Medicaid work rule ruinous, filing says

Lawsuit: 17,000 in state lost coverage

Predictions that adding a work requirement to Arkansas’ Medicaid program would have a “catastrophic effect” on coverage for low-income people have come true, plaintiffs in the lawsuit challenging the requirement say.

In a filing late Friday, attorneys for the plaintiffs cited the nearly 17,000 Arkansans who have lost coverage as a result of the requirement as evidence that the provision is a “simple benefits cut” that is not allowed under the federal law governing Medicaid.

The filing responded to arguments from the state and U.S. Department of Justice about whether President Donald Trump’s administration acted within its authority when it approved a waiver in March allowing the requirement, the first ever added to a state Medicaid program.

The requirement applies to enrollees in Arkansas Works, as the expanded part of the state’s Medicaid program is known. Most of the more than 234,000 enrollees receive the coverage through private plans, with the Medicaid program paying the premium.

To meet the work requirement, enrollees who don’t qualify for an exemption must spend 80 hours a month on work, volunteering or other approved activities and report what they did through a state website or over the phone.

Enrollees who fail to meet the requirement for three months during a year are kicked off and barred from re-enrolling for the rest of the year.

The waiver allowing the requirement was granted under Section 1115 of the federal Social Security Act, which allows the Secretary of Health and Human Services to authorize experimental projects that are likely to further the Medicaid program’s objectives.

Earlier this month, Justice Department attorneys argued that work requirements could enhance the “fiscal sustainability” of state Medicaid programs, thus supporting Medicaid’s goal to provide health coverage to needy people.

The plaintiffs responded Friday that the Trump administration didn’t mention

such considerations when it approved the requirement.

In fact, the plaintiffs noted that a consultant hired by a state legislative task force found in 2016 that the expansion of coverage to adults with incomes of up to 138 percent of the poverty level would save the state $637 million from 2017-21.

Much of the savings were expected to come from shifting some enrollment from the traditional Medicaid program, for which the state pays 30 percent of the cost, to the expansion program, for which the state’s share of the cost is smaller.

The state’s share of the cost for expanded Medicaid started at 5 percent in 2017 and is now 6 percent. It is scheduled to increase next month to 7 percent and to 10 percent for 2020 and beyond.

Other savings were expected to come from a reduction of spending on medical care for the uninsured and an increase in state tax collections resulting from the influx of federal Medicaid money.

Even in the fiscal year that starts July 1, 2020, with the state’s share of the cost at 10 percent, the expansion was estimated to save the state budget $68 million.

The plaintiffs also argued that waivers can’t be granted under Section 1115 of the Social Security Act simply to save money.

“Defendants’ reasoning would allow the Secretary to approve any proposed project that would save money on the grounds that without the proposed project in place, the state may choose to terminate optional populations or its Medicaid program entirely,” the plaintiffs’ attorneys wrote. “In other words, any project that reduces Medicaid spending would be likely to promote the objectives of the Medicaid Act. This cannot be what Congress intended when it enacted Section 1115.”

The lawsuit, filed in August in federal court in Washington, D.C., contends that U.S. Health and Human Services Secretary Alex Azar failed to adequately consider the effect the requirement would have on the Medicaid program’s goal of providing health coverage for low-income people when he approved the requirement.

The requirement was phased in starting in June for enrollees ages 30-49 and will begin next month for an initial group of enrollees ages 19-29.

The suit was filed by National Health Law Program, the Southern Poverty Law Center and Jonesboro-based Legal Aid of Arkansas, and will be decided by U.S. District Judge James Boasberg, who in June blocked a similar requirement from taking effect in Kentucky. Nine Arkansas Works enrollees are named as plaintiffs.

In the filing Friday, attorneys for the plaintiffs also responded to an argument by Arkansas that providing coverage to needy people isn’t Medicaid’s only purpose.

Attorneys with Attorney General Leslie Rutledge’s office noted in an earlier filing that the Patient Protection and Affordable Care Act created grants for states to reward Medicaid recipients for healthy behavior and that a 2005 law allows states to require some Medicaid recipients to pay monthly premiums and face out-of-pocket charges for medical care.

They also noted that the Social Security Act lists providing “rehabilitation and other services” to help Medicaid recipients “attain or retain capability for independence or self-care” as a goal of the program.

Attorneys for the plaintiffs responded in Friday’s filing that that part of the law refers to “functional, not financial independence.” They also responded that the provisions in the Affordable Care Act and 2005 Deficit Reduction Act don’t change the Medicaid program’s purpose.

A response by the Justice Department and Arkansas to the plaintiffs’ filing is due Jan. 14.