WASHINGTON — A federal appeals court on Friday struck down the Trump administration’s decision to allow states to compel some Medicaid recipients to work or prepare for a job in exchange for their health benefits.
In a unanimous decision that blocks the first state that had imposed work requirements, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that President Donald Trump’s health officials had been “arbitrary and capricious” in allowing Arkansas to launch a Medicaid program called “Arkansas Works” two years ago.
The ruling marks the first time that an appellate court has weighed in on what has been one of the Trump administration’s signature attempts to push health policy in a more conservative direction. The DC Circuit is considered the nation’s top appeals court below the U.S. Supreme Court, and the 19-page opinion was written by a jurist appointed by President Ronald Reagan.
Friday’s ruling pertains only to Arkansas, but it could deter other states that are eager to enact such requirements but that have held back amid uncertainty over their legality.
Arkansas is one of three states whose work requirements have been set aside by the same lower-court judge, with an additional lawsuit in Michigan pending. Several other states that have won federal permission to begin similar requirements are postponing them while the litigation plays out.
Confronted with another legal setback, the Trump administration said through a spokesperson at the federal Centers for Medicare and Medicaid Services that the agency”remains steadfast in our commitment to considering proposals that would allow states to leverage innovative ideas.”
The administration did not indicate whether it might appeal the ruling to the Supreme Court. “CMS is reviewing and evaluating the opinion and determining next steps,” the spokesperson said.
Friday’s Circuit ruling echoes the reasoning of a lower-court judge who struck down Medicaid work requirements in Arkansas, as well as Kentucky and New Hampshire. Like Judge James Boasberg, of the U.S. District Court for the District of Columbia, the appeals court said that Medicaid law makes clear that the program’s primary purpose is to provide needy people with health coverage.
“Failure to consider whether the project will result in coverage loss is arbitrary and capricious,” the opinion said. The ruling noted that during the five months that Arkansas Works was in effect before being blocked by a judge, more than 18,000 Medicaid recipients were dropped from the program.
The ruling also said that the goals cited by Health and Human Services officials in allowing work requirements — improving people’s health and helping people become financially independent — “are not consistent with Medicaid.”
For a half-century, Medicaid has been a mainstay of the nation’s social safety-net. The court’s rejection comes two years after top federal health officials announced that the government would permit states to condition eligibility on people holding a job, going to school or volunteering.
Administration officials and other conservatives contend such requirements instill self-reliance and help lead people into jobs that come with health benefits, lessening reliance on Medicaid, a shared responsibility of the federal government and states. Opponents counter that most poor people who can work already do so, and that health coverage is often a prerequisite to searching for and holding a job.
Kentucky’s work requirements were the first approved in early 2018 by Seema Verma, administrator of HHS’s Centers for Medicare and Medicaid Services. She has driven the sharpest policy changes in Medicaid — including letting states convert it from an entitlement open to anyone who meets the eligibility rules into finite block grants — in the history of the program, created in the 1960s as part of President Lyndon Johnson’s War on Poverty.
The lower-court ruling by Boasberg blocked Kentucky’s requirements before they were to have begun. When Kentucky’s governorship swung back into Democratic hands a few months ago, the new governor, Andy Beshear, killed the requirements, so there was no longer a basis for an appeal of the district court’s ruling.
“The court confirmed that this administration’s effort to ‘explode’ Medicaid by converting it from a health care access program to a work program is arbitrary and illegal,” said Sam Brooke, deputy legal director of the Southern Poverty Law Center, one of the organizations that challenged the work requirements.
Jane Perkins, legal director of the National Health Law Program, said the ruling “means that thousands of low-income people in Arkansas will maintain their health insurance coverage.”