A federal judge blocked Kentucky and Arkansas from requiring some Medicaid recipients to work, another setback for a Trump administration policy that other states are seeking to adopt.
In simultaneous rulings, U.S. District Judge James Boasberg in Washington decided on Wednesday that work rules in the two states shouldn’t stand. He’d ruled against the requirements in Kentucky once before.
“The secretary’s failure to consider the effects of the project on coverage alone renders his decision arbitrary and capricious,” Boasberg wrote of the Arkansas program’s approval by U.S. Department of Health and Human Services (HHS) Secretary Alex Azar.
The judge based that decision on his own ruling last year faulting Kentucky for having failed to adequately consider whether its program “would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”
HHS, for its part, failed to remedy the defects that previously prompted him to block the Kentucky program, Boasberg said. The states required approval by HHS to put their programs in place.
The court “cannot concur that the Medicaid Act leaves the secretary so unconstrained, nor that the states are so armed to refashion the program Congress designed in any way they choose,” he said, and remanded the program to the federal agency for further review.
Boasberg was appointed to serve as federal judge by former President Barack Obama.
“We will continue to defend our efforts to give states greater flexibility to help low-income Americans rise out of poverty,” Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services, said in an emailed statement.
Kentucky Attorney General Andy Beshear, who is seeking to unseat incumbent Republican Gov. Matt Bevin, promised to rescind the directive if he wins and in a statement hailed the “decision to overturn Matt Bevin’s callous waiver.” A representative of the governor couldn’t immediately be reached for comment.
Adam Meier, secretary of Kentucky’s Cabinet for Health and Family Services, the state’s health care and human services agency, disagreed, calling the judge’s decision illogical.
“Although a setback to our implementation schedule, we believe that we have an excellent record for appeal and are currently considering next steps,” Meier said in a statement.
Arkansas Attorney General Leslie Rutledge, a Republican, also criticized the ruling, saying she’s disappointed and reviewing decision to decide what to do next.
Medicaid covers more than 75 million low-income Americans, including 30 million children. The program, jointly funded by the federal government and states, cost about $580 billion in 2017. It’s usually one of the biggest budget lines for states.
Permitting states to impose work requirements in their Medicaid programs for the first time is one of the Trump administration’s signature health policies. So far, 15 states including Michigan, Ohio and Virginia have asked Washington to approve new Medicaid work rules, according to data compiled by the Kaiser Family Foundation, a health research group.
Advocates representing people whose coverage is endangered challenged the federal government’s approval of the Kentucky and Arkansas plans in court last year, arguing that they contradict Medicaid’s intended purpose to improve health. Boasberg heard oral arguments on both cases March 14 and said he would rule by the end of the month.
Many of the programs apply to the group of people who got Medicaid through the Affordable Care Act, including childless adults whose incomes can reach up to slightly above the poverty line. Some states are also targeting traditional Medicaid recipients, who tend to be poorer and have dependents.
The first state to implement the policy was Arkansas, where more than 18,000 Medicaid recipients were dropped from the program between August and December for failing to comply with work requirements, according to an analysis of state data by Kaiser.
Support for Medicaid fractures along party lines. Democrats typically see it as a safety net and want to widen eligibility. Republicans tend to consider it a welfare program and want to restrict funding and limit eligibility.
Critics of work requirements say most recipients who can work do, and that the red tape of work rules causes people who qualify for benefits to lose them unjustly. While the new plans vary by state, some include cost-sharing for Medicaid participants in addition to stricter eligibility rules.
Boasberg’s ruling won’t require Arkansas to re-enroll those who lost coverage under the policy last year, but they became eligible again at the start of 2019 and can seek to re-enroll. The ruling requires the state to tell Medicaid organizations that they shouldn’t remove people based on the work requirements going forward. In most states, Medicaid is now run through contracts with private insurers.
Medicaid recipients lost coverage if they didn’t comply with work rules for three months over the course of the year, so no one has yet been terminated in 2019.
The cases are Stewart v. Hargan, 18-cv-152, and Gresham v. Azar, 18-cv-1900, U.S. District Court, District of Columbia (Washington).
— Read Government Plan Enrollment Rises Again, on ThinkAdvisor.