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Justices to Mull Wading Into Fight Over Medicaid Work Rules (1)

Oct. 20, 2020, 9:35 AMUpdated: Oct. 20, 2020, 8:48 PM

The U.S. Supreme Court has to decide whether to give the federal government another shot at greenlighting Medicaid work rules that opponents say will be disastrous for low-income people already struggling during the pandemic.

A federal appeals court struck down an Arkansas law that forced people to work, volunteer, or go to school to get Medicaid a month before Covid-19 shuttered businesses across the country. The high court is being asked to step into the dispute at a time when millions of people are flocking to Medicaid after losing their jobs and their employer-sponsored health-care coverage.

“We have millions of people out of work now. A lot of them are likely to lose the coverage that they were getting through work,” said Benjamin Sommers, a Huntley Quelch professor of health-care economics at the Harvard T.H. Chan School of Public Health.

“Opportunities to get jobs in the first place, which is the underlying idea of work requirements, become much more difficult,” he said.

Arkansas and Health and Human Services Secretary Alex Azar have separately petitioned the high court to review the U.S. Court of Appeals for the District of Columbia Circuit’s decision that found Azar unlawfully approved the state’s work program in 2018.

The justices are expected to vote this term on whether to hear the cases. A conference date has not yet been selected.

The appeals court said Azar focused on three objectives in approving the requirements— improving health outcomes, addressing social factors that influence those outcomes, and creating incentives for beneficiaries to engage in their own health care—but that those aren’t objectives of the Medicaid program.

“The district court and then the appeals court affirmed that the purpose of the Medicaid program is to provide coverage and the work requirement is the antithesis to the objectives of the Medicaid program,” said Jessica Schubel, a senior policy analyst at the Center on Budget and Policy Priorities.

Arkansas argues healthier outcomes and the independence of beneficiaries are objectives of Medicaid. The Justice Department, arguing on behalf of Azar, says the HHS secretary has broad authority to approve measures he thinks are likely to promote the objectives of Medicaid and stretch scarce financial resources to provide health-care coverage.

“Every Medicaid dollar a State saves is a dollar that it can spend providing coverage for additional individuals or providing additional benefits,” the government said in its petition to the Supreme Court.

Transition to Work

Enrollment in Medicaid has climbed in recent months.

More than 67.9 million people were enrolled in Medicaid in June, up from 64.8 million in March, according to the Centers for Medicare & Medicaid Services. Last month, 19.4 million people reported they were unable to work at all or forced to work fewer hours because their employer closed or lost business due to the pandemic, according to the Bureau of Labor Statistics.

Arkansas’s program would require non-exempt, able-bodied beneficiaries under the age of 50 to report 80 hours of work, work-related activities, education, or volunteering per month to receive Medicaid coverage.

“Arkansas Works’ model was designed to encourage able-bodied Arkansans without dependent minors in the home to transition into the workforce,” Arkansas Attorney General Leslie Rutledge (R) said in a statement to Bloomberg Law.

“Arkansas Works promotes healthier outcomes by enabling recipients to obtain employment in exchange for Medicaid benefits and create a sense of accomplishment by improving their health and financial independence.”

Arkansas is one of 19 states that have sought to adopt work requirements after the CMS put out guidance in 2018 announcing it would support such measures. Azar’s petition to the Supreme Court asks the justices to uphold the government’s approval of Medicaid work requirements in New Hampshire as well as in Arkansas.

Critics have called New Hampshire’s policy one of the harshest. It requires certain adult Medicaid beneficiaries to spend 100 hours a month on work or skill-building activities to qualify for coverage.

The federal government has approved work requirements for Medicaid in 11 states, according to the Kaiser Family Foundation’s online tracker. Georgia gained approval last week.

But courts blocked requirements in Arkansas, Kentucky, Michigan, and New Hampshire.

Kentucky Gov. Andy Beshear (D) announced he had rescinded the state’s Medicaid work rules in December 2019, during his first week in office.

Programs in Alabama, Idaho, Mississippi, Montana, Oklahoma, South Dakota, and Tennessee are pending HHS approval.

Nebraska’s plan, which the CMS approved on Tuesday, requires beneficiaries to meet work or community engagement requirements to earn addition benefits like dental and vision coverage and over-the-counter medications.

No state work requirements are currently active.

“What I heard from governors across the country is that they wanted to do more than just hand out insurance cards,” CMS Administrator Seema Verma said during a recent webinar hosted by the Aspen Institute. “They wanted to help people rise out of poverty, help them be independent. Nobody wants to be dependent on the government.”

Perplexing Process

While Arkansas’s goals for the requirements may be well-intentioned, a study Sommers conducted with other Harvard professors found that 18,000 adults in the state lost coverage in the nine months the requirements were in effect before a federal judge in the District of Columbia tossed them out.

“The vast majority of people who ended up losing coverage from the work requirements didn’t lose it because they weren’t working,” Sommers said. “It was because they weren’t able to navigate the process they had to use to report to the state.”

The study found more than 95% of the target population was already working or should have qualified for an exemption, but didn’t understand they were required to report their activities to the state online.

The lower court’s ruling in the case over Arkansas’s program doesn’t stop the federal government from approving work requirements for Medicaid in other states. But any approval that’s challenged will likely be tossed out by the U.S. District Court for the District of Columbia.

With an election looming, the court could decide to wait and see what happens, said Sidney Watson, director of the center for health law studies at Saint Louis University School of Law.

“I think the future of work requirements depends on the next administration,” she said.

The cases are Azar v. Gresham, U.S., No. 20-37 and Arkansas v. Gresham, U.S., No. 20-38.

—With assistance from Christopher Brown

(Updated to include new information about Nebraska's plan in 21st and 22nd paragraphs.)

To contact the reporter on this story: Lydia Wheeler in Washington at lwheeler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com

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