Indiana Legal Services, a nonprofit law firm, filed a lawsuit Monday on behalf of four Indiana citizens against the federal government, claiming Indiana’s plan to enforce work requirements for Medicaid recipients improperly jeopardizes health coverage for thousands. Work requirements have recently been endorsed by the Trump Administration, but various courts have blocked state implementation.
The Medicaid program is a federal/state health insurance program for the poor. While overseen by the federal government, states create their own plans that must abide by federal requirements of eligibility outlined in the Medicaid Act. Generally, Medicaid eligibility depends upon a means testing framework (amount of income compared to the Federal Poverty Level).
However, states may subvert federal requirements by applying for a §1115 Demonstration Waiver. These waivers allow a state Medicaid program to violate the federal requirements and instill their own requirements as long as it is still likely to assist in promoting the objectives of the overall Medicaid program. Waivers are granted by the Secretary of the US Department of Health and Human Services (HHS), typically to allow innovation in health care administration.
In March 2017, the HHS Secretary and the Centers for Medicare and Medicaid (CMS) Administrator wrote a letter to states indicating the agencies would approve work requirements within state Medicaid programs. Historically, work requirements have received backlash for restricting access to Medicaid, a hallmark of the programs purpose. The government has argued however, work requirements have shown increased health outcomes and therefore continues to promote the objectives of the program.
From this new policy, Indiana added work requirements to their Medicaid plan in July. Medicaid beneficiaries are required to report 20 hours of work (or a qualifying activity) per month. This hour requirement will jump to 80 hours a month by July 2020. Work hours must be reported to the Indiana Family and Social Services Administration in order for Medicaid beneficiaries to retain their coverage.
In the lawsuit, Indiana Legal Services argues that Indiana’s work requirements harm individuals who depend on Indiana’s Medicaid program. Specially, the complaint claims that because the HHS Secretary granted the waiver allowing these additional requirements, they are attempting to “to re-write the Medicaid Act, and the use of the statute’s waiver authority to ‘transform’ Medicaid is an abuse of that authority.” States must follow certain procedures to ensure continuity of coverage for eligible individuals. Because thousands of residents will lose coverage, Indiana Legal Services further contends the federal government has illegally allowed the state to bypass this duty.
This suit comes after numerous other lawsuits have blocked similar work requirements in Arkansas, Kentucky and New Hampshire.
