kentucky.

Boasberg in the rulings remanded the approvals of each state's Medicaid waiver requests back to HHS. Boasberg said HHS must reconsider the approvals and take into account the effect the work requirements could have on low-income individuals who depend on Medicaid for health coverage.

The rulings placed the work requirements on hold in Arkansas and Kentucky, and the Trump administration appealed the rulings to U.S. Court of Appeals for the District of Columbia Circuit.

The oral arguments

A three-judge panel for the U.S. Court of Appeals for the District of Columbia Circuit on Friday during oral arguments appeared to agree with Boasberg, the Post reports.

Namely, the judges questioned whether the administration had considered how many beneficiaries would lose their Medicaid coverage under the work requirements, noting that Medicaid's core objective is to promote coverage.

Judge Harry Edwards asked Alisa Klein, the Department of Justice lawyer representing the administration in the case, "Why … Boalsburg's very thorough analysis isn't eminently correct based on the [HHS] secretary's failure to consider the effects on enrollment?"

Klein did not directly address the question, but she noted that Boasberg had assumed the work requirements would cause beneficiaries to become uninsured, when he should have considered whether the work requirements would help beneficiaries to become eligible for employer-sponsored health coverage, or whether they would enroll in Affordable Care Act exchange plans.

Klein said promoting health is Medicaid's core objective, and Medicaid work requirements could help to achieve that goal. For example, Klein said the work requirements might help a Medicaid beneficiary find a job and enroll in employer-sponsored health coverage, which would free up federal and state funds to help cover a needier individual.

But Edwards told Klein, "You are looking to objectives that are not in (the Medicaid) statute, and you are failing to address the critical statutory objective, which is coverage."

Judge David Sentelle said, "The other things you say may be laudable goals, but to say they outweigh the principal goal [of Medicaid] seems a bit strange."

The judges also appeared to reject the administration's argument that Medicaid work requirements are an extension of concepts already embedded in other federal assistance programs, including Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP). Sentelle said TANF, SNAP, and Medicaid "are not comparable at all," because federal lawmakers included financial self-sufficiency as a goal for TANF and SNAP, but have not included such a requirement in Medicaid laws.

Panel's ruling could have national implications

According to The Hill, the judges' eventual ruling could have implications beyond Arkansas and Kentucky. The administration so far has approved Medicaid work requirements in 10 states, and seven additional states have sought CMS' approval for Medicaid work requirements.

The panel did not indicate when it plans to issue a decision in the case, the Associated Press reports  (AP/New York Times, 10/11; Goldstein, Washington Post, 10/11; Weixel, The Hill, 10/11; Brady, Modern Healthcare, 10/11).

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