Gresham v. Azar

Facts

Medicaid originally provided health care coverage for four categories of people: the disabled, the blind, the elderly, and needy families with dependent children. Congress amended the statute to expand medical coverage to low-income adults who did not previously qualify. States have a choice whether to expand Medicaid to cover this new population of individuals. Arkansas expanded Medicaid coverage to the new population effective January 1, 2014, through participation in private health plans, known as qualified health plans, with the state paying premiums on behalf of enrollees. Medicaid has certain minimum coverage requirements that states must include in their plans. States can deviate from those requirements if the Secretary waives them so that the state can engage in 'experimental, pilot, or demonstration projects.' The Secretary can approve 'any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives' of Medicaid. Arkansas applied to amend its existing waiver under §1315. Arkansas gained approval for its initial Medicaid demonstration waiver in September 2013. In 2016, the state introduced its first version of the Arkansas Works program, encouraging enrollees to seek employment by offering voluntary referrals to the Arkansas Department of Workforce Services. Arkansas's new version of Arkansas Works introduced several new requirements and limitations. It required beneficiaries aged 19 to 49 to 'work or engage in specified educational, job training, or job search activities for at least 80 hours per month' and to document such activities. Beneficiaries were exempted from completing the hours, if they show they are medically frail or pregnant, caring for a dependent child under age six, participating in a substance treatment program, or are full-time students. Nonexempt 'beneficiaries who fail to meet the work requirements for any three months during a plan year will be disenrolled . . . and will not be permitted to re-enroll until the following plan year.' When someone enrolls in Medicaid, the 'medical assistance under the plan . . . will be made available to him for care and services included under the plan and furnished in or after the third month before the month in which he made application.' Arkansas Works proposed to eliminate retroactive coverage entirely. It also lowers the income eligibility threshold from 133% to 100% of the federal poverty line, meaning that beneficiaries with incomes from 101% to 133% of the federal poverty line would lose health coverage. Arkansas Works eliminated a program in which it used Medicaid funds to assist beneficiaries in paying the premiums for employer-provided health care coverage. It used Medicaid premium assistance funds only to help beneficiaries purchase a qualified health plan available on the State Health Insurance Marketplace, requiring all previous recipients of employer-sponsored coverage premiums to transition to coverage offered through the state's Marketplace. D approved most of the new Arkansas Works program until December 31, 2021. D authorized Arkansas to limit retroactive coverage to thirty days before enrollment rather than a complete elimination of retroactive coverage. He also approved the decision to terminate the employer-sponsored coverage premium assistance program. He did not permit Arkansas to limit eligibility to persons making less than or equal to 100% of the federal poverty line. He kept the income eligibility threshold at 133% of the federal poverty line. D identified three objectives that he asserted Arkansas Works would promote: 'improving health outcomes; . . . addressing behavioral and social factors that influence health outcomes; and . . . incentivizing beneficiaries to engage in their own health care and achieve better health outcomes.' He claimed it would 'encourage beneficiaries to obtain and maintain employment or undertake other community engagement activities that research has shown to be correlated with improved health and wellness.' Also, he claimed the shorter timeframe for retroactive eligibility would 'encourage beneficiaries to obtain and maintain health coverage, even when they are healthy,' which, in turn, promotes 'the ultimate objective of improving beneficiary health.' D noted that Arkansas had several exemptions and would 'implement an outreach strategy to inform beneficiaries about how to report compliance.' Ps filed an action for declaratory and injunctive relief. The district court vacated the Secretary's approval, effectively halting the program. The court held that, based on the text of that appropriations provision, the objective of Medicaid was to 'furnish . . . medical assistance' to people who cannot afford it. It held that 'D's approval letter did not consider whether [Arkansas Works] would reduce Medicaid coverage. It held that D failed to consider whether Arkansas Works would promote coverage. D held that the ''focus on health is no substitute for considering Medicaid's central concern: covering health costs' through the provision of free or low-cost health coverage.' The court ruled that D's approval was arbitrary and capricious because it did not address-despite receiving substantial comments on the matter-whether and how the project would implicate the 'core' objective of Medicaid: the provision of medical coverage to the needy. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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