Arkansas's 2018 Medicaid work requirement debacle holds lessons for Georgia as it rolls out similar policy

Georgia is on the verge of rolling out an ambitious Medicaid work requirement that resembles the now-defunct 2018 Arkansas rule that kicked some 18,000 people off Medicaid before being struck down by a federal judge in 2019, Amy Goldstein reports in today's Washington Post.

Arkansas, meanwhile, is now seeking federal approval of a new work rule of its own — though it's much more modest than the 2018 policy and is arguably not a traditional "work requirement" at all. In fact, the proposal Arkansas submitted to the federal Centers for Medicaid and Medicare Services on June 1 acknowledges the Hutchinson-era work requirement was "burdensome" and almost suggests chagrin on the part of the state Department of Human Services.

"DHS heavily considered the lessons learned from its prior implementation," the agency wrote in its application to federal authorities seeking permission to create a new program.

To understand what's going on here, it's worth reviewing some Medicaid fundamentals. Medicaid is a joint state-federal project. The federal government pays most of the costs, and the federal Centers for Medicaid and Medicare Services sets broad rules. States chip in additional money, and each state's program is overseen by an agency such as Arkansas's Department of Human Services. States have much latitude to manage Medicaid how they see fit, but the feds must sign off on major policy changes, including those that might restrict eligibility or unduly strip people of coverage.

When Donald Trump was president, federal Medicaid and Medicare chief Seema Verma effectively invited states to experiment with imposing work requirements on certain Medicaid beneficiaries. Arkansas was among the first states in line to ask the Trump administration for a waiver to conduct such an experiment, and in 2018 it became the only state that actually put its plan fully into motion before the federal courts stepped in.

The 2018 Arkansas work requirement applied only to a sub-group of Medicaid recipients — non-disabled adults under the age of 50 — and it came with a long list of further exemptions, such as for those caring for dependent children. But if the Hutchinson administration intended to keep the requirement from biting too hard, it had limited success. The rule ended up creating logistical headaches for both the state agency administering the program and for beneficiaries, who had to report their "work activities" on a glitch-plagued web portal deployed by the state on a shoestring budget (tough luck for people with spotty internet access). After some six months, about 18,000 Arkansans had been stripped of health coverage and locked out of reapplication until the new year began.

In 2019, a federal judge in Washington, D.C., ruled that work requirements in Arkansas and Kentucky (which created a similar work rule that never actually took effect) violated federal Medicaid law. The states appealed, and the fight likely would have been resolved by the Supreme Court had Joe Biden not won the 2020 election. But with a Democrat in the White House, the federal Centers for Medicaid and Medicare Services became skeptical of work requirements again, and the issue became a moot point — temporarily.

Now, though, Georgia is about to put in place a program that looks like a harsher version of Arkansas's 2018 Hutchinson-era policy. It includes fewer exemptions and applies to people all the way up to age 64, Goldstein reports.

Georgia was able to overcome the opposition of the Biden administration for two reasons. First, unlike Arkansas, Georgia has not already expanded Medicaid to cover low-income adults as allowed under Obamacare, and it is now proposing to do so. That means Medicaid expansion in Georgia will be bundled from the outset with a work requirement policy, allowing the state to convincingly argue that it is actually expanding coverage, albeit less generously than other states that have embraced Medicaid expansion. (Background: The health care reform law widely known as Obamacare provided extra money to states to expand Medicaid to cover low-income, able-bodied adults, but states had the option of rejecting the money and refusing to expand their programs. Arkansas was one of the few red states to embrace expansion, but many others in the South still have not.)

Second, Georgia's plan was approved by the Trump administration shortly before the 2020 election. After the Biden administration took over, the Centers for Medicaid and Medicare Services rescinded its approval of the state's work requirement plan, but Georgia sued and won. Goldstein explains:

In August 2022, U.S. District Judge Lisa Godbey Wood sided with the state. "[R]escinding would mean less Medicaid coverage in Georgia," the judge wrote in her opinion. Georgia, she reasoned, was unlike other states that would remove people from Medicaid if they failed to adhere to added requirements. Anyone covered through Pathways would increase Medicaid's availability.

Most observers expected the Biden administration to appeal. It did not. CMS officials have refused to discuss their reasons.

Sara Rosenbaum, a health law and policy professor at George Washington University, said the Biden administration doubtlessly realized the case would be far trickier to win than earlier legal fights over such requirements. Even if a partial expansion added "unbelievably low numbers," Rosenbaum said, "any whiff of an expansion is part of the core objective of Medicaid."

Other experts said an appeal would have placed the case before a conservative appellate court and perhaps the Supreme Court, risking for the Biden administration a broader precedent supporting work requirements.

As for the new Arkansas proposal, it's a complete departure from the 2018 work requirement. Beneficiaries won't have to manually report hours, as they did under the old rule; the state will only rely on existing data to verify that people are working. The Department of Human Services will assign "success coaches" to beneficiaries who aren't working to help them get jobs and develop life skills.

"No individuals will be required to report or otherwise document compliance on a regular basis," the proposal says. "Rather, DHS is seeking to improve member engagement through focused care coordination, which, for most, will mean a monthly contact with a success coach to check whether the beneficiary has gained access to needed resources and is making progress on their individualized Action Plan."

As for the 2018 work requirement, it was well-intentioned but flawed, the Department of Human Services seems to say. "While the intent was to encourage beneficiaries to engage in their communities and the workforce to achieve economic growth and eventual independence from government dependency, the monthly reporting of engagement hours was burdensome," the proposal says.

Crucially, no one will fully lose health coverage under Arkansas's new proposal if they aren't meeting the state's requirements. Instead, they'll be moved from one of the state's Medicaid-funded plans provided by private insurance companies such as Arkansas Blue Cross to its regular, "fee-for-service" Medicaid program. "In no event will a beneficiary lose Medicaid eligibility or have a reduction in benefits," the proposal says.

Some health advocates, such as Legal Aid of Arkansas, say the state's proposal would still hurt people. Not all medical providers take fee-for-service Medicaid, so having a Blue Cross plan may give beneficiaries greater access to services. This was, after all, one of the rationales Arkansas gave a decade ago when it set up its unusual system of relying on private insurance companies to expand Medicaid to hundreds of thousands of low-income adults. (Arkansas is the only state with such a system, and while research shows Medicaid expansion generally has been a great success in terms of helping poor families, it's less clear whether Arkansas's unique quasi-privatized model is superior. It certainly creates a windfall for the insurers, though.)

It remains to be seen if the federal Medicaid authorities will approve Arkansas's new plan. But it's striking how Arkansas's proposal effectively acknowledges the shortcomings of the 2018 work requirement. Perhaps that's an easier admission now that Gov. Sarah Huckabee Sanders and other Republicans seem to want to blame the Hutchinson administration for virtually everything wrong with the state.

Is this a lesson learned on the part of Arkansas — a kinder side of the Sanders administration? One would like to think so, but that's belied by how the state has approached the "unwinding" of special rules that had kept states from booting people off Medicaid rolls during the COVID-19 public health emergency. Due to a 2021 law passed by the Republican-controlled legislature, Arkansas's Department of Human Services has rushed to purge the Medicaid rolls as quickly as possible, closing some 140,000 cases in just the last two months. Other states have moved more slowly out of concern for disrupting beneficiaries' lives, and federal officials have expressed dismay at Arkansas's hasty approach to the process

Arkansas's current work proposal seems relatively benign, at least compared to the 2018 requirement. But if a Republican wins the White House in 2024 and the federal government again becomes receptive to full-fledged work requirements, there's a good chance the state's tune will change.

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