Arkansas Works work rule shot down; Senators say funding still likely

A three-judge U.S. Court of Appeals panel on Friday (Feb. 14) unanimously ruled against Arkansas Works’ work requirement, but two legislators – one supportive and one opposed to the program – said it will likely still receive enough support to pass in the Legislature’s upcoming fiscal session.

The Washington, D.C.-based court ruled in Gresham v. Azar that the U.S. Department of Health and Human Services’ approval of the state’s work requirement was “arbitrary and capricious.” It said HHS Secretary Alex Azar approved the requirement in hopes of furthering goals of improving health outcomes rather than Medicaid’s congressionally stated purpose of providing medical coverage. Judge David Sentelle wrote in the opinion.

Arkansas Works is the state program that uses mostly federal dollars to purchase private insurance for lower-income adults. Originally known as the “private option,” it was created in 2013 after the U.S. Supreme Court ruled states could chose whether to expand their Medicaid populations under the Affordable Care Act, commonly known as Obamacare. While many Republican-leaning states chose not to expand their populations, Arkansas obtained a federal waiver to use those same dollars to purchase private insurance. As of Jan. 1, the program enrolled almost 250,000 Arkansans.

The program was created by lawmakers and Gov. Mike Beebe’s administration and has generated opposition from some Republicans who see it as a government intrusion into health care. Opponents have tried to block it during legislative sessions by denying funding to the Department of Human Services’ Division of Medical Services, the agency that administers the program. Each legislative appropriation requires three-fourths approval. Each time it’s been approved, but often not without a fight.

When Gov. Asa Hutchinson succeeded Beebe, he embraced the program but, to increase political support, added a requirement that nonexempt recipients ages 19 to 49 work or engage in educational, job training, or job search activities for 80 hours per month. As a result of the work requirement, more than 18,000 individuals were removed from the program. Charles Gresham and nine other Arkansans filed an action for declaratory and injunctive relief on Aug. 14, 2018.

Judge Sentelle wrote that the statute and state law show that Medicaid’s main purpose is to provide access to medical care, but Azar had approved Arkansas’ waiver based on improving health outcomes and changing recipients’ behaviors. Sentelle wrote that when Congress wants to add objectives to a social welfare program, it does so through the law, as it did with both the Temporary Assistance to Needy Families program and the Supplemental Nutrition Assistance Program. It had not done so with Medicaid.

“The text of the statute includes one primary purpose, which is providing health care coverage without any restriction geared to healthy outcomes, financial independence or transition to commercial coverage,” he wrote.

Sentelle noted that more than 18,000 individuals were removed from the program in five months as a result of the requirement.

Gov. Hutchinson issued a statement saying the U.S. Supreme Court will “hopefully” review the ruling.

“The D.C. Court of Appeals ruled that the Medicaid Act does not permit a work requirement for able-bodied recipients even though one of the purposes of the Medicaid law is ‘to help families be independent,’” he said. “Arkansas implemented a work requirement in order to help recipients get worker training and job opportunities while receiving benefits. It is difficult to understand how this purpose is inconsistent with federal law. The court’s ruling undermines broad public support for expanded health care coverage for those struggling financially. Arkansas Works has expanded access to health care coverage for low-income Arkansans. Hopefully, the Supreme Court will review today’s ruling, but as it stands the Arkansas Works program will be less effective in helping recipients gain independence.”

Legislators will convene in their fiscal session April 8. These occur every even-numbered year and focus on bills for appropriations, or spending. Asked if the court ruling will make it harder to pass the Division of Medical Services’ appropriation during the upcoming fiscal session, Senate President Pro Tempore Jim Hendren, R-Gravette, an Arkansas Works supporter, said, “Possibly, but I think in the end we will pass the appropriation and begin the work of finding new ways to deal with the hand that Washington and the courts give us.”

A longtime opponent of Arkansas Works, Sen. Bart Hester, R-Cave Springs, said while the ruling will make it harder for supporters to fund the program, it will attain the necessary votes.

“I’m still opposed but not sure what this exactly means and not sure how to unwind at this point. We are looking at details now,” he said.

The case originally was consolidated with a similar Kentucky case, but that was dismissed as moot when that state’s new governor ended the work requirement. Gresham and the plaintiffs were represented by Legal Aid of Arkansas, the Southern Poverty Law Center, the National Health Law Program and Jenner & Block. Last year, a district court ruled in favor of the plaintiffs.

In a press release, Legal Aid of Arkansas attorney Kevin De Liban said, “The court recognized the tragic harm that these work requirements have caused for people in Arkansas doing their best to get ahead. Now, more than two hundred thousand Arkansans on the program can rest easier knowing that they’ll have health care when they need it.”