UPDATE: April 11, 2019: The U.S. Department of Justice on Wednesday appealed the ruling on behalf of HHS Secretary Alex Azar and CMS Administrator Seema Verma. The case is now in the U.S. Court of Appeals for the District of Columbia Circuit.
- A federal judge on Wednesday struck down Medicaid work requirements in Arkansas and Kentucky that forced most Medicaid recipients to work at least 80 hours per month in order to receive healthcare coverage, saying the requirements directly oppose the program's core objective of providing care to those in need.
- U.S. District Judge James Boasberg's dual rulings prohibited Kentucky from greenlighting its Medicaid work requirement for a second time and stopped the program in Arkansas. Boasberg, appointed by President Barack Obama, questioned whether Arkansas' work requirements "would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid."
- In January, CMS approved Arizona's requirement waiver, making it the eighth state to receive the go-ahead from the agency. There are seven similar state work requirements on deck to be considered by CMS, and the rulings have the potential to affect all.
The rulings put a damper on the Trump administration's bid to transform Medicaid into what CMS Administrator Seema Verma described Wednesday evening as a "vehicle to serve working age, able-bodied adults." The judge's decision suggests that notion is directly opposed to what Medicaid was designed to provide: "the provision of medical coverage to the needy."
Verma clapped back Wednesday evening on Twitter, issuing a statement asserting the agency's determination to continue to "help low income Americans rise out of poverty" through Medicaid work requirements.
"We believe, as have numerous past administrations, that states are the laboratories of democracy and we will vigorously support their innovative, state-driven efforts to develop and test reforms that will advance the objectives of the Medicaid program," Verma's statement reads.
Boasberg's ruling sent both Arkansas and Kentucky's programs back to HHS, the latter for the second time. That state's work requirement waiver was originally struck down by Boasberg in July 2018. Kentucky claimed the program would reduce its Medicaid population by about 100,000 recipients, saving the state $2.4 billion.
More than 18,000 people in Arkansas lost Medicaid coverage between September and December, according to the Kaiser Family Foundation, due to the failing to meet the requirements — meaning they either didn't work 80 hours a month or failed to report the hours they did.
A new report from The Commonwealth Fund found that work requirements would leave hospitals with lower revenues, higher levels of uncompensated care and, consequently, even tighter operating margins. Hospitals in some states that have proposed work requirements could lose more than 20% of Medicaid revenue per hospital, according to the report, as well as seeing massive rises in uncompensated care costs.
States that have proposed work requirements have argued that the level of government spending needed to sustain Medicaid is becoming unmanageable and are looking to Section 1115 waivers to contain costs. A 2017 HHS Office of the Actuary report estimated Medicaid expenditures will grow at 5.7% every year — a faster rate than the gross domestic product is predicted to grow over the next decade.
CMS is still reviewing work requirement projects for a number of states, including Alabama, Mississippi, Ohio, Oklahoma, South Dakota, Tennessee, Utah and Virginia.