Ruling in Arkansas case creates hurdle for Indiana’s Medicaid work mandates

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Indiana’s attempt to impose work requirements on some Medicaid recipients likely suffered a setback Feb. 14 when an appellate court ruled that similar mandates in Arkansas fell outside the core objective of the federal health care program.

The decision in Charles Gresham, et al. v. Alex Michael Azar, II, Secretary, United States Department of Health and Human Services in his official capacity, et al., 19-5094, upheld a ruling from the U.S. District Court for the District of Columbia, the same court that is currently reviewing a legal challenge to the changes Indiana wants to make to its Medicaid program. In fact, the district court had already asked the parties in the Hoosier case to state how an affirmance from the appellate court would impact their dispute.

Indiana Legal Services and the National Health Law Program, which filed the lawsuit on behalf of Hoosiers who could lose their Medicaid benefits if the state institutes work requirements, argued that if the D.C. Circuit upheld the lower court’s ruling, then the approval for Indiana’s Medicaid extension should be invalidated as a whole.

Conversely, the state of Indiana argued its program should not be completely discarded. Rather, the 2018 approval for the Healthy Indiana Plan 2.0, which included the work mandate, should be remanded back to Department of Health and Human Services since that would allow the program’s other components to remain in place while the federal government considers whether to reapprove the state’s application.

Like Indiana’s “Gateway to Work,” the program in Arkansas required certain Medicaid recipients to either work or participate in educational, job training or job search activities for at least 80 hours per month. Failure to do so could get the recipient booted from the federal health coverage for one year.

Department of Health and Human Services Secretary Alex Azar approved the work requirements, among other elements, in the Arkansas Works initiative.

However, in an April 2019 ruling, the district court blocked the mandate, finding the secretary’s approval of the Arkansas amendments to its Medicaid program were “arbitrary and capricious.” Specifically, the court held the work requirement did not align with Medicaid’s core objective of providing medical coverage to people who otherwise cannot afford it.

A unanimous appellate panel agreed.

“In total, the Secretary’s analysis of the substantial and important problem is to note the concerns of others and dismiss those concerns in a handful of conclusory sentences,” Senior Judge David Sentelle wrote, referring to the potential that a work requirement would likely lead to people losing their Medicaid benefits. “Nodding to concerns raised by commenters only to dismiss them in a conclusory manner is not a hallmark of reasoned decisionmaking.”

The appellate decision pointed out that Azar had stated the objective of the Arkansas program was to improve health outcomes, and since employment is positively correlated to health outcomes, a work requirement furthers the purposes of Medicaid. But, the appeals court noted, nowhere in Azar’s approval letter does he justify his decision based on the belief that the project will help Medicaid recipients gain income to be able to purchase private insurance.

Like the district court, the appellate panel looked at the text of the Medicaid statute and determined Arkansas Works was not fulfilling the federal program’s original purpose of providing medical coverage to the indigent.

Indeed, the circuit court highlighted that in 1996, while the federal Supplemental Nutrition Assistance Program already had a work requirement, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, which replaced Aid to Families with Dependent Children with Temporary Assistance for Needy Families, or TANF, and added a work requirement.

“The fact that Congress did not similarly amend Medicaid to add a work requirement for all recipients – at a time when the other two major welfare programs had those requirements and Congress was in the process of amending welfare statutes – demonstrates that Congress did not intend to incorporate work requirements into Medicaid… ,” Sentelle wrote.

Finding Azar’s approval of Arkansas Works arbitrary and capricious, the circuit court affirmed the lower court’s judgment vacating the secretary’s approval.

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