MEMORANDUM OPINION
James
E. Boasberg, United States District Judge.
In
November 2018, the Secretary of Health and Human Services
approved the State of New Hampshire's proposal to impose
work requirements on a significant share of its Medicaid
recipients. Under the proposal, most non-disabled Medicaid
beneficiaries ages 19 to 64 would be required to demonstrate
that they have completed 100 hours of qualifying employment
or other “community-engagement” activities each
month (or show that they satisfy an exemption) or risk losing
their health-care coverage. Four New Hampshire residents have
challenged the Secretary's approval in this Court,
arguing that it violates the Administrative Procedure Act and
the Constitution.
The
issues presented in this case are all too familiar. In the
past year or so, this Court has resolved challenges to
similar programs in Kentucky and Arkansas, each time finding
the Secretary's approval deficient. See Stewart v.
Azar, 366 F.Supp.3d 125, 131 (D.D.C. 2019) (Stewart
II); Gresham v. Azar, 363 F.Supp.3d 165, 169
(D.D.C. 2019); Stewart v. Azar, 313 F.Supp.3d 237,
243 (D.D.C. 2018) (Stewart I). The overriding
shortcoming in the agency's decisions in those cases was
its failure to adequately consider the requirements'
effects on Medicaid coverage. Despite conceding that
providing medical care to the needy is “Medicaid's
core objective, ” Gresham, 363
F.Supp.3d at 176 (citation omitted), HHS did not “offer
its own estimates of coverage loss or grapple with comments
in the administrative record projecting that the proposal
would lead a substantial number of residents to be
disenrolled from Medicaid.” Id. at 175
(cleaned up).
Plaintiffs
argue that the Secretary's approval of New
Hampshire's plan suffers from the same deficiency and
thus must meet the same fate. The Court concurs. On their
face, these work requirements are more exacting than
Kentucky's and Arkansas's, mandating 100 monthly
hours - as opposed to 80 - of employment or other qualifying
activities. They also encompass a larger age range than in
Arkansas, which applied the requirements only to persons 19
to 49. Yet the agency has still not contended with the
possibility that the project would cause a substantial number
of persons to lose their health-care coverage. That omission
is particularly startling in light of information before the
Secretary about the initial effects of Arkansas's
markedly similar project - namely, that more than 80% of
persons subject to the requirements had reported no
compliance information for the initial months, and nearly 16,
900 people had lost coverage. The agency's rejoinders -
that the requirements advance other asserted purposes of
Medicaid, such as the health and financial independence of
beneficiaries and the fiscal sustainability of the safety net
- are identical to those this Court rejected with respect to
HHS's 2018 approval of Kentucky's program. Perhaps
seeing the writing on the wall, the Government conceded at
oral argument that its reasoning was deficient in these
respects under the analysis in the Court's prior
Opinions.
In
short, we have all seen this movie before. The Secretary has
significant discretion to approve demonstration projects that
promote the objectives of the Medicaid Act, and it is not for
the Court to second guess his policy decisions or substitute
its judgment for his. “But courts retain a role, and an
important one, in ensuring that agencies have engaged in
reasoned decisionmaking.” Judulang v. Holder,
565 U.S. 42, 53 (2011). At the heart of this review is an
assessment of “whether the decision was based on a
consideration of the relevant factors.” Id.
(citation omitted). For the fourth time, HHS has fallen short
of this fundamental administrative-law requirement. The Court
will, accordingly, grant summary judgment to Plaintiffs and
vacate the Secretary's approval of New Hampshire's
community-engagement requirements.
I.
Background
The
Court begins with a now-familiar overview of the relevant
history and provisions of the Medicaid Act. It then turns to
New Hampshire's challenged plan before concluding with
the procedural history of this case.
A.
The Medicaid Act
Since
1965, the federal government and the states have worked
together to provide medical assistance to certain vulnerable
populations under Title XIX of the Social Security Act,
commonly known as Medicaid. See 42 U.S.C. §
1396-1. The Centers for Medicare and Medicaid Services (CMS),
a federal agency within the Department of Health and Human
Services, has primary responsibility for overseeing Medicaid
programs. Under the cooperative federal-state arrangement,
participating states submit their “plans for medical
assistance” to the Secretary of HHS. Id To
receive federal funding, those plans - along with any
material changes to them - must be “approved by the
Secretary.” Id; see also 42 C.F.R.
§ 430.12(c). Currently, all states have chosen to
participate in the program.
To be
approved, state plans must comply with certain minimum
parameters set out in the Medicaid Act. See 42
U.S.C. § 1396a (listing 86 separate requirements). One
such provision requires state plans to “mak[e] medical
assistance available” to certain low-income
individuals.
Id.
§ 1396a(a)(10)(A). Until recently, that group included
pregnant women, children, and their families; some foster
children; the elderly; and people with certain disabilities.
Id. In 2010, however, Congress enacted the Patient
Protection and Affordable Care Act (ACA), colloquially known
as Obamacare, “to increase the number of Americans
covered by health insurance.” Nat'l Fed'n
of Indep. Business v. Sebelius, 567 U.S. 519, 538
(2012). Of relevance here, that statute required
participating states to expand Medicaid coverage to
additional low-income adults under 65 who did not previously
qualify. See 42 U.S.C. §
1396a(a)(10)(A)(i)(VIII).
Generally,
a state must cover all qualified individuals or forfeit its
federal Medicaid funding. Id. §
1396a(a)(10)(B); id. § 1396c. That was
originally so for the ACA expansion population as well.
Id. § 1396c. In NFIB, however, the
Supreme Court held that Congress could not, consistent with
the Spending Clause of the Constitution, condition a
state's entire Medicaid funds on its agreeing to the
expansion. See 567 U.S. at 584-85. As a result,
states could choose not to cover the new population
and lose no more than the funds that would have been
appropriated for that group. Id. at 587. If the
state, conversely, does decide to provide coverage,
those individuals would become part of its mandatory
population. Id. at 585-87 (explaining that Congress
may “offer[] funds under the Affordable Care Act to
expand the availability of health care, and require[] that
States accepting such funds comply with the conditions on
their use”). In that instance, the state must afford
the expansion group “full benefits” -
i.e., it must provide “medical assistance for
all services covered under the State plan” that are
substantially equivalent “in amount, duration, or scope
. . . to the medical assistance available for [other]
individual[s]” covered under the Act. See 42
U.S.C. § 1396d(y)(2)(B); 42 C.F.R. § 433.204(a)(2).
The
Medicaid Act, in addition to defining who is
entitled to coverage, also ensures what coverage
those enrolled individuals receive. Under § 1396a,
states must cover certain basic medical services,
see 42 U.S.C. §§ 1396a(a)(10)(A),
1396d(a), and the statute limits the amount and type of
premiums, deductions, or other cost-sharing charges that a
state can impose on such care. Id. §
1396a(a)(14); see also id. § 1396o.
Other provisions require states to provide up to three months
of retroactive coverage once a beneficiary enrolls,
id. § 1396a(a)(34), and to ensure that
recipients receive all “necessary transportation . . .
to and from providers.” 42 C.F.R. § 431.53.
Finally, states must “provide such safeguards as may be
necessary to assure that eligibility” and services
“will be provided, in a manner consistent with
simplicity of administration and the best interests of the
recipients.” 42 U.S.C. § 1396a(a)(19).
Both
before and after the passage of the ACA, a state accepting
federal Medicaid funds is not entirely locked in; instead, if
it wishes to deviate from certain of the Act's
requirements, it can seek a waiver from the Secretary of HHS.
See 42 U.S.C. § 1315. In particular, Section
1115 of the Social Security Act allows the Secretary to
approve “experimental, pilot, or demonstration
project[s] which, in [his] judgment . . ., [are] likely to
assist in promoting the [Act's] objectives.” 42
U.S.C. § 1315(a). As conceived, experimental projects
were “expected to be selectively approved by the
Department and to be those which are designed to improve the
techniques of administering assistance.” S. Rep. No.
1589, 87th Cong., 2d Sess. 19, reprinted in 1962
U.S.C.C.A.N. 1943, 1962. Once the Secretary has greenlighted
such a project, he can then waive compliance with the
requirements of § 1396a “to the extent and for the
period . . . necessary to enable [the] State . . . to carry
out such project.” Id. § 1315(a)(1).
While
the ultimate decision whether to grant § 1115 approval
rests with the Secretary, his discretion is not boundless.
Before HHS can act on a waiver application, the state
“must provide at least a 30-day public
notice[-]and[-]comment period” regarding the proposed
program and hold at least two hearings at least 20 days
before submitting the application. See 42 C.F.R.
§§ 431.408(a)(1), (3). Once a state completes those
prerequisites, it then sends an application to CMS.
Id § 431.412 (listing application
requirements). After the agency notifies the state that it
has received the waiver application, a federal 30-day
public-notice period commences, and the agency must wait at
least 45 days before rendering a final decision. Id
§§ 431.416(b), (e)(1).
B.
Factual Background
1.
New Hampshire Granite Advantage
In
2014, New Hampshire, like many states, expanded Medicaid
under the AC A to previously uninsured adults whose income is
133 percent of the federal poverty line or less. See
AR 17; AR 1949. More than 53, 000 individuals have received
coverage as a result, helping to reduce the State's
uninsured rate by 45 percent. Id. at 4384. Since
2015, the State has covered this population through Section
1115 demonstration projects that deviate from traditional
Medicaid delivery mechanisms - first adopting a
premium-assistance model and later shifting to a managed-care
system. Id. at 4379. While New Hampshire has had an
interest in work requirements dating back to 2016,
id at 99, it proposed to amend its demonstration to
add the work and community-engagement requirements under
consideration in this suit in 2018. Id. at 4377.
As
proposed, the project - now called Granite Advantage -
requires most non-disabled adults aged 19 to 64 to complete
100 hours per month of employment or other community
activities. Id. at 4. Certain categories of
beneficiaries are exempt, including caregivers for a
dependent child, pregnant women, and the medically frail.
Id. at 5. If a beneficiary does not demonstrate
compliance with the work requirements in a particular month,
she will be sent a notice stating that her Medicaid will be
terminated the following month if she does not make up the
hours or show that she qualifies for an exemption.
Id. Once a beneficiary's coverage is suspended,
it can be reactivated by completing 100 hours of qualifying
activities or obtaining an exemption. Id. at 5, 7.
Separately, New Hampshire requested as part of these
amendments that HHS allow the State to eliminate all
retroactive coverage. Id. at 4377.
The
Secretary approved the amendments on November 30, 2018,
explaining that they promoted the purposes of the Medicaid
Act because they would improve the “health and
wellness” of beneficiaries and enhance the
“fiscal sustainability of the Medicaid program.”
Id. at 1-2. With respect to commenters' concerns
that some beneficiaries would lose coverage, the agency
responded that “the demonstration will provide coverage
to individuals that the state is not required to cover”
- namely, the ACA expansion population. Id. at 10.
Indeed, because “the state plans to end its current
coverage of the new adult group” in the event the
project were not approved, HHS says, Granite Advantage
necessarily increases coverage. Id. at 6, 10. The
agency further explained that the requirements were
“not designed to encourage” coverage loss and are
“intended to [be] achievable, ” citing certain
exemptions and safeguards that are meant to reduce the
likelihood of persons improperly losing their Medicaid.
Id. at 10-11.
While
the new requirements could have been implemented under this
approval beginning January 1, 2019, id. at 1, they
have still not been put into full effect. New Hampshire,
after several initial delays, required beneficiaries to
submit qualifying hours or proof of an exemption this past
June. See ECF No. 1 (Complaint), ¶ 10. Under
that timeframe, persons who did not satisfy the reporting
obligations would lose their coverage on August 1.
Id. As of July 8, 2019, however, approximately 17,
000 non-exempt beneficiaries (out of about 25, 000 total) had
not reported any compliance information to the New Hampshire
Department of Health and Human Services. See ECF No.
44-2 (Jeffrey A. Meyers Letter, July 8, 2019) at 3. Citing
this consideration and emphasizing the difficulty the State
has had in communicating with persons subject to the
community-engagement requirements, the Department announced
that it was further delaying implementation until September
30, 2019. See ECF No. 44 (Notice) at 2. Under the
new implementation plan, Medicaid beneficiaries who do not
report compliance with the requirements would lose coverage
beginning December 1. Around the same time, the New Hampshire
Legislature amended the program in several respects,
including by expanding the scope of the exemptions. The State
explained that it plans to seek reapproval of such amendments
from CMS over the next several months. See Oral
Argument Transcript (Provisional) at 3, 17.
2.
Other CMS Approvals
New
Hampshire is not the only state that has been interested in
work requirements. As noted at the start, CMS has approved
similar proposals submitted by Kentucky and Arkansas, each of
which has been challenged and struck down in this Court.
Kentucky's program - called Kentucky HEALTH - mirrors New
Hampshire's in many respects. As relevant here, it
requires non-exempt adults aged 19 to 64 who receive coverage
through the expansion to complete and report 80 hours per
month of qualifying activities, such as employment,
education, or job training. See Stewart I, 313
F.Supp.3d at 246. The failure to do so or to report an
exemption results in the termination of Medicaid coverage.
Id. at 246-47.
Before
the requirements took effect in the Commonwealth, several
Medicaid recipients sought judicial review of HHS's
approval. Id. at 248. They argued, among other
things, that the agency had failed to adequately explain why
Kentucky HEALTH promoted the objectives of Medicaid and that
the approval of the project exceeded the Secretary's
statutory authority. The Court agreed with Plaintiffs in one
central and dispositive respect: “[T]he Secretary never
adequately considered whether Kentucky HEALTH would in fact
help the state furnish medical assistance to its citizens, a
central objective of Medicaid.” Id. at 243. It
therefore vacated the Secretary's approval and remanded
the matter to the agency for further consideration.
Id. at 273-74. HHS subsequently reopened the comment
period and reapproved Kentucky's project on November 20,
2018. The agency reasoned, along substantially similar lines
as it did ten days later when it approved New Hampshire's
project, that Kentucky HEALTH advanced the Medicaid Act's
objectives because it would 1) promote the health and
financial independence of beneficiaries, a justification the
Court had found wanting in the first round, 2) increase
coverage because it allows Kentucky to cover the expansion
population when it would not do so otherwise, and 3) advance
the fiscal sustainability of the state's Medicaid
program. See Stewart II, 366 F.Supp.3d at 138.
Believing these justifications still unsatisfactory, the
Bluegrass State plaintiffs returned to this Court, which
again concurred. Concluding that the agency's previous
rationales fared no better and that its new explanation still
failed to grapple with the possibility of coverage loss, the
Court vacated the approval. Id. at 138-39.
Arkansas's
project, named the Arkansas Works Amendments, followed a
similar, although abbreviated, path. The State proposed to
require most able-bodied beneficiaries in the expansion
population aged 19 to 49 to complete 80 hours of qualifying
employment or other activities. See Gresham, 363
F.Supp.3d at 172. Non-exempt individuals who did not report
sufficient qualifying hours for three consecutive months in a
calendar year would be disenrolled from Medicaid for the
remainder of that year. Id. The Secretary approved
the requirements on March 5, 2018, and their roll-out was
staged through 2018 and early 2019. Id. During the
first six months after implementation, however, “only a
small percentage of the persons required to report compliance
. . . actually did so” - in October 2018, only 12.3%
reported any kind of qualifying activities - and more than
16, 900 persons lost Medicaid coverage for some period of
time as a result. Id Several beneficiaries
challenged the program under the APA, and, finding the
Secretary's explanation deficient for the same reasons as
in its first Kentucky decision, the Court vacated his
approval. Id at 175. The Court's decisions as to
both of those cases are now on appeal before the D.C.
Circuit. See Nos. 19-5094, 19-5095, 19-5096,
19-5097. No. oral argument date has yet been set.
C.
Procedural History
Believing
with Shakespeare that what's past is prologue, four New
Hampshire residents filed this lawsuit on March 20, 2019.
Like the plaintiffs in Arkansas and Kentucky, they assert
that the Secretary's approval of the proposed
community-engagement requirements violates the APA and the
Constitution. Because it was designated as related to
Stewart and Gresham, the case was directed
to this Court. See ECF Nos. 2-3. The State of New
Hampshire has since intervened as a Defendant, and ...