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Medicaid work requirements face political, court resistance

NEW YORK(Thomson Reuters Regulatory Intelligence) - As the number of Americans eligible for the Medicaid low-income health insurance program grows through expansion under the Affordable Care Act (ACA), some states are aiming to trim the rolls by requiring recipients to work or satisfy related criteria. However, these rules have recently met significant legal opposition in multiple states.

Vaccines are placed on a tray inside the Taipei City Hospital October 1, 2010.

MEDICAID WORK REQUIREMENTS

States are allowed to experiment with their Medicaid plans using pilot programs or demonstration waivers. Before doing so, states must request approval from the Centers of Medicare and Medicaid Services (CMS), which is a part of the Department of Health and Human Services (HHS). Before granting such waiver requests, HHS must find that the programs are “likely to assist in promoting the objectives” of Medicaid.

One example of a Medicaid waiver involves work rules, which require able-bodied adults to work a minimum number of hours each month or participate in an equivalent activity as a condition for continued Medicaid eligibility. Equivalent activities include skills training, education, job searching, volunteering or caregiving.

While advocates argue the rules will increase employment among low-income people, critics point to a study with several findings that would undermine the efficacy of work requirements{here}. First, most Medicaid recipients already work. Second, a majority of recipients work full-time in low-wage industries with low rates of employer-sponsored insurance. Third, of those who do not work, a majority would be exempt anyway. Lastly, persons who remain eligible could lose coverage by failing to meet reporting requirements.

COURT CHALLENGES SLOW WAIVER EXPANSION

President Donald Trump’s administration in early 2018 announced that work requirement waivers would be permitted by the federal government. The Obama administration previously rejected all such proposals.

CMS issued guidance on how states should design their waiver proposals to increase the likelihood of approval. Under the guidance, certain recipients must be exempt from work requirements, such as those with disabilities, the elderly, children and pregnant women. States must also make “reasonable modifications” for those with opioid addictions and other substance-use disorders.

So far, nine states have received approval{here} from the Trump administration to impose work requirements. Of those nine, the programs of three states -- Arkansas, Kentucky and New Hampshire -- have been temporarily halted by challenges in federal court. The other six states’ programs have not yet been implemented. Another nine states currently have waiver applications pending.

In a pair of March 2019 decisions, Judge James Boasberg of the U.S. District Court of the District of Columbia rejected Kentucky’s waiver approval and blocked a similar Arkansas rule already in effect where more than 18,000 people have lost coverage.

The approval of Arkansas and Kentucky’s work rules by HHS were deemed “arbitrary and capricious” by the court since their impact on Medicaid coverage loss was not considered adequately. Boasberg also took an unusual step in halting Arkansas’ work requirement, instead of putting a stay on the ruling, stating that any disruption “must be balanced against the harms that plaintiffs and persons like them will experience if the program remains in effect.”

In July 2019, Boasberg also rejected New Hampshire’s waiver since HHS had not considered the possibility that the proposal might cause a significant number of recipients to lose coverage. “In short, we have all seen this movie before,” wrote Boasberg.

The Trump administration in May appealed Boasberg’s March decisions on the Kentucky and Arkansas work requirements to a three-judge panel of the U.S. Court of Appeals for the D.C. circuit.

The government defended its work rules, arguing that: 1) requiring able-bodied adults to work a certain a certain amount of time each month is essential for maintaining quality coverage; 2) keeping borderline populations out of Medicaid frees up for funds for others; 3) Medicaid recipients who start working could gain private insurance through their employers; and 4) work requirements save money for states struggling to make sure their expansion programs stay financially solvent.

Plaintiffs opposing work rules argued that: 1) work requirements would not necessarily result in Medicaid recipients transitioning to private insurance; 2) massive coverage losses will likely result; 3) the objective of the ACA is to provide coverage for more people, not financial independence; and 4) coverage should not be conditioned on someone’s physical well-being or job status.

Prospects for overturning the District Court decision in the appeals court appear slim. Two of the appeals panel’s three judges sharply criticized the government’s arguments defending work rules. One seemed to agree with the plaintiffs that financial independence is not an objective of Medicaid and the ACA, critiquing the government by saying it was “looking for objectives that are not in the statute.” Another judge undercut the government’s position by saying that Congress would have passed work rules for Medicaid, as it did for some other welfare programs in 2010, if they had deemed it appropriate.

A date has not been set for the appeals judges’ decision.

POLITICAL BATTLEGROUND

Regardless of the appeals court decision, Kentucky’s work rule could be in jeopardy. In November 2019, Governor-elect Andy Beshear vowed to rescind it after the Democrat takes office in early 2020{here}. During the election, Beshear ran on defending Medicaid expansion.

Although he only won by a slim 0.4% margin, Beshear’s victory could signal that tides are turning against the popularity of Medicaid work requirements. Their future remains to be seen depending on whether a similar trend emerges in other states and the outcome of the 2020 presidential election.

*To read more by the Thomson Reuters Regulatory Intelligence team click here: bit.ly/TR-RegIntel

Logan Mortenson is a compliance attorney editor for Thomson Reuters. He is based in Eagan, Minnesota.

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