KICKED OFF: Nannette Ruelle was one of the 18,000 people removed from Medicaid in 2018 due to the work rule — despite meeting the requirement. Brian Chilson

U.S. District Judge James E. Boasberg on Wednesday halted Arkansas’s experimental work requirement for certain Medicaid expansion beneficiaries, the only program of its kind in the country. The judge also blocked Kentucky’s plans to implement a similar program.

Governor Hutchinson, a champion of the work rule, said in a statement he was “disappointed in the decision” but was still reviewing the judge’s opinion and would offer further comment on Thursday. A spokesperson for the state Department of Human Sevices, the agency that administers Arkansas Medicaid, referred a reporter to the governor’s office when asked about next steps.

Attorneys for the Arkansas plaintiffs celebrated both the decision and its timing. The order comes only five days before the state was set to begin removing a new group of beneficiaries from the Medicaid rolls, on April 1.

Arkansas’s policy cuts off health coverage for those who do not report at least 80 hours of “work activities” — some education, job search and volunteer hours count — for any three months in a given calendar year. About 6,500 beneficiaries hit the two-month mark at the end of February, state data shows, which means thousands likely would have reached their third strike at the end of March.

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People who are disenrolled for noncompliance are locked out of reapplying for Medicaid for the rest of the calendar year. Each month, beneficiaries must report at least 80 hours of “work activities” to DHS, but it is not clear how many noncompliant beneficiaries are not working and how many are simply not reporting.

In 2018, the state terminated coverage for over 18,000 beneficiaries due to work rule noncompliance. Of those, only about 1,900 have regained coverage since their lockout period ended on Jan. 1, 2019. There were about 234,000 Arkansans covered by Medicaid expansion as of Feb. 1, though only about half of those beneficiaries were subject to the work requirement.

The timing of the ruling could also complicate passage of the state’s Medicaid budget. Since 2013, when Arkansas first opted to expand Medicaid to cover low-income adults, a bloc of conservative Republicans has sought to reverse the expansion by holding up the state’s annual Medicaid appropriation. The governor has fought to keep expansion itself intact, leading to a recurring showdown within the GOP.

However, in 2018, the appropriation easily passed. Opponents of Medicaid expansion were placated by Hutchinson’s receipt of a waiver from the Trump administration to implement the work rule. Boasberg’s decision halting the work requirement could renew legislative calls to dismantle the Medicaid expansion — known as “Arkansas Works” — in its entirety.

Kevin DeLiban, an attorney for Legal Aid of Arkansas, is among those representing nine Medicaid beneficiary plaintiffs who sued the Trump administration over Arkansas’s work rule. He praised the decision and urged the state to abandon its experiment.

“Our clients talk to us about the stress and worry and anxiety of not knowing whether they’re going to have medical coverage tomorrow or next month … tonight [they] can go to bed and wake up tomorrow and know that they’re going to have insurance,” he said.

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In his opinion, Boasberg, a judge in the District of Columbia, rejected arguments from the Trump administration that it followed the law in allowing Arkansas to impose its work requirement. Under a portion of the federal Medicaid statute, the secretary of the U.S. Department of Health and Human Services has the authority to issue waivers to states to design and implement experimental programs if he or she determines the experiments are likely to assist in promoting the objectives of Medicaid. Federal and state officials argued that work requirements promote better health outcomes and greater independence by incentivizing people to move up the economic ladder.

But attorneys for the plaintiffs said federal HHS Secretary Alex Azar did not adequately consider the impact the work requirement would have on beneficiaries likely to lose coverage.

On Wednesday, Boasberg agreed, noting that the secretary “neither offered his own estimates of coverage loss nor grappled with [public comments] projecting that the [waiver] amendments would lead a substantial number of Arkansas residents to be disenrolled from Medicaid.” Azar did not “engage” with the question of how many people might lose their insurance, he said.

That evident lack of review made Trump administration approval of Arkansas’s waiver “arbitrary and capricious,” the judge wrote.

He noted that his reasoning (and “the Secretary’s failures”) was nearly identical to that found in his ruling in the related Kentucky case last summer. At the time, Kentucky was about to begin implementing its work rule. After Boasberg blocked the policy, Kentucky and the Trump administration attempted to address the judge’s concerns by re-opening the public comment period on the waiver. In November, the Trump administration said it had once again approved Kentucky’s request, leading plaintiffs in that state to challenge the new, re-approved waiver, too.

Boasberg on Wednesday again sided with the Kentucky plaintiffs, concluding HHS Secretary Azar had still failed “to adequately consider the effects of [Kentucky’s work requirement waiver] on coverage.” In that opinion, he also delved deeper into the substantive issues at play in both the Arkansas and Kentucky cases. He expressed particular skepticism at the argument made by Kentucky and the Trump administration that the state is now considering a full reversal of Medicaid expansion if its work requirement does not remain intact.

“Taken to its logical conclusion, the Secretary’s position thus makes little sense,” the judge wrote. “Under his reasoning, states may threaten that they wish to de-expand, or indeed do away with all of Medicaid — for fiscal reasons or no reason at all — if the Secretary does not approve whatever waiver of whatever Medicaid requirements they wish to obtain. The Secretary could then always approve those waivers, no matter how few people remain on Medicaid thereafter because any waiver would be coverage promoting compared to a world in which the state offers no coverage at all.”

In the Arkansas case, attorneys for the state argued that the Arkansas work requirement should not be immediately vacated because doing so would cause disruption to an existing program — unlike in Kentucky, where it remains a hypothetical — and might sow confusion among beneficiaries.

Boasberg said he was “not insensitive to the practical concerns” caused by halting the rule. But on balance, he concluded, any disruption caused to the state “is not sufficiently significant to avoid vacatur.

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“For one thing, Defendants have expressed confidence throughout this case that they can communicate with Medicaid recipients regarding the terms of the work requirements. If that is so, they should be able to inform them that the requirements are paused for now and, if later reapproved, that they are put back into effect,” he wrote.

However, the judge continued, Arkansas’s own monthly data shows that the overwhelming majority of people subject to the requirement aren’t reporting anything each month. (State data also indicates most of those people are likely working, though Boasberg did not mention that.)

The low reporting rate suggests “that the State’s outreach efforts may well be falling severely short,” he wrote. “Notably, only 12.3% of persons not exempt from the requirements reported any kind of qualifying activity.  … The numbers are even lower for several other months. … Arkansas might use the time while the program is paused to consider whether and how to better educate persons about the requirements and how to satisfy them.”

This reporting is made possible in part by a yearlong fellowship sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund. It is published here courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.