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A federal appeals court panel on Friday unanimously upheld a lower court’s ruling striking down work rules for Medicaid recipients in Arkansas, casting more doubt over broader Trump administration efforts to require poor people to work, volunteer or train for a job as a condition of getting government health coverage.
A three-judge panel of the United States Court of Appeals for the District of Columbia Circuit found that approval of the Arkansas work requirement by the health and human services secretary, Alex M. Azar, was “arbitrary and capricious” because it did not address how the program would promote the objective of Medicaid as defined under federal law: providing health coverage to the poor.
“The means that Congress selected to achieve the objectives of Medicaid was to provide health care coverage to populations that otherwise could not afford it,” Judge David Sentelle, a Reagan appointee, wrote in the ruling. “Importantly, the Secretary disregarded this statutory purpose in his analysis.”
Concurring were Judges Cornelia Pillard, an Obama appointee, and Harry Edwards, a Carter appointee.
It was not immediately clear whether the Trump administration would appeal to the Supreme Court. In a statement about the ruling, a spokesman for Seema Verma, the administrator of the Centers for Medicare and Medicaid, said the agency “is reviewing and evaluating the opinion and determining next steps.”
To date, the Trump administration has allowed 10 states to condition Medicaid eligibility for many poor adults on proving that they work or engage in other accepted activities, like volunteering. But only Arkansas had put its work rule into effect. The district court judge who initially struck it down, James E. Boasberg of the Federal District Court for the District of Columbia, also struck down similar rules in New Hampshire and in Kentucky.
The appeals ruling will influence other cases heard in the District of Columbia circuit, and could give further pause to states outside the circuit pursuing work requirements. Many of the seven others that enacted such requirements — Arizona, Indiana, Michigan, Ohio, South Carolina, Utah and Wisconsin — have voluntarily put them on hold while the court battles play out. The latest rejection makes it all but impossible for the administration to get work requirements in place anywhere before the November election.
There are outstanding lawsuits over work requirements in Indiana and Michigan as well as in New Hampshire. Kentucky’s new governor, Andy Beshear, has rescinded that state’s work rule.
The Arkansas work rule led to more than 18,000 people there losing coverage before Judge Boasberg blocked it in March, leading the Trump administration to appeal. Even many Medicaid recipients who had jobs there were either unaware of the rule or confused about how to report their work hours to the state every month.
The rules require “able-bodied” adults to report to the state every month that they have worked, searched or trained for a job, taken classes or volunteered in order to keep receiving Medicaid health coverage, which is largely free. Ms. Verma has repeatedly said such activities can improve people’s health and help them “rise out of poverty and government dependence.”
In approving Medicaid work rules under a waiver program that allows states to spend federal Medicaid funds in ways that would not normally be allowed, Mr. Azar said the objective was to improve health outcomes. Employment, he said, was “positively correlated with health outcomes.”
But the appeals panel noted that experiments approved under the Medicaid waiver program were supposed to be “likely to assist in promoting the objectives” of Medicaid. Mr. Azar, the panel ruled, had not done due diligence to ensure Arkansas work requirements would meet that goal.
In fact, the ruling noted that when the work rule was first proposed, many commenters expressed concerns that it would lead to people losing coverage, but that Mr. Azar had not taken heed.
“The text of the statute includes one primary purpose, which is providing health care coverage without any restriction geared to healthy outcomes, financial independence or transition to commercial coverage,” the ruling said.
The National Health Law Program, joined by Legal Aid of Arkansas, the Southern Poverty Law Center and Jenner & Block, represented the plaintiffs in the case, a group of Medicaid enrollees in Arkansas who were subject to the work requirement.
Work requirements have long been central to the Republican goal of instilling a sense of “personal responsibility” in people who benefit from government programs. Supporters of such rules for Medicaid recipients have said that extending the safety-net program to millions of low-income adults without disabilities, as the Affordable Care Act allowed, gave them an incentive not to work.
But a large portion of Medicaid recipients do already work. According to the Kaiser Family Foundation, 63 percent of adult Medicaid recipients without disabilities have part- or full-time jobs.
As part of a broader quest to reshape the Medicaid program — which covers more than 71 million people, or more than one in five Americans — Ms. Verma last month announced plans to allow states to cap Medicaid spending for many poor adults, a major shift long sought by conservatives. States that participate would have broad flexibility to design coverage for those adults, who are also the population targeted by work requirements.
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