Federal court strikes down Trump administration's Medicaid work requirements

A federal appeals court rejected a Trump administration rule that allowed Arkansas and other states to impose work requirements on its low-income residents who received Medicaid benefits, further blocking a marquee issue for the president.

The U.S. Court of Appeals for the District of Columbia Circuit ruled Friday that the White House had acted unlawfully and that Health Secretary Alex Azar's approval of the program, known as Arkansas Works, was "arbitrary and capricious."

Judge David Sentelle referred to the original Medicaid statute in his opinion, which he wrote "identifies its primary purpose rather than a laundry list" of secondary goals and only aims "to provide health-care coverage to populations that otherwise could not afford it."

The decision was unanimous and upheld the one originally made by U.S. District Judge James E. Boasberg in March 2019.

“We are pleased with the DC. Circuit’s decision today. It makes it clear that the administration cannot simply ignore the devastating real-world consequences of its policies,” said Ian Heath Gershengorn, one of the lawyers who argued the case. “This is a victory for thousands of Americans who can now continue to have access to health coverage and health care.”

The appeals court opinion criticized Azar for only considering positive secondary outcomes that did not deal with the central objective of the law and for ignoring Congress's direction within the law itself, noting that "when Congress wants to pursue additional objectives within a social welfare program, it says so in the text."

In his original approval letter to Arkansas, Azar said that the program would "encourage beneficiaries to obtain and maintain employment or undertake other community engagement activities that research has shown to be correlated with improved health and wellness."

Azar and the Department of Health and Human Services did not immediately respond to a request for comment.

Arkansas Gov. Asa Hutchinson, a Republican who signed off on the program, said that the purpose of the law was "to help families be independent," which he claimed is what drove the state to adopt the policy and require that beneficiaries find work.

"It is difficult to understand how this purpose is inconsistent with federal law," the governor said in a statement on Friday. "The court’s ruling undermines broad public support for expanded health care coverage for those struggling financially. Arkansas Works has expanded access to health care coverage for low-income Arkansans. Hopefully, the Supreme Court will review today’s ruling but as it stands the Arkansas Works program will be less effective in helping recipients gain independence.”

Instituted in 2018, Arkansas was the first state to adopt work requirements for Medicaid, a program that ultimately caused 18,000 residents of the state to lose their health care coverage before a federal court order blocked the measure in March 2019. Arkansas Works required "able-bodied" adults to work, study, volunteer or participate in community activities in order to receive health insurance through the Affordable Care Act's Medicaid Expansion.

The policy has grown in popularity with 18 states applying for waivers to institute work requirements on Medicaid beneficiaries, according to the Kaiser Family Foundation. Kentucky — which was originally named in the lawsuit — rescinded its plan after Gov. Andy Beshear, a Democrat, took office late last year.

Critics argue that work requirement programs do not work and only lead to people losing coverage.

An Urban Institute study found that after New Hampshire adopted work requirements nearly 17,000 people of the approximately 25,000 people subject to the measure were in danger of losing their health benefits before the state government decided to suspend the program.

The Trump administration has attempted to institute a number of regulatory changes to entitlement programs like Medicaid, the federal food stamps program and Temporary Assistance for Needy Families.

For Medicaid, the White House announced earlier this month that it would allow states to take a block grant or lump sum instead of traditional Medicaid funding. It is also considering other regulatory changes that would restrict eligibility.