Court battle brewing over work rules for Medicaid

A battle is brewing in the courts over the Trump administration’s move to let states impose work requirements for recipients of Medicaid, the health insurance program for the poor.

Advocacy groups are gearing up to sue the administration, arguing that it doesn’t have the power to allow work requirements and other rules for Medicaid without action from Congress. 

But the administration is defending the legality of the shift. When unveiling guidance Thursday on the work requirements, top Medicaid official Seema Verma said the administration has “broad authority” under current law to allow states to make changes through waivers.

On Friday, the administration quickly gave Kentucky the green light to implement work requirements for some beneficiaries, the first time such an approval has been given.

Shortly after, the National Health Law Program (NHeLP) issued a press release stating, “litigation is expected because the approval violates federal law.”

While NHeLP is “still reviewing” the approval’s details, “the action appears designed to achieve significant cuts in Medicaid enrollment rather than Medicaid’s stated purpose of furnishing medical assistance to low-income people,” Jane Perkins, the group’s legal director, said in a statement.

Kentucky Gov. Matt Bevin (R) said the requirements are necessary because “able-bodied people” are essentially getting free health coverage without contributing to society.

Asked if he anticipated legal challenges, Bevin said: “It’s conceivable. We live in America. There are lawsuits that fly around this town, this country. People certainly have that right.”

Under federal law, state waivers must promote the “objectives” of the Medicaid program. Democrats argue the objective of the program is to provide health insurance to low-income people, which won’t be met by requirements that could result in people getting kicked off the program.

The Trump administration counters by pointing to research that it argues shows that having a job improves people’s health, which it says demonstrates that work requirements serve the goal of promoting health.

“A growing body of evidence suggests that targeting certain health determinants, including productive work and community engagement, may improve health outcomes,” the Centers for Medicare and Medicaid Services (CMS) writes in its guidance allowing for work requirements.

Eliot Fishman, who was a top Medicaid official under President Obama, dismissed that argument, saying the administration’s move was “delayed for months while they were trying to torture their way to a legal argument that this is somehow good for health.”

Fishman, who now works at the liberal advocacy group Families USA, said work requirements would result in thousands of people losing coverage, which is “antithetical to the objectives of the Medicaid program.”

Opponents of the move say the administration has the causality backwards, and that having health insurance in the first place is what allows people to be healthy enough to work. 

“It’s not that work creates health. It’s that creating health allows people to work,” said Leonardo Cuello, NHeLP’s health policy director. “They have taken two things that are correlated — work and health — and made up a false causation, and they’re trying to use that to justify what is really a square peg they are trying to fit into a round hole.”

The Medicaid waiver granted to Kentucky allows the state to require that certain adults complete at least 80 hours per month of community engagement activities, such as work, education, job skills training or volunteering. Nine other states have also asked CMS for permission to add some type of work or work-related requirement into their Medicaid programs.

Kentucky’s waiver also requires certain people to pay monthly premiums and imposes a six-month lockout from Medicaid coverage if a person gets a new job or salary and doesn’t inform the state, among other things.

State officials estimated the waiver will lead to 95,000 fewer people on Medicaid, and about 350,000 Kentuckians would be subject to a community engagement requirement.

For years, the GOP has eyed changes to the Medicaid program. The Obama administration denied states the ability to impose work requirements, and when Republicans won both Congress and the White House, they attempted to pass bills that would change Medicaid, a joint federal-state program.

Many of the GOP bills to repeal ObamaCare would have allowed states to create work requirements in addition to cutting spending on the program. But it’s unlikely Republicans will return to health-care legislation this year, leaving the waivers the main way the Trump administration can make a conservative mark on Medicaid. 

“When you really think about it, there’s a strong case to be made that this is a continuation of the efforts to repeal [ObamaCare’s Medicaid] expansion that failed last year after multiple attempts, and this is the administrative approach to getting to the same place,” said Judy Solomon, vice president for health policy at the left-leaning Center on Budget and Policy Priorities.

While approving work-requirement waivers won’t repeal ObamaCare’s Medicaid expansion, “it’s certainly going to undermine” it, she said.

– Nathaniel Weixel contributed.