Top Ten Issues in Health Law: Medicaid Work Requirements

On January 11, 2018, CMS issued a letter to State Medicaid Directors announcing that CMS would approve Section 1115 waivers where the states condition Medicaid participation on working in community engagement programs. According to the letter, the rationale for such waivers is to support state demonstrations that test whether sustained employment or other productive community engagement leads to improved health outcomes. Section 1115 of the Social Security Act permits states to experiment, test, and evaluate state specific policy changes and to waive state compliance with specific Medicaid requirements upon a determination that the state’s innovative approach would still promote Medicaid objectives, the most important of which is to promote insurance coverage.

The conflict between the purpose of the 1115 waiver program–experiments that still promote Medicaid program objectives–and the rationale for the work requirement–sustaining work to improve health outcomes–is playing out in the courts, which have found a lack of evidence that the work requirement programs are promoting Medicaid objectives. All three decisions issued so far have determined that the HHS Secretary’s waiver approval failed to adequately consider whether the proposed Medicaid innovative work requirement program in fact helped the state furnish health coverage. For example, in Kentucky a federal court vacated the HHS approved waiver and remanded to HHS to correct its failure to consider how the waiver enhanced health coverage. After further review by HHS and reimplementation by Kentucky the waiver was again challenged with the same result as the first decision.60 Court decisions also struck down work requirements in Arkansas and New Hampshire. As of this writing, HHS has approved six states’ work requirement programs but none have been implemented. Three states’ work requirements have been set aside by the courts and nine states have filed applications that are pending.

As a general matter, states have applied the work requirement to diverse segments of the Medicaid population, including the Medicaid expansion population, the traditional Medicaid population, or both. Under the essential terms of the waivers, the applicable populations must meet the prescribed work requirements, which are typically described as some minimum number of hours of work per month, and the timely reporting of meeting the minimum. According to CMS, the work requirement is anchored in historic CMS principles that emphasize work to promote health and well-being.