Court Decision Gives Arkansas Medicaid Beneficiaries Another Big Win

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A court once again has ruled against Arkansas’s attempt to condition Medicaid benefits on work requirements, sparing thousands of beneficiaries the pain of losing access to needed health care.

The policy issue initially heated up almost two years ago, when the secretary of the U.S. Department of Health and Human Services (HHS) approved the state’s section 1115 waiver application to give the state permission to impose work requirements on certain Medicaid beneficiaries. Section 1115 of the federal Social Security Act gives the HHS secretary authority to waive certain requirements in approving state policies if those policies are likely to assist in promoting the objectives of Medicaid. Arkansas implemented its work requirement in June 2018, conditioning receipt of Medicaid benefits on compliance. The consequence of noncompliance was losing Medicaid coverage.

The result: in the first six months of implementation, more than 18,000 Arkansans lost Medicaid coverage. A lawsuit ensued challenging the federal government’s decision to approve the waiver, and a March 2019 decision by the U.S. District Court for the District of Columbia forced Arkansas to stop its work requirement. The federal government appealed to the D.C. Court of Appeals.

In a decision released just last week, the appeals court affirmed the lower court’s ruling that the Administration exceeded the scope of its legal authority by approving Arkansas’s work requirement.

In reaching its conclusion, the appeals court rejected the Administration’s argument that legitimate purposes of Medicaid include both improving health outcomes and promoting beneficiary independence. Agreeing with the lower court, the appeals court reaffirmed the primary purpose of Medicaid—to provide medical care and services to people whose income and resources are insufficient to meet the costs of needed medical care.

The court reasoned that because Medicaid’s primary purpose is to provide health coverage, the Administration should have considered the impact of coverage losses when it made the decision to approve the Arkansas work requirement. Ultimately, the court determined that the Administration’s failure to take these losses into account when it gave the state permission to impose work requirements was unreasonable and inconsistent with the statutory objective of Medicaid.

What’s Next?

The Court of Appeals decision means that Arkansas still can’t implement its work requirement for the time being. This is terrific news for the thousands of people in the state who rely on Medicaid and were at risk of losing access to needed health care. The next stop for this case is the U.S. Supreme Court, though there is no guarantee that the Court will agree to hear it. In addition, the decision should send a strong signal to other states seeking to condition Medicaid benefits on labor force participation. It remains to be seen if other states with approved work requirement waivers will implement them, or if the HHS secretary will continue to approve pending state requests to impose work requirements.