Appeals Court Strikes Decisively at the Heart of Administrator Verma’s Medicaid Agenda

In a decision which warmed my heart on a cold Valentine’s Day here in Washington, the federal Court of Appeals issued an unanimous opinion striking down the Arkansas work requirements waiver.  In doing so, it upheld district court Judge Boasberg’s decision vacating the Arkansas’ Section 1115 waiver (including most famously Medicaid work requirements) because it was “arbitrary and capricious” and therefore violated the Administrative Procedures Act.

As I read the decision, I found that there is no good news here for Administrator Seema Verma – for whom promoting Medicaid work requirements has been a signature initiative. The panel’s decision written by Judge Sentelle, who was appointed by President Reagan, delivers a stinging rebuke to the Department of Justice’s arguments defending Secretary Azar. The decision also makes clear that only Congress has the authority to impose work requirements on Medicaid beneficiaries. (See pps. 15-16)

The court sent a clear and unambiguous message that the central purpose of Medicaid is to provide health coverage, and that the Secretary “disregarded this statutory purpose” in his analysis and prioritized “non-statutory objectives to the exclusion of the statutory purpose.”

Judge Sentelle affirms “The district court is indisputably correct that the principal objective of Medicaid is providing health care coverage.”

As the opinion noted, numerous public comments were submitted for the record pointing out that considerable coverage losses were likely to ensue from Medicaid work requirements. Yet these comments were essentially dismissed and ignored by Secretary Azar and his team, which clearly did not impress the court. As someone who writes a lot of comments, this is one of my favorite sections of the decision:

“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. Nodding to concerns raised by commentators only to dismiss them in a conclusory manner is not a hallmark of reasoned decision making.” (P. 17)

The decision also strikes a blow directly at the incessant framing by Administrator Verma in many of her ruminations on the Medicaid program (including her recent block grant waiver initiative) that the Affordable Care Act Medicaid expansion population is not who the Medicaid program is intended for. The opinion states clearly that the Affordable Care Act’s Medicaid expansion is “consistent w/ Medicaid’s general purpose of furnishing health care coverage” (p. 11).

So where does this leave matters?

First, and most importantly, no Medicaid beneficiary has lost coverage due to work requirements since January 2019. (18,000 Arkansans lost coverage during the second half of 2018.)

Second, as I blogged about some months ago, the momentum for work requirements had already been slowing, and in light of today’s decision, states still pursuing this illegal and harmful approach should stop immediately. Voters in Kentucky and Virginia elected state policymakers opposed to work requirements and those waivers have been withdrawn. Arizona and Indiana have suspended implementation voluntarily. Similar lawsuits challenging the Secretary’s waiver approvals of work requirements in New Hampshire, Indiana and Michigan have been filed in Judge Boasberg’s court. New Hampshire’s fate is already directly linked to this decision – the other two states can expect to see their waivers follow a similar path.

Other states that have approved work requirements include Utah, Ohio, Wisconsin, and South Carolina. While litigation has not been filed with respect to these waivers yet, it is very important to be aware that all of these cases would be filed here in DC and be assigned to Judge Boasberg. States that have pending work requirement waivers that the federal government has not yet approved include Alabama, Mississippi, Oklahoma, South Dakota, Tennessee, Montana, Idaho, Nebraska and Georgia.

The appeals court decision makes clear that the Secretary cannot make up new objectives for the program and that the text of the law is clear that the central purpose of Medicaid is to provide coverage. This suggests that other harmful waiver policies which have the effect of limiting coverage (such as lockouts, limiting retroactive eligibility, premiums, etc.) may suffer a similar fate. See my colleague Andy Schneider’s blog about the more technical legal issues raised by the decision.

The Trump Administration is likely to announce it will appeal to the U.S. Supreme Court – we shall see.  The Supreme Court may agree to review the D.C. Circuit Court decision; then again, it may not.  If the Supreme Court does accept the case, it seems highly unlikely that it will hear the argument before its next term starts in October 2020.  In that scenario, depending on when in the term the case is argued, the Court might not issue a decision until the spring of 2021.

In the meantime, the rulings of the DC Circuit and the District Court remain in force. And millions of Medicaid beneficiaries can celebrate this Valentine’s Day by knowing for now at least, cruel efforts to take away their health insurance have been defeated.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.