Federal Judge blocks Medicaid work requirements in Kentucky and Arkansas

Washington • A federal judge in Washington threw a significant roadblock into the Trump administration’s efforts to require poor people on Medicaid to be compelled to work in exchange for health benefits, rejecting a Kentucky program for a second time while saying that rules in effect in Arkansas “cannot stand.”

The twinned opinions, in a pair of states that have been national leaders in the move towards Medicaid work requirements, cast doubt on the Trump administration's approvals of efforts to re-envision the public insurance program. The opinions undo the permission the U.S. Health and Human Services Department had given those two states, telling the agency it must reconsider their applications with an eye towards the effect on poor people who depend on the coverage.

Judge James Boasberg, of the U.S. District Court of the District of Columbia, concluded that in letting Kentucky go forward with its requirements, HHS had been “arbitrary and capricious” — the same criticism he leveled once before.

The rulings came nine months after Boasberg, a judicial appointee of President Barack Obama, first signaled his disapproval of the way President Donald Trump's health aides were handling the issue. Two days before Kentucky was to begin its new "community engagement" requirements, the judge stopped the state in its tracks.

Kentucky had been the first state to win permission to impose "community engagement" requirements in January, 2018, a day after Seema Verma, administrator of the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid, announced that for the first time, the government would allow states to require low-income people to work, prepare for jobs, or volunteer as a condition of coverage.

The question of work requirements has emerged as a bright line in ideological debate of the role and nature of the nation's social safety net.

Administration officials, and a growing cadre of Republican governors, contend that such rules motivate low-income people to find work that will help them climb the economic ladder and eventually become self-sufficient, no longer needing public insurance.

The idea had been opposed by Barack Obama's HHS and many Democrats, who regard it as a sharp break in Medicaid's half-century history as an entitlement program, open to anyone eligible as a result of their income. Progressives contend that most poor people who can work already do and that access to health care is a precondition for some people to hold jobs.

In his June 29 opinion, Boasberg held that the federal officials who approved the new rules had been "arbitrary and capricious," neglecting to consider adequately whether the requirements "would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid."

His ruling sent Kentucky’s request to begin its program back to HHS for another review. Five months later, the department re-approved Kentucky’s plan without any changes. The state had been preparing its delayed launch of Kentucky HEALTH, as it calls its program, on April 1, with the work rules to begin this summer.

In the meantime, Arkansas ended up the first state to impose work requirements last June. Between September and December, about 18,000 people were cut off that program, known as Arkansas Works, for failing to comply for three months with requirements to work, train or volunteer for 80 hours per month - or for failing to report to the state that they met the rules.

April 1 is a significant date in Arkansas, as well as Kentucky. Under the Arkansas Works rules, the clock starts over each January, with people removed from the program allowed to reapply and a new three-month countdown for non-compliance. So the next group of people to be cut off will be announced within a few weeks. This time, cutoffs may include for the first time young adults, 19 to 29, for whom the rules have been phased in more slowly.

In legal briefs and court hearings, attorneys for both states and the U.S. Justice Department have argued that the requirements are useful because they help ensure that the states can continue to afford their expansions of Medicaid to include people with slightly higher incomes — less than 10 percent of total costs, with the federal government covering the rest. Kentucky, in particular, has contended that it could not otherwise afford its share of the program’s costs. And the states have argued that the work rules will lead people into jobs.

But at a court hearing earlier this month, the judge, in questioning attorneys, reiterated his view that neither the affordability of Medicaid’s expansion nor incentives to get jobs were at the core of the insurance program’s purpose.