Trump hits obstacles in effort to reshape Medicaid

The Trump administration faces a long, tough road ahead in its mission to reshape Medicaid, the primary federal health program for the poor, after losing three legal challenges in less than one year. 

Trump and leaders at the Department of Health and Human Services (HHS) — Secretary Alex Azar and Medicaid Administrator Seema Verma — are pushing to make employment a precondition for receiving Medicaid coverage in all 50 states.

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But that future is uncertain after a federal judge ruled Wednesday against work requirements in Kentucky and Arkansas, raising questions for other states looking to implement similar programs.

“The judge’s ruling should be a wake-up call, both for any state considering work requirements, as well for Secretary Azar and Administrator Verma,” said Joan Alker, executive director of Georgetown University Center for Children and Families.

“They can’t just continue business as usual.”

HHS has approved nine states’ work requirement requests, and an additional seven are seeking approval. Arkansas, Indiana and New Hampshire are the only states that have implemented their work requirements so far.

But HHS has now lost every time it had to defend work requirements in court: twice in the Kentucky case and once for Arkansas.

Most recently, Judge James Boasberg of the the U.S. District Court for D.C. on Wednesday ruled that the projects in Kentucky and Arkansas didn’t consider "the 'core' objective of Medicaid: the provision of medical coverage to the needy."

While the decisions don’t extend to other programs that have been approved — those need to be challenged individually — it could set a precedent for future cases.

The National Health Law Program, which brought the lawsuits against the Arkansas and Kentucky programs, also filed suit last week against work requirements in New Hampshire that are slated to take effect this summer.

That case was filed in the same court and could be heard by the same judge. A lawsuit challenging Indiana’s requirements is also possible; Medicaid beneficiaries there who don’t comply with the requirements begin losing coverage in 2020.

More than 18,000 people have lost Medicaid coverage in Arkansas since the program became the first to take effect last summer. And 95,000 were estimated to lose coverage under the Kentucky program, which hadn’t yet gone into effect.

The rulings could give pause to states that have received the go-ahead for their programs, but have not yet implemented them, and others that were considering applying for work requirement waivers.

A bill in Idaho that would direct the state to apply for work requirements died in committee Wednesday, with the sponsors citing the rulings.

“This sends a clear message both to the federal government, and to state policymakers in the legislatures, in the executive branch,” said Eliot Fishman, a senior director of health policy at Families USA, which opposes work requirements.

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“You now have a clear sense of what you are bargaining for in trying to pursue one of these programs: potentially years of litigation.”

Most of the states that have received approval for their work requirement programs have expanded Medicaid under ObamaCare to cover childless, low-income adults.

But five of the seven states with applications under review have not expanded Medicaid, and are asking HHS to approve work requirements on the traditional population, namely very low-income parents.

That’s going to be harder for HHS to defend, experts say.

“That’s, in my judgement, an even higher hurdle to pass with the courts because this is a mandatory coverage group required by law,” Alker said.

“[Verma] and the secretary would cross into new and tougher legal ground by approving any of those.”

Meanwhile, Verma and state officials in Arkansas and Kentucky have indicated that they plan to forge ahead with their requirements despite Wednesday’s setback.

“I remain fully committed to a work requirement, and we are in this for the long haul because we believe it is the right policy,” said Arkansas Gov. Asa Hutchinson (R) at a news conference Thursday. 

Hutchinson said he was encouraged by conversations he had Thursday with HHS officials in which he urged them to seek an expedited appeal. Verma said in a statement Wednesday that HHS will “continue to defend our efforts to give states greater flexibility to help low-income Americans rise out of poverty.”

Kentucky’s health secretary Adam Meier also said he believes the state has an “excellent record for appeal.”

Experts that support work requirements say it's an issue that could go all the way to the Supreme Court.

“The ruling in the Arkansas case is obviously a major blow to the Trump Administration’s Medicaid work requirement rules, but I do think the case will be appealed and ultimately go to the U.S. Supreme Court,” said Sally Pipes, president and CEO of Pacific Research Institute, a free-market think tank.