Judge Blocks Work Requirements for Medicaid Recipients in Arkansas and Kentucky

WASHINGTON — A federal judge on Wednesday threw out Medicaid work requirements in two states, a blow to Republican efforts to profoundly reshape a program that has provided free health insurance to the poorest Americans for more than 50 years.

In twin rulings, Judge James E. Boasberg of the Federal District Court for the District of Columbia rejected for a second time Kentucky’s attempt to require recipients to work or volunteer as a condition of coverage and blocked a similar rule in Arkansas, which has resulted in more than 18,000 people there losing coverage since last summer.

So far, the Trump administration has allowed eight states to begin requiring many of their Medicaid recipients to work, volunteer or train for a job to be eligible for benefits. Seven other states are seeking permission from the Department of Health and Human Services to impose similar rules.

Seema Verma, the Trump appointee in charge of the Medicaid program, has described the goal as helping people “rise out of poverty and government dependence.”

Judge Boasberg, an Obama appointee, had already ordered the department to re-evaluate the impact of Kentucky’s work requirement in a ruling last June, saying it had not adequately considered whether it “would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

In the first of his new decisions, he found the approval of Arkansas’s work rule by Alex M. Azar II, the health and human services secretary, was “arbitrary and capricious” for a similar reason. Mr. Azar had failed, the judge wrote, to “consider adequately” the impact of Arkansas’s plan on Medicaid coverage.

“The court finds its guiding principle in Yogi Berra’s aphorism, ‘It’s déjà vu all over again,’” Judge Boasberg wrote.

Arkansas officials had asked the judge to leave the work requirements in place in the event that he ordered Mr. Azar to further weigh their potential impact, saying that freezing them would cause too much disruption.

The judge disagreed, writing that “the road to cure the deficiency in this case is, at best, a rocky one” and that any disruption “must be balanced against the harms that plaintiffs and persons like them will experience if the program remains in effect.”

In the Kentucky case, Judge Boasberg said the state’s plan, with only minor changes since his last ruling, “has essentially the same features as it did before.” He said that Mr. Azar’s review and approval of the Kentucky program were fatally flawed because federal officials did not adequately consider “the coverage-loss consequences” of the work requirements.

The rulings presented a serious setback not only for President Trump and Mr. Azar, but for Ms. Verma, who has led the call for conditioning government health coverage on work.

She has insisted that Medicaid must not be “used as a vehicle to serve working age, able-bodied adults.” And she affirmed her goals Wednesday evening after the latest rulings came out.

“We will continue to defend our efforts to give states greater flexibility to help low income Americans rise out of poverty,” Ms. Verma said. “We believe, as have numerous past administrations, that states are the laboratories of democracy and we will vigorously support their innovative, state-driven efforts to develop and test reforms that will advance the objectives of the Medicaid program.”

Both states’ plans are aimed at hundreds of thousands of working-age adults who became newly eligible for Medicaid when the Affordable Care Act allowed states to expand it starting in 2014. Arkansas’s version requires most Medicaid recipients between the ages of 19 and 49 to spend 80 hours a month at a job or in “community engagement” activities, like volunteering or training for a job. Kentucky’s, which has not yet been rolled out because of the court case, does the same for people between 19 and 64.

The Trump administration had asserted that some people in Kentucky who lost Medicaid would gain commercial insurance coverage. But Judge Boasberg appeared skeptical, writing that federal officials “cited no research or evidence that this would happen.”

Kentucky officials, meanwhile, had made the case that the work requirements could save money for the state and thus make its expansion of Medicaid “fiscally sustainable.” Gov. Matt Bevin, a Republican whose Democratic predecessor expanded the program, has warned repeatedly that he will end the expansion for financial reasons if the work rules don’t survive in court.

But Judge Boasberg rejected the financial argument. Federal officials, he said, “made no finding” that the waiver would save any amount of money or make the program more sustainable.

In seeking federal permission to introduce work requirements, Kentucky had estimated that 95,000 fewer residents would have been enrolled in Medicaid within five years, although its lawyers said many of those people would have found jobs that offered insurance. Lawyers for the plaintiffs predicted the number would be much greater, and the early results in Arkansas — thousands losing coverage for either failing to meet the 80-hours-per-month requirement or failing to correctly report their compliance — bolstered their case.

Adam Meier, the secretary of Kentucky’s Cabinet for Health and Family Services, said in a statement, “Although a setback to our implementation schedule, we believe that we have an excellent record for appeal and are currently considering next steps.”

He added, “The judge illogically concluded that Medicaid is all about paying for health care for as many people as possible without regard to whether this coverage actually makes people healthier. We emphatically disagree because a program like Medicaid, by its very nature, must take into account whether it improves people’s health.”

Gov. Asa Hutchinson of Arkansas, a Republican, said that he was “disappointed” in the ruling and would discuss it further in a news conference on Thursday.

The other states that have won federal approval for Medicaid work requirements are Arizona, Indiana, Michigan, New Hampshire, Ohio and Wisconsin. New Hampshire’s requirement, the next to take effect, is the subject of a third lawsuit, filed last week.

An earlier version of this article misstated the surname of the Arkansas governor. He is Asa Hutchinson, not Huckabee.

Robert Pear contributed reporting.

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