Will Indiana Medicaid work requirements pass legal muster?


The recent federal waiver allowing work requirements for Indiana’s Medicaid program has sparked controversy from all sides and led to a debate that analysts say is likely to end in court.

Indiana’s waiver, green-lighted by the U.S. Department of Health & Human Services in February, requires certain Medicaid recipients to work an average of 20 hours a week, be enrolled in school, or participate in a job search/training program in order to qualify for assistance. Proponents say the requirements are a practical approach to improving self-sufficiency for able-bodied Medicaid patients by incentivizing work and community engagement. Critics argue the requirements are burdensome for the state’s most vulnerable populations and jeopardize medical care for some 30,000 recipients. But will the requirements pass legal muster in a court of law?

Matt Salo, executive director for the National Association of Medicaid Directors

Matt Salo

A key legal question is whether such a waiver furthers the purposes of the Medicaid program, says Matt Salo, executive director for the National Association of Medicaid Directors. Federal law allows states to deviate from Medicaid requirements when necessary to implement demonstration projects if the changes promote the Medicaid program’s objectives.

Typically, when arguments arise over state Medicaid program provisions, they center on whether the requirements help or hinder the program, Mr. Salo said in an interview.

“There isn’t really a clear-cut, black-and-white definition of the purposes of Medicaid written down in the statute,” he said. “Practically speaking, it’s a fairly subjective term. Clearly, the Obama administration said, ‘We don’t think [work requirement] policies further the objectives of the Medicaid program.’ I don’t think there’s anything that would preclude a new administration from saying, ‘We have a slightly different opinion of what the purposes of the Medicaid program are.’ ”

However, Leonardo Cuello, director of health policy for the National Health Law Program, says Indiana’s new requirements are illegal and clearly run contrary to the purpose of the Medicaid program. While the program’s work requirements are taking the spotlight, he notes that the new provisions also include lockout periods if paperwork is late and removes transportation assistance for medical care.

Leonardo Cuello, director of health policy for the National Health Law Program

Leonardo Cuello

“The purpose of Medicaid is to help furnish medical services,” he said. “Does the work requirements help furnish health services? The answer is, no. Nobody gets furnished more health services as a result of the work requirements. The work requirements aren’t even about health care, they’re about [purported] job promotion.”

The National Health Law Program is a coplaintiff in a lawsuit challenging similar Medicaid requirements in Kentucky. Like Indiana’s waiver, Kentucky’s approved plan includes lockout provisions for failing to pay premiums on time and has work requirements for able-bodied adult enrollees. Mr. Cuello said his organization is looking closely at taking legal action against Indiana’s waiver as well.

In a statement, HHS Secretary Alex Azar said the approval of Indiana’s expanded Medicaid program is in line with a Trump administration policy to support state efforts to “improve Medicaid enrollee health outcomes and promote independence by incentivizing community engagement among able-bodied, working-age Medicaid beneficiaries.” The policy responds to numerous state requests to test programs through Medicaid demonstration projects under which work and other types of community engagement would be a condition of Medicaid coverage, according to the announcement.

“We look forward to collaborating with Indiana on this next evolution of [the Healthy Indiana Plan], which serves as another example of the Trump administration’s support of state-led efforts and innovative reforms to make our HHS programs really work for Americans,” Mr. Azar said in the statement.

Another legal question that may arise against Indiana’s work requirements for Medicaid is whether the provisions are part of a true “experiment.”

James Blumstein of Vanderbilt University, Nashville

James Blumstein

The nature of Medicaid waiver programs are to try out a new idea and demonstrate that the changes are successful in meeting certain goals after a designated period, said James F. Blumstein of Vanderbilt University, Nashville. Mr. Blumstein served as counselor to then-governor Phil Bredesen (D-Tenn.) during the state’s Medicaid (TennCare) reform. In the mid-1990s, the government approved a waiver in Tennessee that allowed the state to implement mandatory managed care, an experiment deemed successful 3 years later, he said.

“These waivers are at the broad discretion of the government,” Mr. Blumstein said in an interview. “I think [Indiana’s plan] is compatible with an overall welfare strategy that’s designed to cut costs, to get folks jobs, and then ultimately, into private sector health insurance. In principal, these things are good to try.”

Mr. Blumstein said that he believes HHS has a strong legal position in defending Indiana’s waiver program, but that doesn’t mean a judge will agree, he said.

“Will a court somewhere find against the government? Against Indiana? I can’t say,” he said. “There’s a lot of hostility to change, and some judges share that hostility to change. But based on my TennCare experience, courts should bend over backward to give flexibility to the states to experiment in this way, if they’re approved by the federal government.”

Mr. Cuello of the National Health Law Program said the Indiana and Kentucky waivers both fail to demonstrate any experimental value. Studies show that when such requirements are enforced, patients drop out of Medicaid or forgo medical care.

“These waivers fail a legality test because they’re not part of any experiment,” he said. “An experiment would be: Here’s an innovative way we have for how to provide health care. These are not experiments.”

At press time, eight states had pending waiver requests at the Centers for Medicare & Medicaid Services that would require work as a condition of eligibility for expansion adults and/or traditional populations.

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