On December 4, 2020, the Supreme Court agreed to hear arguments to decide the legality of the Department of Health and Human Services’ (HHS’s) authorization for states to incorporate work requirements into their Medicaid programs. The consolidated cases, Azar v. Gresham and Arkansas v. Gresham, challenge the legality of work requirements in two states’ Medicaid programs—Arkansas and New Hampshire. On January 19, 2021, the last full day of the Trump Administration, outgoing HHS Secretary Alex Azar filed HHS’ main Supreme Court brief supporting the states’ work requirements.
We first wrote about the Centers for Medicare & Medicaid Services’ (CMS’s) policy allowing states to require some Medicaid recipients to hold employment or participate in community engagement activities back in 2018. Since then, we also reported on how a federal district court twice invalidated those requirements. Last year, we reported that a three-judge panel of the D.C. Circuit Court of Appeals struck down Arkansas’ work requirements . The D.C. Circuit reasoned that a waiver can be approved if it “promotes the objectives” of Medicaid, and Medicaid’s principal “objective” is to provide health coverage to low-income people. By approving Arkansas’ waiver, the court determined that HHS did not assess how requiring Medicaid beneficiaries to work (as a condition for receiving health coverage) promoted the program’s main objective.
In the Supreme Court brief, Azar and the petitioners argue that HHS was acting within its authority by approving the waivers, explaining that 42 U.S.C. 1315 allows the HHS Secretary to approve experimental state initiatives if the Secretary determines they are “likely to assist in promoting the objectives” of Medicaid. Further, Azar argued, the statute allows the HHS Secretary to “waive compliance with any of the [state Medicaid plan’s] requirements” under §1396a if the Secretary determines doing so is “necessary to enable” the experiment. The brief reiterates the argument that requiring Medicaid recipients to work as a condition of coverage helps stretch limited state resources by giving beneficiaries opportunities to seek commercial health coverage (e.g., through an employer). “Conserving scarce resources enables the States to expand or maintain coverage, and thus promotes the Medicaid statute’s undisputed objective of providing health coverage to needy persons,” the brief explains.
The Supreme Court might not hear arguments before the early spring, and it is possible the new Biden Administration could rescind approval for the Medicaid work requirements before then. On the other hand, the Biden Administration may want to allow the case to go forward in order to prevent an adverse decision that would hinder the flexibility that the Secretary of HHS has to issue Medicaid waivers. A decision strictly interpreting the Secretary’s waiver authority may limit the ability of the Biden Administration to use waiver authority to implement its own healthcare priorities.
 Later in 2020, the D.C. Circuit struck down New Hampshire’s work requirements.