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WASHINGTON -- After hearing challenges to Medicaid restrictions in Arkansas and Kentucky, U.S. District Judge James Boasberg told litigants Thursday that he aims to issue rulings on both cases by the end of the month.

The timing would allow the judge's decision to be made before more Arkansans are removed from the rolls of a health insurance program called Arkansas Works. People who don't comply with work and reporting requirements for three months during a calendar year lose their coverage for the rest of the year, so the first terminations for noncompliance in 2019 would happen April 1.

In June, Arkansas became the first state to implement a work requirement for Arkansas Works recipients. Kentucky is also adopting a similar program, though it was placed on hold while Boasberg, a Barack Obama appointee, weighed its legality.

In its fiscal 2020 budget blueprint, released Monday, President Donald Trump's administration called for similar programs nationwide.

In Arkansas Works, most able-bodied adults ages 49 and under are required to participate in work or "community engagement" activities, including education or job training, in order to receive health insurance coverage. The Medicaid expansion program uses federal and state dollars to buy the insurance.

Since Arkansas' experiment began, more than 18,000 people have been removed from the rolls after failing to comply with the new rules. Of those, about 1,400 re-enrolled this year.

Thursday, in back-to-back hearings, Boasberg heard challenges to both programs. Arkansas went first; Kentucky followed.

Deputy Assistant Attorney General James M. Burnham urged Boasberg not to derail the Arkansas program. Shutting it down now "would wipe out all the work that's been done over the last year and it would completely destroy the experimental value of the demonstration project," he said.

The experiment is only nine months old, Boasberg replied, and he questioned whether the Arkansas study results should be the highest priority.

"You're saying, 'Don't interrupt this experiment because we need to get the data.' If you're weighing data versus 17,000 people who have lost coverage, it appears a hard argument to make," the judge said.

Burnham said those removed from the rolls aren't necessarily uninsured. All that's known for certain is that they're no longer enrolled in the program, he said.

"We don't know who these people are or what it means to say that they've lost coverage," Burnham said. Some of them may have found jobs and obtained health insurance elsewhere, he added.

Boasberg, who later praised the attorneys for their "sophisticated and thoughtful" presentations, continued to ponder the government's arguments as the hearing progressed.

"Why aren't they right that this is going to be terribly disruptive and difficult -- both for the state and its citizens -- if I cut this off right here?" he asked Ian Heath Gershengorn, an attorney representing the plaintiffs in both cases. The plaintiffs were program recipients.

Gershengorn emphasized the disruption that occurs when Arkansans lose health care.

"There's massive harm. It's not speculative. It's not a prediction. We know that 18,000 people have already been kicked off Medicaid," he added.

During Thursday's hearings, Burnham argued that the secretary of health and human services has "very broad" authority to grant waivers. Failure to allow them would diminish states' "ability and willingness" to participate in the expanded Medicaid program, he added.

Fourteen states have opted not to participate in the expanded Medicaid program.

Kentucky Gov. Matt Bevin, who was elected after opposing Medicaid expansion, has threatened to end his state's program if the work requirements are blocked.

In June, Boasberg struck down Kentucky's original waiver. Saying that the secretary had failed to "adequately consider the effect of any demonstration project on the state's ability to help provide medical coverage," Boasberg sent the matter back to the Health and Human Services Department "for further review."

In November, after additional work, the department again granted permission for the Kentucky program to proceed. It is slated to begin April 1.

Both states voluntarily expanded Medicaid after passage of the Patient Protection and Affordable Care Act in 2010.

At the time, both states had Democratic governors who favored the program. Both now have Republican governors who have sought to place new limitations on the program.

Arkansas Gov. Asa Hutchinson convinced wavering members in the General Assembly to back the program, in part, by promising to push for work requirements.

The plaintiffs argue that Arkansas violated Section 1115 of the Social Security Act when it approved the requirement by failing to consider the effect it would have on Medicaid's goal of providing health coverage to low-income people.

Officials from both states argued that the Trump administration complied with federal law.

To stay in the program in Arkansas, the recipients must spend 80 hours a month on work or other approved activities, unless they are exempted. They must report their activities over the phone or through a state website. Parents with children in the home and pregnant women are exempted, as are those receiving unemployment benefits.

The work requirement applies only to enrollees in Arkansas Works, which covers people who became eligible for Medicaid when the state extended coverage in 2014 to adults with household incomes of up to 138 percent of the poverty level.

That income cutoff is $17,236 for an individual or $35,535 for a family of four. More than 233,000 people were enrolled in the program as of Feb. 1.

The state phased in the requirement last year for enrollees age 30-49 and is adding it this year for those age 19-29.

Arkansas Assistant Solicitor General Dylan L. Jacobs also defended the law during Thursday's oral arguments.

Kevin De Liban of Legal Aid of Arkansas also appeared but did not speak. Legal Aid, the National Health Law Program and the Southern Poverty Law Center all represent the plaintiffs.

A report released Thursday by The Commonwealth Fund, a New York City-based health policy research organization, predicted that Arkansas' work requirement will reduce the average hospital's operating margin by 0.2 percentage point to 0.8 percentage point.

Without the work requirement, the average hospital's operating margin -- the percentage of patient revenue that a hospital keeps after paying expenses -- would be 1.3 percent, according to the report.

For rural hospitals, which on average have negative operating margins, the requirement will reduce the margins -- increasing the amount of money the hospitals lose on patient care -- by 0.5 percentage point to 1.1 percentage point, the report estimated.

The estimates were based on the coverage losses in Arkansas during the work requirement's first seven months. When the requirement is fully implemented, the report estimated that the requirement will cause 50,000 Arkansans to lose coverage.

Bo Ryall, chief executive of the Arkansas Hospital Association, said hospital administrators have reported seeing more patients who lack insurance.

The trend is likely to continue as the coverage losses grow, he said.

"We'll slowly be able to see the impact, because people are only going to get to us when they get sicker," he said.

Information for this article was contributed by Andy Davis of the Arkansas Democrat-Gazette.

Metro on 03/15/2019

Print Headline: Arkansas, Kentucky argue for work rules for Medicaid

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