Chapter 9.A.3-4: Medicaid and Medicare

Insert at page 1080 after note 3

Work Requirements

After the 2017 collapse of Republican efforts to repeal and replace of the Affordable Care Act, the Trump administration looked to reform Medicaid through executive action. Recall that the ACA expanded Medicaid eligibility to anyone up at or near the poverty line, at least for those states that chose to adopt the expansion. Believing that Medicaid should not “be used as a vehicle to serve working-age, able-bodied adults,”1 CMS announced in January 2018 that it would, for the first time, allow states to adopt work requirements for non-disabled, non-elderly beneficiaries.

Under the Medicaid statute, the Centers for Medicare and Medicaid Services may grant waivers allowing states to adopt “experimental, pilot, or demonstration projects” that “assist in promoting [Medicaid’s] objectives.” See 42 U.S.C. §1315(b).

"That language comes from section 1115 of the Social Security Act, which was enacted in 1962 to allow experimentation in federal welfare programs. When Congress adopted Medicaid in 1965, it amended section 1115 to cover the new health program. Congress thought that states would use section 1115 to launch small-scale tests: indeed, the Senate report accompanying the law assumed that “a demonstration project usually cannot be statewide in operation.” Over the past five decades, however, section 1115 has evolved into a central feature of Medicaid administration. State Medicaid programs operate pursuant to dozens of waivers, many of which allow for comprehensive, statewide adjustments to eligibility, benefits, cost-sharing, and payment rates." Nicholas Bagley, Are Medicaid Work Requirements Legal?, 319 JAMA 763 (2019).

After the Trump administration’s announcement, nineteen Republican-controlled states asked the Trump administration to waive parts of the Medicaid statute to allow them to impose work requirements. The Trump administration granted eight waivers but, due to legal challenges and the COVID-19 pandemic, only Arkansas managed to implement work requirements, and even then only in 2018.

While the specifics vary from state to state, the waivers generally require certain beneficiaries to periodically report that they have worked 80 hours per month. Proponents of work requirements argue that they encourage people to find jobs. Experience in Arkansas suggests to the contrary. According to the leading study, work requirements in the state were “associated with significant losses in health insurance coverage in the initial 6 months of the policy but no significant change in employment.” Benjamin D. Sommers et al., Medicaid Work Requirements— Evidence from the First Year in Arkansas, 381 New Eng. J. Med. 1073 (2018). Managing the paperwork appeared to present the biggest challenge for beneficiaries. “Lack of awareness and confusion about the reporting requirements were common, which may explain why thousands of persons lost coverage even though more than 95% of the target population appeared to meet the requirements or qualify for an exemption.” Id.

The Trump administration’s waivers were promptly challenged in court, primarily on the ground that waivers could not “assist in promoting [Medicaid’s] objectives” if they would lead to large coverage losses. In cases involving Kentucky and Arkansas, as well as several other states, a district court in Washington, D.C. agreed, reasoning that CMS failed to adequately consider whether the requirement “would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.” Stewart v. Azar, 313 F.Supp.3d 237 (D.D.C. 2018). On appeal, the D.C. Circuit affirmed:

"A critical issue in this case is the Secretary’s failure to account for loss of coverage, which is a matter of importance under the statute. The record shows that the Arkansas Works amendments resulted in significant coverage loss. In Arkansas, more than 18,000 people (about 25% of those subject to the work requirement) lost coverage as a result of the project in just five months. Additionally, commenters on the Arkansas Works amendments detailed the potential for substantial coverage loss supported by research evidence. The Secretary’s analysis considered only whether the demonstrations would increase healthy outcomes and promote engagement with the beneficiary’s health care. The Secretary noted that some commenters were concerned that “these requirements would be burdensome on families or create barriers to coverage.” But he explained that Arkansas would have “outreach and education on how to comply with the new community engagement requirements” and that Centers for Medicare and Medicaid Services could discontinue the program if data showed that it was no longer in the public interest. The Secretary also concluded that the “overall health benefits to the [a]ffected population . . . outweigh the health-risks with respect to those who fail to” comply with the new requirements. While Arkansas did not have its own estimate of potential coverage loss, the estimates and concerns raised in the comments were enough to alert the Secretary that coverage loss was an important aspect of the problem. Failure to consider whether the project will result in coverage loss is arbitrary and capricious.

"In total, the Secretary’s analysis of the substantial and important problem is to note the concerns of others and dismiss those concerns in a handful of conclusory sentences. Nodding to concerns raised by commenters only to dismiss them in a conclusory manner is not a hallmark of reasoned decision making." Gresham v. Azar, 950 F.3d 93, 102-03 (D.C. Cir. 2020).

In late 2020, at the Trump administration’s request, the Supreme Court agreed to review the D.C. Circuit’s decision. After President Biden took office, however, CMS announced that it was starting the process of rescinding the waivers. The Supreme Court agreed to hold the case in abeyance while that process was underway. By July 2021, CMS had formally withdrawn work requirement waivers in Arizona, Arkansas, Indiana, Michigan, New Hampshire, and Wisconsin, though some of those withdrawals remain subject to administrative appeal.2

1 Monica Potts, The Human Cost of Work Requirements, The Atlantic, Oct. 27, 2020.

2 Kaiser Family Foundation, Medicaid Waiver Tracker: Approved and Pending Section 1115 Waivers by State, (visited July 1, 2021)


A good source for Medicare/Medicaid statutes and regulations is:

Information about the current status of Medicare and Medicaid can be found on these two government web sites, and  See also  Kaiser Family Foundation, Medicare at a Glance; Eleanor Kinney, ed., Guide to Medicare Coverage Decision-Making and Appeals (2002); Terry Coleman, Medicare Law (AHLA, 2nd ed. 2006).

From Tom Mayo on the Health Law Professors blog:  “Kaiser Family Foundation has a slick website to commemorate the 40th anniversary of the passage of Titles XVIII and XIX of the Social Security Act - the Medicare and Medicaid laws.  What caught my eye were video documentaries on the political history of the two programs, from the 1930s to the mid-1960s.  The documentaries (one on Medicare, one on Medicaid, one on both) are quite well done, partly because of some compelling excerpts of interviews with some of the principal players in 1965.  Of course, Wilbur Mills and LBJ are long gone, but there are still some terrific interviews with the president of the AMA at that time, Edward Annis; Joe Califano, a White House staffer at the time; LBJ's chief of staff, Jim Jones, and others.  Best of all, longer (7- to 9-minute) interviews with each of these fellows are available on the same page.  I like the way these videos really make the federal health care programs come alive.”

Excellent information about Medicaid, including a primer, program overview, and detailed fact sheets, can be found on the web site for the Kaiser Family Foundation.  See also Murphy's Unofficial Medicaid Page and the AHLA's question and answer Guide to Medicaid Basics.

For additional discussion of the Part D Prescription Drug Benefit, see the detailed summary by McDermott Will & Emery, and the shorter summary by the Kaiser Family Foundation here.

Further analyzing the "Kyl Amendent," which restricts physicians' ability to charge Medicare patients extra, see Kent Masterson Brown, The Freedom to Spend Your Own Money on Medical Care, Cato Policy Analysis No. 601 (Oct. 2007).

Capturing the maddening complexity of all of this is a diagram, prepared by Yaniv Hanoch & Thomas Rice, Can Limiting Choice Increase Social Welfare?, The Elderly and Health Insurance, 84 Milbank Q. 37, 56 (2006).


Georgetown University has a very informative website as part of its Long-Term Care Financing Project.

Medicaid rules intended to make "spending down" more difficult, the look-back period for asset transfers is now three to five years, depending on the type of transfer. The following is an example of how Medicaid estate planning could be used to pay for long term care for the middle class elderly. It was prepared by Wake Forest University law student Daren McDonough (class of 1999), so it may not be fully current, but it illustrates the gist of this type of planning. Do you think this use of Medicaid funds is proper, or does this constitute abuse?

Example: Medicaid Estate Planning

Widow is a 70 year old woman who has recently been diagnosed with Alzheimer's disease. She owns a lovely home in suburban Charlotte, North Carolina. The home is completely paid off with a fair market value of $250,000. This does not include the value of the half acre garden which is adjacent to the property and which is used to produce vegetables which Widow consumes herself. She has one car, a 1991 Cadillac El Dorado. Widow has never worked, she was supported by her husband, Dirk, who was a pilot for U.S. Air. Dirk owned a restaurant as a tenant in common with two other individuals, and upon his death he transferred his interest in the business to Widow, along with $500,000 in the form of proceeds from a life insurance policy and other cash savings.

Widow has recently used her money to buy a new 1997 Lexus (after trading in her El Dorado), titled in only her name, a new bedroom setting, a new kitchen lay out, as well as three new pieces of jewelry. Upon learning that she has Alzheimer's, Widow contacted a local attorney, Will Mack, who advised Widow she had a number of options concerning her estate. At the time of her meeting with Mr. Mack, Widow received $800/month in social security and $300/month from Dirk's pension fund. Widow has four children, all over 22, one child has severe mental retardation and currently lives in an assisted living home. (This is paid for by a trust set up by Dirk, which has Mercantile Bank as the trustee, and upon the child's death the remainder is to be given to a stated charity.)

Widow is worried about losing her home. She currently has the home willed to one of her children. Widow has over $100,000 dollars invested in stocks and bonds and plans on giving these assets along with proceeds from her full life insurance policy to her three able bodied children at her death.

Mr. Mack informs Widow that there is a way she can keep her home, give away her other assets as she sees fit, and let Medicaid pay for her upcoming nursing home care. Mr. Mack informs Widow that in order to qualify for Medicaid assistance some assets may need to be transferred and some assets may need to change form or be liquidated and invested into other areas. Mr. Mack's proposal sets out:

  • Widow must have non exempt assets below $2,000. Her current assets which are exempt/non-counting include:
    • One car: Lexus.
    • Personal effects and household goods (the furniture and redecorated kitchen as well as clothes, jewelry etc.)
    • Her interest in the restaurant, because it is a tenancy in common.
    • The value of the garden, because it is for home consumption use.
  • Widow has non-exempt/counting assets of:
    • Her home.
    •  Her life insurance policy.
    •  Her stocks and bonds.
    •  Any other cash savings.
  • Ways to make counting assets non-counting:
    • Let her disabled son live in the home or have the able bodied children (or anyone else) pay Widow a monthly amount equal to 6% equity value of the home ($15,000 or $5,000 per child).
    •  Trade her full life insurance policy in for a term life insurance policy.
    •  Give the stocks and bonds to the children; or
    •  Cash in the stocks and bond and use the proceeds as well as any cash savings over $2,000 to make home improvements or buy a burial plot.

Once this is done, Widow's assets will be below $2,000. Her income is $1,100/ month and she would be entitled to receive Medicaid reimbursement.