WASHINGTON (AP) -- The Trump administration's effort to remake Medicaid by requiring low-income people to work for health care suffered a serious setback Friday when a federal appeals court ruled it goes beyond what's allowed by law.
The unanimous decision by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit means President Donald Trump will have little to show for one of his major health care initiatives ahead of the November elections. The case involves Arkansas, but the ruling is expected to affect other states pursuing work requirements.
The court found that it is “indisputably correct that the principal objective of Medicaid is providing health care coverage” and that work requirements for “able-bodied” people lack specific legal authorization. Moreover, the court ruled that administration officials failed to thoroughly examine the risk that some Medicaid recipients would lose coverage in approving Arkansas' experiment with work requirements. The state later reported more than 18,000 people dropped from the rolls, but it wasn't clear how many obtained other coverage.
“Failure to consider whether the project will result in coverage loss is arbitrary and capricious,” Judge David B. Sentelle wrote for the court. He was nominated to the federal bench by Republican President Ronald Reagan.
“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," wrote Sentelle, dismissing several justifications cited by the administration for work requirements.
Nearly 20 states are in various stages of trying to implement requirements, after the Trump administration invited states in 2017 to submit such proposals. Kentucky, an early adopter, has reversed course under a new Democratic governor and dropped its requirements.
In a statement, the federal Centers for Medicare and Medicaid Services said it “is reviewing and evaluating the opinion and determining next steps.”
“CMS remains steadfast in our commitment to considering proposals that would allow states to leverage innovative ideas,” the statement added.
Arkansas Republican Gov. Asa Hutchinson said he's hopeful that the U.S. Supreme Court will review the case.
“Arkansas implemented a work requirement in order to help recipients get worker training and job opportunities while receiving benefits," Hutchinson said. “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.”
Advocates for low-income people called the decision a solid win.
“This really challenges all of the administration's theories,” said Leo Cuello, health policy director for the nonprofit National Health Law Program, which joined in suing the administration. “Whatever yarn they spin, this really reins them in.”
The appeals court upheld an earlier ruling by U.S. District Judge James E. Boasberg, who was nominated by President Barack Obama.
Medicaid is a $600 billion federal-state program that covers about 70 million people, from pregnant women and newborns to disabled people and elderly nursing home residents. Under the Obama-era Affordable Care Act, states gained the option of expanding the program to many low-income adults previously ineligible. More than 12 million people have gained coverage as a result.
The Trump administration allowed states to require “able-bodied” adults drawing Medicaid benefits to work, volunteer or study. Officials argued that work can make people healthier.
Trump supports work requirements for safety-net programs across the government. He signed an executive order directing Cabinet agencies to add or strengthen work requirements for programs including subsidized housing, food stamps and cash welfare.
Trump is also seeking to cap the federal government's share of Medicaid costs. Although that idea has failed to get traction in Congress, it remained one of the key components in the White House budget offered this week.