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US Supreme Court nixes Medicaid case relating to Work Requirement

In 2020, the DC Circuit Court of Appeals decided Gresham v. Azar, 950 F.3d 93 (2020). There, the Court of Appeals affirmed a District Court decision halting Arkansas Works, a program that imposed work requirements on impoverished adults seeking Medicaid under the ACA expansion.

Arkansas Works included new requirements in addition to the much-discussed work requirements. Typically, when someone enrolls in Medicaid, the “medical assistance under the plan . . . will be made available to him for care and services included under the plan and furnished in or after the third month before the month in which he made application.” 42 U.S.C. § 1396a(a)(34). Arkansas Works proposed to eliminate retroactive coverage entirely. It also proposed to lower the income eligibility threshold from 133% to 100% of the federal poverty line, meaning that beneficiaries with incomes from 101% to 133% of the federal poverty line would lose health coverage. Finally, Arkansas Works eliminated a program in which it used Medicaid funds to assist beneficiaries in paying the premiums for employer-provided health care coverage. Arkansas instead used Medicaid premium assistance funds only to help beneficiaries purchase a qualified health plan available on the state Health Insurance Marketplace, requiring all previous recipients of employersponsored coverage premiums to transition to coverage offered through the state’s Marketplace. On March 5, 2018, the Secretary of Health and Human Services appoved most aspects of Arkansas Works, but did not approve limiting the program to those earning less than 100% of the federal poverty level.

On August 14, 2018, Charles Gresham and nine other Arkansans filed suit in district court seeking declaratory and injunctive relief against the Secretary. On March 27, 2019, the District Court entered judgment vacating the Secretary’s approval, halting the program. In approving Arkansas Works, the Secretary failed to consider coverage loss and, although the Secretary’s opinion was the work requirements would incentivize healthy outcomes, it failed to “‘focus on health is no substitute for considering Medicaid’s central concern: covering health costs’ through the provision of free or low-cost health coverage.”

The District Court’s decision was appealed to the Circuit Court. In considering the standard of review, the Circuit Court stated:

we will review the Secretary’s approval of Arkansas Works in accordance with the Administrative Procedure Act and will set it aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); see also C.K. v. New Jersey Dep’t of Health & Human Servs., 92 F.3d 171, 181–82 (3d Cir. 1996) (applying the arbitrary and capricious standard of review to a waiver under § 1315); Beno v. Shalala, 30 F.3d 1057, 1066–67 (9th Cir. 1994) (same); Aguayo v. Richardson, 473 F.2d 1090, 1103–08 (2d Cir. 1973) (same).

The undisputed objective of the Medicaid program is providing health care coverage. Although there is no formal “purpose” provision in the Medicaid statute, 42 U.S.C. § 1396-1 describes the purpose of Medicaid as: “to furnish (1) medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services, and (2)  rehabilitation and other services to help such families and individuals attain or retain capability for independence or self-care.” A waiver granted under 42 U.S.C. § 1315 must be likely to assist in promoting the objectives of Medicaid. While covering health care costs and better health outcomes may be connected goals, they are not the same. Further, “[w]hen Congress wants to pursue additional objectives within a social welfare program, it says so in the text. The Court of Appeals found that Congress’s failure to add work requirements to Medicaid when it did add them to TANF (formerly Aid to Families with Dependent children) and SNAP (food stamps) as part of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, demonstrates that “Congress did not intend to incorporate work requirements into Medicaid through § 1396u-1(b)(3)(A).”

In determining the Secretary acted in an arbitrary and capricious manner, the Court of Appeals found it significant that the Secretary failed to consider coverage loss. The record showed that the Arkansas Works amendments resulted in significant coverage loss. 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. Because the Secretary disregarded the primary purpose of Medicaid, seeking to further different goals, the Court of Appeals affirmed the District Court.

On Monday, April 18, the U.S. Supreme Court issued a summary disposition of Arkansas v. Gresham, granting a motion to vacate the decisions below. The Court held that

[the judgment of the United States Court of Appeals for the District of Columbia Circuit in Nos. 19-5094 and 19-5096 is vacated, and the cases are remanded to that court with instructions to direct the District Court to vacate its judgment and dismiss the case as moot. See United States v. Munsingwear, Inc., 340 U. S. 36 (1950). The judgment of the United States Court of Appeals for the District of Columbia Circuit in Nos. 19-5293 and 19-5295 is vacated, and the cases are remanded to that court with instructions to direct the District Court to remand to the Secretary of Health and Human Services.

Munsingwear was a case where the United States filed a complaint against a company allegedly selling a commodity above maximum controlled prices. While the appeal was pending, the commodity was de-controlled. The respondent moved the Court of Appeals to dismiss the appeal as moot. Although the Supreme Court seemingly relied on the principle of res judicata, it affirmed the Court of Appeals. Although the Court’s reasoning is less than clear, it appears as though the Supreme Court is singaling that the present litgation (at least as the case is currently presented) is moot because the Biden administration is reversing Trump-era waiver approvals incoporatating work requirements.

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