In Appellate Defeat, Arkansas Loses Waiver for Medicaid Work Requirement

WASHINGTON (CN) — The D.C. Circuit on Friday struck down government approval of a rule by Arkansas that requires Medicaid recipients to work or participate in job training as a condition of receiving their benefits.

In March 2018, the Trump administration granted Arkansas a waiver allowing the state to overhaul its eligibility requirements for Medicaid, the public health care program that covers low-income people as well as those who are disabled or elderly.

The Arkansas capitol building in Little Rock.

Arkansas sought to add a requirement that people between the ages of 19 and 49 had to either work or take part in educational or job-training programs for 80 hours a month to receive benefits.

Under federal law, states can receive waivers from the federal government that allow them to experiment with how they administer Medicaid, but only if the Department of Health and Human Services determines the changes are “likely to assist in promoting the objectives” of the program.

A group of Arkansas residents filed suit in Washington over the move, arguing that HHS Secretary Alex Azar had overstepped his authority by granting the waiver to Arkansas.

The government appealed after a federal judge agreed in March, finding the Trump administration had not considered how the work requirement would impact the core mission of the Medicaid program.

But the D.C. Circuit also sided with the Arkansas residents Friday, affirming judgment for them in a 19-page opinion. Writing for a three-person panel, U.S. Circuit Judge David Sentelle said the text of the Medicaid statute, as well as decisions from other courts, confirms the core purpose of Medicaid is to provide health coverage to people who cannot afford it otherwise.

Sentelle called out the agency for basing its decision primarily on whether the changes would improve health outcomes, saying it failed to fully grapple with the fact that some 18,000 people in Kentucky lost coverage in five months due to the work requirement.

“Importantly, the secretary disregarded this statutory purpose in his analysis,” Sentelle, an appointee of President Ronald Reagan, wrote. “While we have held that it is not arbitrary or capricious to prioritize one statutorily identified objective over another, it is an entirely different matter to prioritize non-statutory objectives to the exclusion of the statutory purpose.”

Ian Gershengorn, an attorney with Jenner & Block who argued the case for the Arkansas residents, called the ruling an important victory.

“It makes it clear that the administration cannot simply ignore the devastating real-world consequences of its policies,” Gershengorn said in a statement. “This is a victory for thousands of Americans who can now continue to have access to health coverage and health care.”

Arkansas Governor Asa Hutchinson defended the work requirement and said he is hopeful the state will be able to make its case anew before the Supreme Court.

“Arkansas implemented a work requirement in order to help recipients get worker training and job opportunities while receiving benefits,” Hutchinson said in a statement. “It is difficult to understand how this purpose is inconsistent with federal law. The court’s ruling undermines broad public support for expanded health care coverage for those struggling financially.”

Neither the Justice Department nor HHS immediately returned requests for comment about the ruling.

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