Now You See It, Now You Don’t: Supreme Court Drops Medicaid Work Requirements Case, But Still Does Damage

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If you blinked at just the wrong moment last week, you might have missed that the Supreme Court erased several years of critical Medicaid law with just one 113-word order. Poof!

On Monday, April 18th, the Supreme Court issued an order in the cases on appeal reviewing the legality of approvals of work requirements by the Trump administration in Arkansas and New Hampshire. The Trump work requirements had been judged unlawful by a federal District Court (DC District Court) multiple times, and then again by a federal Circuit Court of Appeals (DC Circuit Court). The Supreme Court’s recent order sent the cases back to the lower courts, but also vacated as moot the decisions against work requirements by the Circuit Court (for Arkansas and New Hampshire) as well as one of the District Court decisions (for Arkansas).

This means that the Supreme Court effectively erased three decisions, including the Circuit Court decisions against work requirements, which would have been binding precedent for any cases brought into DC District Court – meaning that all DC District Court judges would be bound by the decision.

So, what is left standing? Three full decisions are left intact: the District Court decisions against work requirements in Kentucky’s first attempt at work requirements, Kentucky’s second attempt, and New Hampshire. There was also a judgment against work requirements in Michigan that for technical reasons is of less significance. These District Court decisions are useful precedent, but they are not binding precedent in DC District Court nor as influential on judges around the country as a Circuit Court opinion would be.

What does this mean going forward? Well, first the good news. The Supreme Court’s order did not speak to the merits of work requirements or authorize them in any way. Given the Court’s irregular handling of the case and recent history of awful Medicaid rulings, it is likely very good for Medicaid policy that the Supreme Court did not issue any decision on the merits.

The bad news is that with just one short order, the Supreme Court vacated carefully crafted judicial opinions based on hours of analysis of volumes of policy evidence, including many comments filed by stakeholders explaining the terrible policy consequences of work requirements. That said, it’s important to understand that, in the final accounting, the Supreme Court has not created any law or precedent that affirmatively supports work requirements, it has just dismantled decisions that would help to block them.

Ultimately, the loss of the case precedent should not have great impacts on new work requirements during the Biden administration, since the administration has come out in opposition to work requirements and committed to never approving them. However, it could weaken defense against efforts by states to resurrect other Trump era approvals that are still pending in the courts or new work requirements that are pursued by a future administration.

Why did this happen? Well, as a matter of technical law, the Supreme Court vacated the lower court decisions citing a case called U.S. v. Munsingwear. The Munsingwear principle is that if a party loses at lower court, and appeals, and while their appeal is pending at the upper court the case becomes moot, the lower court opinion should not be used against them in the future (i.e., it should be vacated), because they never had a chance to have their appeal heard. The Supreme Court applied this principle to vacate the lower court decisions when it assessed that the Arkansas case had become moot. (Fun fact: the case became moot while the Supreme Court inexplicably held the case in abeyance for over a year.)

It’s important to understand how we got to this Supreme Court ruling and what that portends for Medicaid enrollees. The Biden administration’s position with this litigation was… nuanced. On one hand, the administration did not want work requirements to be implemented. The administration moved decisively to stop work requirements and filed a motion requesting the Supreme Court drop the case. On the other hand, the administration’s motion to the Supreme Court, likely designed by lawyers at the Department of Justice (DOJ), actually requested that the Supreme Court vacate the lower court opinions against work requirements. Huh?

The likely reason for this apparent contradiction is that while the administration may have liked the policy outcome of the Circuit Court opinion (i.e., striking down work requirements), DOJ did not like the legal precedent set by the decision—a precedent in which executive branch agency authority is constrained by the judicial branch. The Circuit Court opinion created a strong guardrail constraining HHS from implementing demonstrations that don’t consider coverage, as the court defined it, and DOJ did not want its agency so controlled by a court’s definition. So DOJ maneuvered to have its cake and eat it too: it avoided a Supreme Court review that might have allowed the work requirement policy the administration didn’t want, but at the same time, it got rid of the precedent that it felt was a threat to agency authority.

And therein lies the loss for Medicaid enrollees. The precedent against work requirements and the constraint created by the Circuit Court decision – namely, that HHS cannot approve demonstrations without considering the impact on coverage – would have both helped Medicaid enrollees. After all, when do enrollees want experiments reducing their coverage? In focusing so singularly on protecting agency authority, DOJ lost sight of the forest for the trees. The precedent was unlikely to constrain the Biden administration from any hypothetical future actions it wants to take, while it in fact stopped the Trump administration from implementing policies clearly harmful to Medicaid enrollees and antithetical to the legislative branch’s Medicaid laws.

These work requirement decisions were straightforward cases, applying long-standing law to reasonably interpret the actual words in Congress’s Medicaid laws.

And now—poof!—the most important decisions are gone.

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