District Court Strikes Down Approvals of Harmful Waivers in Indiana (and Shows the Supreme Court is Wrong About Many Things)

After a week full of partisan and poorly-reasoned Supreme Court decisions, it was a relief to see that at least one federal court continues to do its job faithfully. The U.S. District Court for the District of Columbia issued yet another stellar section 1115 demonstration decision, in a case called Rose v. Becerra, vacating the approval of several harmful waivers that the Centers for Medicare and Medicaid Services (CMS) had approved in Indiana. The Indiana waivers would have allowed the state to implement premiums and eliminate retroactive coverage and non-emergency medical transportation, greatly reducing access to care for Hoosiers.

(Just in case you didn’t follow the link to the decision, let me just say there might or might not be a Taylor Swift reference on page 21.)

The timeline in Indiana is a little confusing. The current version of the state’s program, Healthy Indiana Plan 2.0 (HIP 2.0), was approved by CMS in October 2020, in the waning days of the Trump administration and was facing an on-going legal challenge. Meanwhile, implementation of the premiums was on hold because of the pandemic. When the Biden administration took over, the Biden CMS informed the state that it had concerns and was reviewing the approval, but, confusingly, CMS ultimately issued a letter in December 2023 detailing serious problems with the demonstration but allowing Indiana to move forward on the planned premium implementation date, July 1, 2024. Thankfully, the litigators amended their lawsuit and in Rose v. Becerra the D.C. District Court vacated the premium approval (and other waiver approvals) on June 27, 2024. Got all that?

The District Court’s decision is very consistent with prior decisions from the same District Court and the D.C. Circuit Court, vacating approvals of work requirements and other harmful waivers. As with the work requirement cases, the District Court found CMS’s approvals of the HIP 2.0 waivers to be arbitrary and capricious because CMS did not engage in “reasoned decision-making” to issue the approvals.

Specifically, this court has consistently raised three issues when overturning arbitrary approvals in HIP 2.0 and the other cases. First, CMS failed to do an analysis of how HIP 2.0’s harmful policies would impact coverage, and this is the central objective of Medicaid. Second, to the extent CMS’s approval was based on some other objective, like “fiscal sustainability,” the court says that even if that were a valid objective, CMS provided no actual evidence on fiscal sustainability. And third, seeing as it failed on the first two points, CMS wasn’t even close to doing the final thing the court expects, which is analysis balancing the impacts on coverage and other objectives against each other, to come to a reasoned decision.

The Trump CMS likely didn’t do any analysis of the impacts on coverage because it was going to look very, very bad. Does anyone think that stopping medical transportation will lead to more people getting care? But what makes this a well-reasoned decision is that first, the judge set out the proper legal framework, but then second, the judge did the work of carefully scrutinizing the agency record to assess whether CMS had done the proper due diligence in issuing its approvals. This is what sound judicial work actually looks like.

The Supreme Court should pay attention. In its awful decision wiping out 40 years of Chevron deference, the Supreme Court mischaracterized Chevron as “demanding” courts to “mechanically” defer to agencies, giving agencies “the power to authoritatively interpret” statutes. In Rose v. Becerra, the D.C. District Court shows that, in fact, nothing could be further from the truth. Under Chevron, the courts have an active role to play, and the most important one at that. The D.C. District Court explicitly used Chevron, and using Chevron stopped an agency that had gone beyond what the law allows. That is how the law was working and should work. But the Supreme Court appears to be more interested in amassing power and scoring political victories than the hard work—and restraint—of everyday judges.

Leonardo Cuello is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.