The courts haven’t looked favorably on states imposing work requirements on Medicaid beneficiaries. That could change in a 6-3 Republican Court.
The Supreme Court announced on Friday that it will hear a pair of consolidated cases — Azar v. Gresham and Arkansas v. Gresham — both of which concern whether the state of Arkansas may require Medicaid recipients to either work or take certain steps to find a job, or else lose their health benefits.
Arkansas, with the Trump administration’s approval, implemented a program called “Arkansas Works,” which requires Medicaid beneficiaries between the ages of 19 and 49 to “work or engage in specified educational, job training, or job search activities for at least 80 hours per month,” and to document that they’ve engaged in these activities.
The ostensible purpose of Arkansas Works is fairly straightforward. If Medicaid beneficiaries risk losing health care if they aren’t also employed, then they have additional incentive to find work. In approving Arkansas’s request to add a work requirement to its Medicaid program, the Trump administration claimed that this requirement would “encourage beneficiaries to obtain and maintain employment or undertake other community engagement activities that research has shown to be correlated with improved health and wellness.”
Yet research indicates that Medicaid work requirements do not advance this goal. A 2019 study published in the New England Journal of Medicine found that “Arkansas’s implementation of the nation’s first work requirements in Medicaid in 2018 was associated with significant losses in health insurance coverage in the policy’s initial six months but no significant change in employment.”
Nevertheless, 19 states have attempted to implement work requirements, although some of these states have since abandoned such plans. The Department of Health and Human Services has approved eight of these requests so far, with several more pending.
For the moment, at least, none of these work requirements are in effect. Many have been blocked by courts (the opinion blocking Arkansas’s work requirement was written by David Sentelle, an extremely conservative federal appeals court judge). And the federal government implemented a freeze on dropping people from Medicaid during the Covid-19 pandemic.
Moreover, because Medicaid work requirements must be approved by HHS, the Biden administration will likely be able to withdraw approval of such programs — although the process of withdrawing approval may take some time to complete.
Nevertheless, the implications of the Gresham cases could be profound. While Arkansas’s work requirement was in effect, about a quarter of those subject to the requirement — more than 18,000 people — were kicked off Medicaid in five months. And that’s just in one state.
Moreover, while the Biden administration is unlikely to permit Medicaid work requirements, a future Republican administration is likely to support them just as enthusiastically as the Trump administration.
Thus, if the Supreme Court holds that such requirements are lawful, thousands (or potentially hundreds of thousands) of Americans could lose coverage whenever a Republican occupies the White House.
Medicaid waivers, briefly explained
Medicaid is a partnership between the federal government and the states to provide health coverage to low-income Americans. States administer their own Medicaid programs and pay for some of the costs of those programs. The federal government, in turn, provides significant funding to states — provided those states comply with conditions laid out in the various laws and regulations governing Medicaid.
Prior to Obamacare, states that participate in Medicaid (and all 50 states do) were only required to cover certain mandatory populations, such as poor families with dependent children or certain low-income individuals with a disability. The Affordable Care Act sought to expand Medicaid to all Americans earning less than 133 percent of the poverty rate, but the Supreme Court held in NFIB v. Sebelius (2012) that states could opt out of Obamacare’s Medicaid expansion without endangering their existing Medicaid funding.
For this reason, a low-income individual’s access to Medicaid can vary greatly depending on where they live. To date, 12 states still have not expanded their Medicaid program under the Affordable Care Act.
Another reason access to Medicaid can vary from state to state is that the law also permits states to seek waivers from Medicaid’s minimum coverage requirements, in order to set up “experimental, pilot, or demonstration project[s].” Requests for such a waiver must be approved by HHS, and they may only be granted if the proposed experimental project is “likely to assist in promoting the objectives” of the Medicaid program.
Arkansas is one of the few Southern states that expanded Medicaid under Obamacare, although it did so pursuant to a 2013 waiver that allows Arkansas to provide private insurance to Medicaid beneficiaries, rather than covering them through a government-run Medicaid program. In 2017, about six months after President Trump took office, the state sought an amendment to this earlier waiver, allowing the state to implement Arkansas Works.
The courts have thus far been skeptical of Medicaid work requirements because they undermine the purpose of the Medicaid program
Because Medicaid waivers may only be granted if they are “likely to assist in promoting the objectives” of the broader Medicaid program, work requirements generally have not fared very well in federal court.
The Medicaid statute states that one of the primary purposes of the program is to furnish “medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services.” The statute defines the term “medical assistance” to mean “payment of part or all of the cost of [certain forms of] care and services or the care and services themselves.”
Thus, the explicit purpose of Medicaid is to provide health coverage to vulnerable populations — or, at least, to pay for the cost of such coverage.
Work requirements undermine this purpose. They reduce the number of Medicaid-eligible individuals who receive coverage. So, by granting a waiver permitting Arkansas’s work requirement to take effect, Trump’s HHS department exceeded its authority.
The Trump administration, for what it’s worth, claimed that such a waiver is justified because work requirements would advance broader public health goals. Among other things, the administration claimed that work requirements address “behavioral and social factors that influence health outcomes,” that they give Medicaid beneficiaries an incentive “to engage in their own health care and achieve better health outcomes,” and that they will “encourage beneficiaries to obtain and maintain employment” or take other actions that are “correlated with improved health and wellness.”
Yet, whatever the wisdom of these arguments — and, as the New England Journal of Medicine study suggests, there are good reasons to doubt the Trump administration’s case for work requirements — HHS is not allowed to substitute its own public health objectives for those laid out in the Medicaid statute.
As Judge Sentelle wrote in his opinion striking down Arkansas’s Medicaid waiver, “the Supreme Court and this court have consistently reminded agencies that they are ‘bound, not only by the ultimate purposes Congress has selected, but by the means it has deemed appropriate, and prescribed, for the pursuit of those purposes.’” And, in Gresham, he writes, “the means that Congress selected to achieve the objectives of Medicaid was to provide health care coverage to populations that otherwise could not afford it.”
Until recently, if Sentelle voted to strike down a federal policy that is rejected by Democrats and that enjoys broad support among Republicans, that was a pretty good sign that the policy would not survive Supreme Court review. President Reagan nominated Sentelle to the bench at the urging of Sen. Jesse Helms, the archconservative North Carolina Republican who first rose to prominence as an outspoken segregationist. Before Trump started filling the federal bench with Federalist Society stalwarts, Sentelle was one of the most conservative judges anywhere in the federal judiciary.
But the current Supreme Court, with its 6-3 Republican majority, is more conservative than any panel of nine justices since the early days of the Roosevelt administration. The fact that the Court decided to review Sentelle’s decision suggests that its new majority could potentially uphold Medicaid work requirements.
The Biden administration may be able to moot this case
As Joan Alker, executive director of Georgetown University’s Center for Children and Families, notes, “every waiver approval has a long list of ‘terms and conditions’ many of which are boilerplate material that appear in every Medicaid demonstration.” One of those requirements is that the federal government may withdraw its approval of a waiver if “at any time if it determines that continuing the waivers … would no longer be in the public interest or promote the objectives” of Medicaid.
So the Biden administration can probably rely on this authority to withdraw approval of Arkansas’s Medicaid work requirements — as well as approval of any similar requirements in other states. Yet, as Alker notes, “the state is guaranteed the right to a hearing to challenge the federal determination.” So it is unclear just how quickly the Biden administration could withdraw approval of Arkansas Works.
Moreover, as Alker also notes, Medicaid waivers often involve “complex agreements that include other features besides work requirements,” so the new administration may need to take its time studying these agreements to determine which parts it wishes to keep and which parts it wishes to unravel.
Arkansas’s work requirement, for example, was approved as an amendment to the state’s existing waiver allowing it to offer private coverage to Medicaid beneficiaries. This privatized arrangement has proven successful in expanding health coverage in Arkansas, and it’s provided a model that red states that might otherwise refuse to expand Medicaid have emulated. So it’s unlikely that the Biden administration will wish to unravel Arkansas’s waiver altogether.
The new administration, in other words, may spend its first months negotiating new terms with states like Arkansas, rather than acting unilaterally.
If Biden’s HHS department can nullify the Trump administration’s approval of Arkansas’s work requirements before the Supreme Court rules in Gresham, however, it has good reason to do so. Such a decision by the Biden administration would likely moot this case, and prevent the Supreme Court from handing down a decision permitting work requirements.
And that would mean that a future Republican administration would likely have to spend months or even years litigating the question of whether work requirements are permitted, rather than potentially being able to implement such requirements right away.
Author: Ian Millhiser
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