Saving Medicaid Expansion: An Arkansas Nonprofit Legal Aid Story

Last September, NPQ covered a Medicaid work requirement that had been initiated in Arkansas three months before. As NPQ’s Carole Levine noted, “In the guise of ‘lifting people out of poverty’… Arkansas officials have begun assigning work requirements (with many exemptions for those who clearly cannot work) to Medicaid recipients.” Not surprisingly, the main effect was for many to lose coverage. As Levine points out, this loss is “not because they are not meeting the work requirement—in most cases, they are working, and were working before this program went into effect. Rather…[it’s] because they did not receive notification of this requirement, failed to open their mail, moved, or lacked access to a cellphone or computer to report their hours online.”

The impact was devastating. Kevin de Liban, an attorney for Legal Aid of Arkansas, a 52 year-old nonprofit with a budget of roughly $2.7 million that serves Arkansas’ eligible low-income population of 700,000, explains, “Over 18,000 lost coverage just due to the work requirements and another 30,000 lost coverage due to administrative red tape. They lost healthcare that is needed to support their ability to be able to work. Health insurance lets you be healthy.”

“Many called us trying to figure out how can they keep coverage,” de Liban says. “We were involved helping people keep coverage while the litigation was pending.”

According to de Liban, the work requirements in Arkansas marked the single biggest social safety net case faced by his organization in at least 20 years, potentially affecting 235,000 Arkansans. As he explains,

We knew from the SNAP [Supplemental Nutrition Assistance Program or “food stamps”] experience and the TANF [Temporary Assistance for Needy Families or “welfare”] experience that these work requirements were going to cause immense pain. We are a legal aid organization on the front lines—that’s a big thing. They always say—“you don’t have a case, if you don’t have a client.” Legal aid organizations are uniquely set up to hear from the people most affected by these big policy decisions and do what we can to help.

In response to the unfolding calamity, in August 2018, Legal Aid of Arkansas, in partnership with the Southern Poverty Law Center (SPLC) and the National Health Law Program, filed suit in a federal case known as Gresham v. Azar. Charles Gresham is one of nine plaintiffs whose health coverage was disrupted by the work rules. (Azar refers to Alex Azar, the US Secretary of Health and Human Services). In Gresham’s case, he learned through Legal Services that he was exempt from the work requirement rules, but the need to repeatedly request 60-day extensions to maintain health coverage has exacerbated the underlying medical condition (anxiety) that is keeping him from working.

Here, it is worth pausing to recall that this back-and-forth about state Medicaid rules was not supposed to happen. As many NPQ readers will remember, according to the provisions of the Affordable Care Act of 2010, state Medicaid expansion was meant to be automatic. However, the US Supreme Court, even as it upheld in 2012 the Affordable Care Act in National Federation of Independent Business et al v. Sebelius, ruled that states could not be compelled to expand Medicaid coverage, because, according to the majority opinion written by Chief Justice John Roberts, doing so would violate “the Constitution by threatening States with the loss of their existing Medicaid funding if they decline to comply with the expansion.” (Two justices, Ruth Bader Ginsburg and Sonia Sotomayor, dissented.)

As a result, whether or not states expanded coverage to provide Medicaid insurance to adults with incomes up to 138 percent of the federal poverty level, as the Affordable Care Act had indicated, became a political choice, not a federal mandate. To date, 35 states and the District of Columbia have agreed to Medicaid expansion as the law envisioned, two (Utah and Wisconsin) have agreed to a less extensive expansion to 100 percent of the federal poverty level, and 13 states—the majority of which are in the South—have not expanded Medicaid coverage.

Arkansas was one of the few southern states to adopt Medicaid expansion. However, Medicaid expansion in Arkansas has always been politically vulnerable. Even to get it passed initially required some political legerdemain; rather than expanding the state’s program, the legislature agreed to use federal Medicaid expansion dollars to provide subsidies to enable Medicaid recipients to obtain private insurance. Also, under Arkansas state law, the state budget requires a three-fourths majority, giving legislative minorities each year the ability to extract concessions.

While Medicaid expansion was passed under a Democratic governor, Republican Governor Asa Hutchinson agreed to continue the policy. However, according to de Liban, in 2016 that restrictive state budget rule came into play. To “wrangle up the last votes to get the three-quarters majority,” de Liban indicates, Hutchinson agreed to petition the federal government to require able-bodied Arkansans to report work hours to qualify for Medicaid. Had Hilary Clinton been elected president, notes de Liban, it is highly unlikely that federal officials would have accepted the state’s petition, making the rider that Hutchinson accepted to the state’s 2016 budget bill meaningless. However, with Donald Trump in office, the rule in Arkansas was approved, affecting Charles Gresham, eight other named plaintiffs, and tens of thousands of Arkansans.

Until these work restrictions began to be phased in, Medicaid expansion had been largely successful in Arkansas, de Liban says, with the uninsured rate falling from 22 percent to 10 percent. “Some of our clients were seeing a doctor outside the emergency room for the first time,” de Liban relates. “We have seen Medicaid expansion be a great help for our communities. That is why the work requirements pose such a threat to them.”

Gresham’s case was bad enough, but other plaintiffs in the suit suffered even greater consequences. Adrian McGonigal, notes de Libran, suffered from chronic obstructive pulmonary disease (also known as “COPD”).  McGonigal was not a smoker, but he had “weak lungs and asthma as a child,” de Liban explains. “As long as he had his meds, he was able to work. He was working close to full time. He got confused by the work requirements, didn’t meet the reporting aspect, and ended up losing coverage.” Without his meds, McGonigal “was hospitalized three times in a four-week span.” McGonigal’s “employer tried to work with him,” de Liban says, but ultimately McGonigal lost his job. In short, the work reporting requirements were the primary cause of McGonigal’s unemployment. “Adrian’s situation shows the real-life harm that people suffer because of these red tape termination traps that the state imposed,” de Liban adds.

In March 2019, Federal judge James E. (“Jeb”) Boasberg, when vacating the Arkansas rules, began his opinion by citing McGonigal’s case at length:

Adrian McGonigal is 40 years old and lives with his brother in Pea Ridge, Arkansas. He used to have a job working in the shipping department of Southwest Poultry, a food-service company located nearby, although he received no medical insurance through his employer. Like many Americans, he has several serious medical conditions. Beginning in 2014, McGonigal was able to receive medical care—including regular doctor visits and numerous prescription drugs—through the state’s expanded Medicaid program. In mid-2018, however, McGonigal learned that he would be subject to new work requirements, which he would have to report online, as a condition of receiving health benefits. These were imposed by the Arkansas Works Amendments (AWA), approved by the US Secretary of Health and Human Services in March 2018. Despite his lack of access to, and difficulty working with, computers, he was able to report his employment in June 2018, but he did not know he needed to continue to do so each month. As a result, when he went to pick up his prescriptions in October, the pharmacist told him that he was no longer covered, and his medicines would cost him $800. In the absence of Medicaid, he could not afford the cost of the prescriptions and so did not pick them up. His health conditions then flared up, causing him to miss several days of work, and Southwest Poultry fired him for his absences. He thus lost his Medicaid coverage and his job.

According to de Liban, McGonigal’s case was hardly unique. “Many of the clients that called us,” de Liban notes, “were in similar situations. They needed the insurance to work. They needed insurance to be healthy. They didn’t know how to report hours….You have this full range of people who were terribly harmed….Work requirements were another way for people to get tripped up and fall back and struggle more to improve their economic situation.”

Overall, de Liban adds, “Of the people who were subject to the work requirement, 80-90 percent were not able to comply. The work requirements were basically a guarantee of termination [of coverage] for every person who was subject to them.”

Since Boasberg ruled, the federal government has appealed to the DC Court of Appeals. Oral arguments, de Liban says, will take place in October. A ruling might not occur until early 2020. “The work reporting requirements are gone for now,” de Liban adds, “They are not coming back this year.” Still, the case is hardly over, even if the federal government loses again at the Court of Appeals, “It is the safe bet they will appeal to the Supreme Court,” de Liban cautions.

As de Liban observes, the case illustrates the importance of the legal aid system as a whole. Most people, de Liban notes, when they think of social justice lawyers, think of large nonprofits like SPLC or the American Civil Liberties Union (ACLU). “People don’t have a good conception of what social justice lawyers do. You have visions of big cases like Brown v. Board of Education.” These large nonprofits, de Liban adds, “do incredibly important work, but smaller folks have day-to-day legal needs” and that is where groups like his legal aid nonprofit step in.

“For every single legal aid lawyer, there are 18,000 eligible people,” de Liban estimates. NPQ itself has noted the shortage of legal aid often, including articles that featured Hawaii, Massachusetts, Texas, and Kentucky. As NPQ’s Ruth McCambridge noted in the Kentucky article, “Fundraising for some fields of nonprofits is less about writing proposals and more about warding off recurring political attacks at the federal and state levels. And so it is with legal services funding. Every time we turn around, there is another threat.”

The scope of legal aid, adds de Liban, is wide-ranging. “We are front line service providers and work on all sorts of issues—threats to wages, domestic violence, tenant rights, access to credit, reentry—we are there at the front lines.” In Arkansas, de Liban notes, “you used to be able to be put in jail for not paying your rent. Legal Aid of Arkansas was able to get that declared illegal.… We do what we can to work upstream to make it so that all of the people who don’t come to us end up getting justice or being in a fairer situation.”

Meanwhile, Gresham v. Azar proceeds. And while it may seem only Arkansas is affected, that is hardly the case. Kentucky approved a similar rule but was blocked in court before it could be implemented. All told, the Henry J. Kaiser Family Foundation, says a total of 15 states have sought similar federal waivers. And, de Liban notes, work requirements have also been floated for food stamps and housing programs. “Now is a real moment in time where there is an assault on the social safety net through the use of these kinds of work requirements,” de Liban adds.

Is there a silver lining in this? Perhaps. “Sad as it is that 18,000 suffered,” de Liban says, “hopefully it can teach us why work requirements are so horrible….Work requirements keep people in poverty by undermining the access to the benefits they need to get a more economically stable life.”—Steve Dubb