Why the courts may overturn Medicaid work requirements

Filling out job application
This week, 160 advocacy organizations came out against Medicaid work requirements. (Getty/AndreyPopov)

With one lawsuit already challenging Medicaid work requirements in Kentucky and more possible in other states, health policy watchers have one burning question: What will the courts decide?

According to Eliot Fishman—who was the director of the State Demonstrations Group at the Centers for Medicare & Medicaid Services from 2013 until early 2017—there’s a good chance that judges will overturn those waiver approvals.

For one thing, the work requirement component of the waivers in question is a “particularly blatant attempt” to make changes to Medicaid that couldn’t be achieved through legislation, Fishman wrote in a Health Affairs blog post. He argued that the courts will likely take note of the fact that previous Affordable Care Act repeal-and-replace bills tried to impose work requirements in Medicaid.

Here are the other reasons Fishman thinks work requirements may not pass judicial scrutiny:

  • Past court challenges to Medicaid section 1115 waivers have had a high success rate. Not only have judges insisted that such waivers promote Medicaid objectives, but also that they provide research or experimental value.
  • Federal courts have been skeptical in the past year about “stated agency rationales” for certain policies, and the Trump administration has provided evidence that its reasons for supporting Medicaid enrollment restrictions have more to do with opposing Medicaid expansion than anything else.
  • With the exception of Mississippi, every state that has proposed a work requirement has also proposed other restrictions on Medicaid eligibility, such as lockout periods. This could make it appear they’re trying to pare down enrollment any way they can—rather than trying to improve beneficiaries’ health. 

In addition to Kentucky, Indiana has also had a waiver approved that allows it to impose work requirements on able-bodied beneficiaries, and eight other states have pending applications. To CMS Administrator Seema Verma, such policies are a lever to lift individuals out of poverty—and improve their health—by connecting them to employment or other community engagement activities. 

“We see people moving off of Medicaid as a good outcome," she has said.

Even so, criticism of the concept has been mounting. This week, 160 organizations, including the ACLU and Southern Poverty Law Center, announced their opposition in a letter (PDF) to Health and Human Services Secretary Alex Azar, saying work requirements “will have a significant and disproportionately harmful effect on individuals with chronic health conditions, especially those struggling with substance use disorders and mental health disorders, as well as those with conviction and arrest records.”