What Can We Expect from Biden Administration on Work Requirement Waivers?

As I was waiting to watch Vice President-elect Kamala Harris start her speech on Saturday night, I tweeted the following:

It proved to be a popular sentiment – at least on my twitter feed. As we have blogged about countless times, this group of “demonstrations” is nefarious policy that doesn’t support employment but does result in people losing their health insurance. Promoting this approach has been a centerpiece of CMS Administrator Seema Verma’s legacy and part of a larger pattern of efforts by the Trump Administration to eliminate the Affordable Care Act, hobble Medicaid, and generally limit access to public coverage.

So what should we expect from a Biden-Harris Administration, the team that made access to health insurance a central tenet of their campaign, when they take office in January 2021? How easy is it to say goodbye and good riddance to these demonstrations?

First, let’s review the basic law  of Section 1115 demonstration waivers. States apply to the Secretary of Health and Human Services for permission to use federal funds to try out and evaluate new approaches to improving Medicaid coverage.  As the recent litigation on work requirement waivers has reminded us all – they are only granted at the discretion of the Secretary of Health and Human Services. And the Secretary of HHS must determine that the demonstration project is “likely to assist in promoting the objectives of title … XIX”.

According to the latest tracker from the Kaiser Family Foundation, eight states have approved work requirement waivers, seven have pending requests, and four states’ approvals  have been set aside by the court. It is important to note that no state is currently implementing work requirements – as a consequence of judicial intervention, states voluntarily delaying them, or postponed implementation. Moreover, while Medicaid’s disenrollment freeze associated with the public health emergency remains in effect, no state could terminate anyone’s Medicaid coverage for non-compliance with a work reporting requirement.

I don’t believe the objective of the Medicaid program is to take away low income individuals’ health insurance, and neither, so far, does the judiciary. The U.S Court of Appeals wrote in the Arkansas decision upholding the trial judge: “failure to consider … the loss of coverage is arbitrary and capricious.” The Supreme Court is now considering whether to review that ruling.  But whatever the Court decides, I am quite sure that whomever President Biden appoints to be Secretary of Health and Human Services will not hold the view that policies designed to create barriers to coverage promote the objectives of Medicaid.

How will it happen?

Every waiver approval has a long list of “terms and conditions” many of which are boilerplate material that appear in every Medicaid demonstration. Either party – the state or the federal government may terminate the demonstration. For a state to wind down a demonstration there are more conditions involved including public notice and comment etc. Federal CMS may withdraw approval of waivers “at any time if it determines that continuing the waivers … would no longer be in the public interest or promote the objectives of title XIX”.[1] The state is guaranteed the right to a hearing to challenge the federal determination. I can’t recall such a hearing every happening but can’t say definitively that it has never happened.

So there is no question that a new Secretary can unwind these demonstrations but when and how will that happen remains to be seen. It is not possible that this will happen overnight, but an early and strong signal of the intention of a new Biden Administration would be to quickly withdraw the 1/11/18 “Dear State Medicaid Director” letter issued by the Trump Administration encouraging states to apply for “community engagement” waivers. This would also have the effect of letting states know that pending or future requests for work requirements will not be granted.

Pending litigation …

As regular readers of SayAhhh! know, there is active litigation emanating initially from Arkansas that adds another dimension to the process. On November 20, the Supreme Court will consider the Trump Administration’s request to review the case. If SCOTUS says “no” and the Appeals Court ruling stands, then Arkansas, New Hampshire, and Michigan have already been set aside. CMS’s recent extension of the state’s Healthy Indiana Plan (HIP)  included a work requirement and lockouts with “conditional” approval contingent on SCOTUS overruling the Appeals Court decision. Presumably a Biden Department of Justice will change the Administration’s posture in the case if the case remains alive after November 20.

In other states, where there is not active litigation, the Biden Administration will presumably have to go through the remaining demonstrations one-by-one to determine whether the Secretary will withdraw approval of the entire demonstration or just those features that are anti-coverage. Many of these demonstrations are complex agreements that include other features besides work requirements.  For example, in Arizona the entire program is operating through managed care authorized through Section 1115 authority. Depending on extension deadlines and the  complexity of the demonstration agreement, the new leadership of CMS will presumably make their way through the list.

And good riddance indeed.

[1] See Special Terms and Conditions 11 here.

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