A federal judge in the District of Columbia heard oral arguments Thursday morning in a lawsuit challenging Arkansas's work requirement for certain Medicaid expansion beneficiaries. Immediately afterward, U.S. District Judge James E. Boasberg heard arguments in a related suit over Kentucky's efforts to implement a similar policy.
At the conclusion of the hearings, Boasberg said he hoped to issue rulings in both cases by the end of the month. "I plan to issue them simultaneously since there is some overlap," the judge said.
The March 31 date is significant for both states. In Arkansas, the work rule says beneficiaries lose Medicaid coverage — and are locked out of the program for the rest of the calendar year — if they are out of compliance for three months. That means thousands of Arkansans could be kicked off their insurance on April 1. (Some 18,000 people were kicked off the program last year for noncompliance.) Kentucky, meanwhile, hopes to begin phasing in a new set of rules on April 1 that would culminate in establishing a work requirement later this year.
If Boasberg rules in favor of the Arkansas plaintiffs, the state's first-in-the-nation experiment to mandate "work activities" as a precondition for Medicaid could come to a halt. That would be a setback for Governor Hutchinson, who has championed the rule.
It could also complicate approval of the annual state Medicaid budget. In past legislative sessions, some conservative Republicans sought to reverse Arkansas's Medicaid expansion altogether, while Hutchinson and his allies (joined by Democrats) fought to keep it in place. In the 2018 fiscal session, however, the Medicaid appropriation passed the state legislature with little drama. Conservative lawmakers were won over in part because Hutchinson obtained a waiver from the Trump administration to establish the work requirement and make other conservative changes to the state's Medicaid expansion program, which is known as "Arkansas Works."
The lawsuit in Boasberg's court Thursday challenges the Trump administration's authority to issue the waiver that created the work requirement. Nine plaintiffs — all Arkansas Medicaid beneficiaries — are suing the U.S. Department of Health and Human Services, the federal agency overseeing Medicaid. Arkansas is an intervener in the case and presented its own arguments on Thursday defending the legitimacy of the work rule.
The plaintiffs are represented by Legal Aid of Arkansas, the National Health Law Program and the Southern Poverty Law Center.
Federal law gives HHS Secretary Alex Azar the authority to issue waivers to states — known as Section 1115 demonstrations — that allow them to experiment with their Medicaid program in novel ways. But the Arkansas plaintiffs say the work requirement is an impermissible experiment because it does not meet the objectives of Medicaid itself as outlined in the federal statute that established the program.
"Congress has made its intent clear — Medicaid is a medical assistance program, not a work program," the plaintiffs argued in a brief submitted in November. The purpose of the Medicaid program is "to furnish health care coverage to people who cannot otherwise afford it," it says.
Trump administration lawyers, however, argued in a reply brief that the Arkansas experiment is a valid use of federal waiver authority, in part because restricting Medicaid eligibility helps "conserve state resources." That helps ensure the fiscal sustainability of the program as a whole and means "more resources will be available for existing Medicaid beneficiaries." The defendants' brief also argues that requiring work and other forms of "community engagement" as a precondition for Medicaid incentivizes beneficiaries to lead more active, healthier lives.
"It’s easy to talk about [the work requirement] in broad strokes that this will improve people’s lives, and that’s not for me to say. But that’s not the purpose of Medicaid," the judge said in reply to government attorneys at one point during Thursday's hearing.
Last June, Boasberg blocked Kentucky's plan to roll out a work requirement, siding with a set of plaintiff beneficiaries from that state. (They, too, are represented by the National Health Law Program and the Southern Poverty Law Center.) However, the judge's ruling was focused on the narrow question of whether the Trump administration conducted a sufficiently thorough review of public comment before granting Kentucky its Section 1115 waiver. Boasberg determined it had not, sending Kentucky's proposal back to federal HHS officials, who reopened public comment.
In November, the Trump administration said it had performed a more thorough review of public comment and had once again approved Kentucky's waiver request. The waiver could go into effect in April, the administration said. The Kentucky plaintiffs challenged the re-approved waiver as well.
Boasberg now must weigh in on the more substantive arguments in the Kentucky case, which will have implications for Arkansas. Attorneys for the Arkansas plaintiffs said Thursday that if the judge finds the Trump administration did overstep its bounds in granting the waiver to Kentucky, that ruling would seem to invalidate Arkansas's waiver. Boasberg agreed, saying it "seems to me that that’s logically the right answer."
Attorneys for Arkansas said the cases differ, in part because Arkansas's work requirement has been in place since June while Kentucky's has yet to get off the ground. Because Arkansas's work rule is now the state's status quo, the state attorneys argued, halting it would create "disruption" for the Medicaid program and confusion among beneficiaries who would no longer have to comply.
"Wouldn’t that be welcome?" Boasberg replied.
The Arkansas work requirement first went into effect for a subset of beneficiaries last June. As of January, about 105,000 people were subject to the rule. It applies only to adults ages 19-49 who are not considered disabled.
Beneficiaries must report at least 80 hours a month of work, school, volunteer or certain other activities to the state, or else prove an exemption. The state grants exemptions for many reasons, including having a dependent child in the home.
If a beneficiary is out of compliance for any three months in a calendar year, he or she is kicked off of Medicaid and locked out of the program for the rest of that year. About 18,000 people lost coverage in 2018 due to the work requirement. Anecdotally, many beneficiaries have said they were unaware of the requirement, confused about the details of the policy or unsure how to report their hours.
Josh Kaplan provided reporting.
This reporting is made possible in part by a yearlong fellowship sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund. It is published here courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.