An appellate court panel has held up an earlier ruling that Medicaid work requirements in Arkansas were illegal, dealing another legal blow to the administration's efforts.
The three-judge panel ruled on Friday that the administration didn't fully evaluate the prospect for coverage losses due to work requirements.
“The record shows that the Arkansas Works amendments resulted in significant coverage loss,” the opinion reads. “In Arkansas, more than 18,000 people (about 25% of those subject to the work requirement) lost coverage as a result of the project in just five months.”
The judges added that while Arkansas didn’t have its own estimate of potential coverage loss, comments on the proposal should have alerted HHS that “coverage loss was an important aspect of the problem.”
Another problem the judges found is that the work requirements promote an “entirely different set of objectives than the one we hold is the principal objective of Medicaid.”
The ruling said that the primary purpose of Medicaid is to help provide medical coverage to disabled or low-income individuals.
A CMS spokesperson said the agency is reviewing and evaluating the opinion and thinking over its next steps.
"CMS remains steadfast in our commitment to considering proposals that would allow states to leverage innovative ideas," the spokesperson said.
The ruling only applies to Arkansas’ work requirements program. Kentucky had decided to drop its challenge to the lower court’s ruling striking down its own program after the election of Democrat Andy Beshear last year.
So far the Centers for Medicare & Medicaid Services has approved 10 total state work requirement programs in addition to Kentucky and Arkansas, and another 10 states have applications that are pending, according to the Kaiser Family Foundation. A lower court also struck down New Hampshire's program.
Other states have decided to hold off on work requirements after similar lawsuits have been filed. Indiana was set to implement its own work requirement program last year but held off after a lawsuit was filed.
The legal setbacks have not been lost on Centers for Medicare & Medicaid Services Administrator Seema Verma. During an event outlining the agency’s Medicaid block grant proposal, Verma blasted groups that sought to “weaponize” the legal system to block greater state flexibility to Medicaid.