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Medicaid Work Rules Dispute Signals Division on Supreme Court

March 19, 2021, 9:46 AM

The Supreme Court canceled plans to hear arguments over work requirements for Medicaid beneficiaries but it didn’t dump the cases entirely, signaling the justices may be divided over what to do with the dispute.

The parties in the case are waiting for the court to rule on an unusual request from the Biden administration. The Department of Justice asked the court to toss two lower court decisions that invalidated work rules the Trump administration had approved for recipients in Arkansas and New Hampshire, even though the Biden administration was actively working to withdraw those approvals.

The Justice Department said the appeals court decisions should be scrapped because they create uncertainty over the scope of authority the Health and Human Services secretary has to test new policies for the Medicaid program. That question over the extent of agency power could be an enticing question some of the justices on the high court want to ultimately resolve.

“One possibility for the delay is there is a division,” said Katie Keith, a health law professor at Georgetown University. “They may be trying to decide what to do with that motion.”

Core Objective

On Wednesday, the HHS sent letters to Arkansas and New Hampshire notifying the states that the approvals for their work rules were being withdrawn, effective in 30 days. The agency pointed to the Covid-19 pandemic and early evidence showing work rules rapidly cause beneficiaries to lose their health-care coverage as reasons for walking back the prior approvals.

“Uncertainty regarding the current crisis and the pandemic’s aftermath, and the potential impact on economic opportunities (including job skills training and other activities used to satisfy community engagement requirements, i.e., work and other similar activities), and access to transportation and affordable child care have greatly increased the risk that implementation of the community engagement requirement approved in this demonstration will result in substantial coverage loss,” the letters said.

The move could help convince the court that the case is now moot and shouldn’t be heard. But even if the justices decide the case is no longer a live issue, they will still have to decide whether to keep the appeals court decisions on the books.

Some legal scholars say the lower court rulings could be read broadly as limiting the secretary’s authority to use Medicaid funding on other factors that have been shown to have a major impact on people’s health like housing and transportation.

The U.S. Court of Appeals for the District of Columbia Circuit said Medicaid’s primary objective is to provide low-income people access to medical care. That implies that any use of a Medicaid waiver that doesn’t directly advance that purpose is suspect, said Nicholas Bagley, a professor at the University of Michigan Law School.

“At a minimum, the D.C. Circuit decisions give ammunition to people who are upset with Medicaid waivers to challenge them in court,” he said.

But others say the opinions should be read more narrowly.

The court of appeals and the district court said over and over that they weren’t passing judgment on the power of the secretary to identify other objectives of Medicaid, said Sara Rosenbaum, a health law and policy professor at George Washington University.

“All they were saying is the core objective of the program is coverage and therefore, if you want to promote other outcomes, you have to tell us what the effect on coverage would be,” she said.

When the Trump administration approved work requirements for the federal program, it argued they would help Medicaid beneficiaries transition to employer-sponsored or federally subsidized commercial health insurance and make people healthier. But more than 18,000 people lost Medicaid coverage in the five months work requirements were in effect in Arkansas.

Clean Slate

The consolidated case before the Supreme Court is one that’s been turned upside down by the change of administration. The Biden administration told the court there’s no reason now to hear the appeals the Trump administration filed because Congress won’t allow states to unenroll people from Medicaid if they’re receiving additional funding from the Covid-19 relief legislation, and the new administration had already determined work rules don’t advance the objectives of Medicaid.

The Justice Department may be asking the court to toss the lower court decisions because it wants a clean slate, Keith said.

“The argument being made by the government is that the circumstances have changed so much that first, there is no need for the Supreme Court to rule on this issue at this time, and second, if this does come to the courts again, it should be on entirely new facts and circumstances without this prior lower court case law,” she said.

Arkansas Attorney General Leslie Rutledge told the court in a Feb. 22 brief that the issue is likely to come back before the court if the state’s approval of the work rules is rescinded.

“Arkansas’s program is important because it encourages personal responsibility while still providing healthcare coverage for those seeking gainful employment, and it’s important to defend that program,” she said in a statement after arguments were canceled last week.

Rutledge is hoping the Supreme Court will reschedule the arguments and ultimately rule that the secretary’s approval of the work requirements was valid under Medicaid, Stephanie Sharp, a spokeswoman for the Arkansas Attorney General’s Office, said in an email.

The court was scheduled to hear the case March 29. Though the case was removed from the arguments calendar, the court didn’t pause the briefing in the case. The final round of briefs from the federal government and Arkansas are due March 22.

“There are a lot of good reasons why they should grant the government’s motion, but they could very well choose to keep the case,” Keith said.

The case is Cochran v. Gresham, U.S., No. 20-37.

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; Karl Hardy at khardy@bloomberglaw.com

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