States should exhaust legal process when implementing Medicaid work rules

States should exhaust legal process when implementing Medicaid work rules
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Among the pressing issues before lawmakers this budget season is the rising cost of health care, which, in most states, now rivals spending for public education and infrastructure. Indeed, recent surveys of registered and likely voters also demonstrate that health care reform is top-of-mind for those who plan to vote in November. It also has been one of the most talked-about wedge issues on the campaign trail, but Congress has been unable to make strides toward meaningful health care reform. 

Court battles continue, meanwhile, over the legitimacy of entire programs, so state legislators must take greater responsibility in leading on health care policies that set an example for the rest of the country.

Until recently, states had little flexibility to manage their health care programs, and all the incentives went against doing the right thing by patients and taxpayers. The Affordable Care Act gave states the chance to expand their Medicaid programs to healthy, childless adults and get the federal government to (temporarily) pay 100 percent of the cost of doing so. Not surprisingly, 35 states and the District of Columbia jumped on board. In short, these states traded short-term cost-shifting for long-term liabilities. Fast-forward several years, and enrollment and costs have increased far beyond projections in every state that took this deal. And because the federal spending match rate has been reduced to 90 percent of these new costs, states have had to make up the difference. 


Fortunately, the Trump administration has departed from some Obama-era policies. It has the Centers for Medicaid and Medicare to approve waivers that allow states to impose new eligibility requirements on able-bodied adults who signed up for Medicaid as part of the ACA expansion. Seven states, including Michigan, took advantage of this new flexibility by passing work and community engagement requirements for capable, working-age adults without dependents. Similar rules for welfare came into effect at the federal level as part of the historic welfare reform effort of 1996, led by President Clinton. In the decades that followed, millions of people were lifted out of poverty; minorities and single mothers experienced the greatest economic benefits. 

Despite the known benefits that work rules have — controlling costs, protecting critical safety nets, and providing bridges toward greater independence — courts have stepped in to suspend Medicaid-related rules in Kentucky, Arkansas and, most recently, Michigan. Four other states  subsequently have paused their requirements until the legal challenges conclude.  

“While the federal defendants continue to disagree with this court’s decisions in [the Arkansas cases], they acknowledge that, under those decisions, HHS’s approval of [Michigan’s] work and community engagement component is unlawful,” wrote lawyers for the U.S. Department of Health and Human Services in a memo to Judge James Boasberg. In short, HHS is signaling that, while recognizing the approved work rules for most states are similar enough to subject them to the current U.S. Circuit Court’s decision, the agency nevertheless maintains that the rules should and will continue to be defended in other levels of the judicial process.

This is because neither the U.S. Court of Appeals nor the circuit court’s ruling said work rules were necessarily illegitimate. Nor did they suggest that the rules themselves are necessarily illegal. Rather, both the circuit court and the appeals court found that the Centers for Medicaid and Medicare needed to do more to assess their effects on health insurance coverage. 

By failing to implement Medicaid work and community engagements requirements, states harm beneficiaries and taxpayers alike, because these rules improve access to care and save money for the state. This is no mere assertion based on theory; it’s what Arkansas enjoyed during the brief time its rules were in effect. As reported by Victoria Eardley, research fellow for the Foundation for Government Accountability, “More than 14,000 individuals left the program due to increased incomes. The work requirement empowered them to move from government dependency to financial independence.”


The requirements, beyond empowering these individuals to become more self-sufficient, also were expected to save Arkansas taxpayers at least $300 million per year as healthy individuals migrated off the rolls and found private coverage. Unfortunately, “more than 4,000 able-bodied adults immediately returned to the program once the work requirement was paused,” Eardley said.

The Trump administration and HHS plan to continue to support and defend state work rules through the legal process, which may well culminate at the Supreme Court. State legislatures should do their part by examining legal options that would hold state administrations accountable to defending their approved waivers authorizing work requirements. Doing so will send a strong statement to Washington politicians that state policymakers are serious about reform and willing to be a co-equal in charting the path forward.

Lindsay Killen is the vice president of outreach and communications at the Mackinac Center for Public Policy, a research and educational institute located in Michigan. David Guenthner is the senior strategist for state affairs at the Mackinac Center.