Lawsuit Challenges Arkansas’s Medicaid Work Requirement

Back in 2014, Arkansas expanded Medicaid through a section 1115 demonstration waiver referred to as the ‘private option.’ Newly eligible Medicaid beneficiaries enrolled in private market plans on the ACA’s Marketplace and the state defrayed the costs and offered wrap-around benefits. A preliminary evaluation of the private option showed that Arkansas cut its uninsured rate among adults from 22.5 percent to 9.6 percent by 2016, the largest reduction observed nationwide. Over 300,000 Arkansans gained coverage through the private option.

Unfortunately, that might be where the good news ends. In 2017, Arkansas rebranded the private option, calling it Arkansas Works, and sought to make changes to the program to “promote personal responsibility and work.” According to a recent article in the Arkansas Times, enrollment peaked near 330,000 in January 2017, but has decreased by almost 60,000 since then – a 15 percent drop. Though some amount of churn is expected, rates this high are unusual and only likely to worsen as Arkansas implements its latest section 1115 demonstration waiver.

Earlier this year, the Administration issued a State Medicaid Director letter announcing a change in Medicaid law and inviting states to request section 1115 waivers to implement work requirements in Medicaid for the first time. Shortly thereafter, the Administration approved Hutchinson’s new waiver request, along with similar work requirement waivers in Kentucky, Indiana and New Hampshire. Arkansas was the first to implement its work requirement, and early signs show that it is not going well. The state implemented the work requirement for beneficiaries ages 30-49 in July, and already 72 percent of people expected to go online and report work hours failed to do so. If people fail to report for three months, they will be kicked off of coverage, even if they have actually met the requirement or qualify for an exemption but have failed to jump through the bureaucratic hoops on time.

Thankfully, our system of government provides some checks and balances. Kentucky’s section 1115 waiver – that also included high premiums, lockouts for failure to comply with administrative processes, and benefit cuts – was the subject of a lawsuit earlier this year and in June, the federal district court in DC overturned the approval of Kentucky’s waiver.

Now, the National Health Law Program, Legal Aid of Arkansas, and the Southern Poverty Law Center have filed a similar lawsuit on behalf of three Medicaid beneficiaries in Arkansas. In the complaint, the lawyers argue that the Administration’s letter on work requirements and approval of the section 1115 demonstration in Arkansas violate the Administrative Procedures Act, the Medicaid law, and the US Constitution. We’ll be back with more on the details of the complaint and the implications of the section 1115 demonstration for children and families in Arkansas, but for the time being it is encouraging to see that beneficiaries in Arkansas have the support needed to assert their legal rights in court even as the Administration works to ignore them.

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.