The Biden administration is beginning to roll back a signature Trump administration health policy goal of requiring people to work to receive Medicaid coverage.
In separate actions Friday, officials notified states with approved work requirements that the administration planned to withdraw the approvals, and it rescinded a Trump-era online guidance document inviting states to pursue new work requirement plans.
President Biden signaled early that eliminating such restrictions was a priority, and he signed an executive order requesting a review of such rules during his first week in office. But Friday’s policy changes were made quietly, without a public announcement. Medicaid, a public health insurance partnership between the federal government and states, provides health coverage for 77 million Americans.
The work requirements, a longstanding conservative goal, were a policy priority for Seema Verma, who ran the federal Medicaid program under President Trump. This was an about-face from the position of the Obama administration, which steadfastly opposed the idea of tethering public health benefits to work — something that had never happened in Medicaid’s nearly 60-year history. Obama administration officials repeatedly rejected states’ waiver requests, stating concerns that they “could undermine access” and that they did “not support the objectives of the Medicaid program.”
But Ms. Verma’s Medicaid agency encouraged states to apply, arguing that the policy could help lift poor Americans out of poverty by encouraging them to to find jobs. The requirement was to apply only to childless, nondisabled adults, a group she described as able-bodied.
In practice, the work requirements were barely enacted. Only one state — Arkansas — actually started such a program. Other state plans were either quickly halted by the courts, or placed on pause as state officials waited for litigation to play out. In Arkansas, about 18,000 adults lost health coverage because of their failure to document work hours, before a judge stopped the state from continuing the program. Evidence there suggested that few affected people knew the work requirement existed, and many who did struggled to complete the necessary paperwork.
“Arkansas made a good-faith effort to tell people about the program; they sent out thousands of emails and set up a call center,” said Ian Hill, a senior fellow at the Urban Institute, who has conducted focus groups with Medicaid enrollees affected by work requirements. “The complex message just didn’t get through to people, so they didn’t know what they were subject to.”
In the letters to the states, the agency noted that the idea of conditioning health insurance on work was particularly inappropriate during the Covid-19 pandemic, when many poor Americans have gotten sick and needed health care, and when waves of layoffs have left millions unemployed.
“C.M.S. has serious concerns about testing policies that create a risk of a substantial loss of health care coverage in the near term,” the letters say.
The existing legal challenges, brought by Medicaid enrollees who would be subject to the requirements, are currently before the Supreme Court, which is scheduled to hear oral arguments next month. At issue is whether linking health coverage to work is allowed under Medicaid’s broad waiver authority, which allows states to experiment to further the objectives of the program.
Several federal judges have ruled that a work requirement is at odds with Medicaid’s central goal: to provide medical assistance. Though the Biden administration opposes the policy, typically the Justice Department defends regulations even if they were issued by a previous administration, which could put the Biden administration in an awkward position if the case moves forward. The quick reversal of the policy could help Justice Department lawyers argue the case is now moot.
Medicaid waivers are discretionary, and they can be easily withdrawn by the secretary of Health and Human Services. Under longstanding guidance, states that oppose such a move are entitled to ask for a single hearing before the decision is made final.
“There’s an ability for either side, either the state or the feds, to walk away from the waiver,” said Cindy Mann, a partner at Manatt Health who ran Medicaid during the Obama administration. “My expectation is the administration is going to want to initiate discussions with states, in light of what we’ve learned about the impact on coverage.”
In the letters, Medicaid informed states that they had 30 days to raise objections to the cancellation of their programs.
In her last weeks in office, Ms. Verma sought to add further obstacles for the new administration: She invited states to sign a short contract offering them a more lengthy review process, and guaranteeing at least nine months of notice before a waiver could be withdrawn.
“We want to make sure that people don’t come into office and on a political whim terminate waivers,” Ms. Verma said in an interview at the time.
In a second letter to states Friday, the acting administrator for the Centers for Medicare and Medicaid Services told them she was rescinding Ms. Verma’s offer, saying its new procedures did not provide the agency with enough “flexibility.” But the contract could provide grounds for states with work requirements to protest their elimination in court.