[00:00:03] Speaker 02: Case number 19-1594 at L. Charles Gresham at L, versus Alex Michael Azar, second. [00:00:10] Speaker 02: Secretary, United States Department of Health and Human Services, and his official capacity at L, Appellant, State of Arkansas. [00:00:18] Speaker 02: Case number 19-1595 at L. Ronnie Maurice Stewart at L, versus Alex Michael Azar, second, and his official capacity as Secretary of the United States Department of Health and Human Services at L, Appellants. [00:00:31] Speaker 02: Commonwealth of Kentucky ex-real Matthew G. Desen, Governor. [00:00:36] Speaker 02: Ms. [00:00:36] Speaker 02: Klein for the Federal Appellates. [00:00:38] Speaker 02: Mr. Geshe-Gorn for the Appellees. [00:00:45] Speaker 01: Morning, Ms. [00:00:46] Speaker 01: Klein. [00:00:46] Speaker 01: Morning. [00:00:46] Speaker 01: May it please the Court. [00:00:47] Speaker 01: Elisa Klein for the Federal Government. [00:00:51] Speaker 01: A number of states that have chosen to provide substantial amounts of optional Medicaid coverage [00:00:58] Speaker 01: are testing various ways to try to make their Medicaid programs more cost effective. [00:01:04] Speaker 01: And the mechanism that has been the principle focus of these cases tests out work-oriented requirements that are modeled on those in the existing federal TANF and SNAP food assistance programs in order to see if the application of those requirements [00:01:24] Speaker 01: helps to transition Medicaid recipients from the Medicaid program into commercial coverage. [00:01:33] Speaker 01: And it's particularly important to emphasize that that commercial coverage would not be limited to employer-based insurance, but also would include the heavily subsidized exchange insurance. [00:01:47] Speaker 03: Is that what they're trying to test whether it transitions people to commercial coverage? [00:01:54] Speaker 03: I thought that was sort of a little [00:01:57] Speaker 03: not the central objective, that the central premise was that whether you earn money or get a better job that comes with coverage, that doing the work is healthy, that doing volunteer work, that doing training, that doing even a job that carries no commercial insurance is correlated with health and therefore [00:02:25] Speaker 03: There isn't data in the record about people getting a leg up into a market through a work requirement and eventually how many of them get commercial insurance. [00:02:37] Speaker 03: I didn't see that as part of the record. [00:02:40] Speaker 01: Well, let me unpack the various questions. [00:02:42] Speaker 01: So both are true. [00:02:44] Speaker 01: It is unquestionably true that part of the hypotheses being tested are [00:02:51] Speaker 01: for existing Medicaid recipients. [00:02:53] Speaker 01: These are primarily expansion adults. [00:02:56] Speaker 01: While in the Medicaid program, whether you will see improved health, in part as a result of these work-oriented requirements, and also other aspects of these demonstrations that are meant to increase preventive health services uptake, which is very low among the expansion population. [00:03:17] Speaker 01: So that is definitely a piece of it. [00:03:19] Speaker 01: In the record, for example, the Kentucky application in July 2017, Kentucky made various modifications. [00:03:29] Speaker 01: and in the public notice that it put out to describe the objectives of the project, it included transitioning adults who can graduate from Medicaid into the exchanges and other commercial coverage. [00:03:45] Speaker 05: I have only one question for each side, and it's one that I would have thought could be simple, and maybe I'm overlooking something. [00:03:55] Speaker 05: In the case of each of these states, the requirements that have been placed on the new recipients are in a program that has two populations, the ones who are already covered, that is, the already-recipient for the medication, the ones who are coming in under the modified plan that the department is accepting from these individual states. [00:04:17] Speaker 05: The question I have is, do these restrictions that are placed in the accepted exploratory program [00:04:24] Speaker 05: apply to both populations, that is to say the existing recipients and the new recipients, or only to the new recipients. [00:04:34] Speaker 01: So the requirements for both Kentucky and Arkansas apply to the expansion population, but whether or not they were being covered before these demonstrations were approved. [00:04:48] Speaker 01: and in Kentucky also to a sliver. [00:04:52] Speaker 01: So it's not just people who for the first time are, if I'm answering the court's question. [00:04:59] Speaker 05: I falsely claim that I have only one question, but that leads me to another one. [00:05:06] Speaker 05: Given their application to perhaps some of the existing population, is the government then correct that the new programs do not expand the coverage? [00:05:16] Speaker 05: of the ACA program, the Medicaid program. [00:05:22] Speaker 01: I'm not sure I'm understanding that. [00:05:23] Speaker 01: Perhaps I can step back. [00:05:24] Speaker 05: The position that seems to be taken by the government, I'm not nearly as simple as I thought I'd be, the position that seems to be taken by the government is this is not furthering the objectives of the Act. [00:05:33] Speaker 01: Oh, by plaintiffs? [00:05:34] Speaker 05: Because it does not expand the covered population. [00:05:39] Speaker 05: If the new accepted program do increase the [00:05:47] Speaker 05: population that is potentially covered, although not as much as they would increase it if the requirements were not there, does it not then further the objectives of the statute by increasing the covered population, even though it didn't increase as much as it could have? [00:06:06] Speaker 01: I don't believe the factual premise is a correct description. [00:06:10] Speaker 01: Both states, Kentucky and Arkansas, are ACA expansion states. [00:06:15] Speaker 01: elected, though they didn't have to, to amend their state plans in order to provide coverage to these newly eligible adults. [00:06:25] Speaker 01: That happened before. [00:06:26] Speaker 01: Arkansas did it in connection with a demonstration, but it still amended its state plan. [00:06:33] Speaker 01: It did. [00:06:34] Speaker 01: And just to be clear, under NFIV, states that choose to do that have the prerogative to change their mind, and that was important and explicitly [00:06:43] Speaker 01: an assurance that HHS gave back in 2012 when states were contemplating... I'm sure I'm getting at what I'm trying to get at. [00:06:51] Speaker 05: Okay. [00:06:51] Speaker 05: The question I've got is the programs that the government is challenging, I mean the government is being challenged on today that the district court rule were invalid. [00:07:01] Speaker 05: Do those programs actually result in an increase in the potentially covered population in that state or not? [00:07:09] Speaker 01: In the long term, the answer is hopefully yes. [00:07:11] Speaker 01: In the near term, if I'm understanding the question, that's not our argument because... I know it's the government's argument... Well, we are the government. [00:07:18] Speaker 01: Okay. [00:07:19] Speaker 05: Excuse me. [00:07:20] Speaker 05: The government's argument seems... I'm sorry, the complainant's argument... I'll get my cases back. [00:07:27] Speaker 05: The complainant's argument seems to be that the [00:07:31] Speaker 05: New parts of the program accepted by the government do not further the objectives of the statute because these work requirements cause a decrease rather than an increase in the people who are eligible. [00:07:47] Speaker 05: Now, if it's not the case that that work should be decreased, if the total is going to be greater than it was before, it's not the objection by the complaining parties from. [00:08:00] Speaker 01: It's not our argument because I don't think the court's factual premise is accurate if I'm understanding it. [00:08:08] Speaker 01: What the plaintiffs would like is for the expansion population to be covered under the ACA with the benchmark plan with no additional conditions on eligibility. [00:08:19] Speaker 01: And that's what was happening before these demonstrations were approved. [00:08:25] Speaker 01: the reason that we've given, and that of course the secretary's given, that these testing, these particular measures are likely to promote the coverage, expand coverage in the long term. [00:08:39] Speaker 01: is because Medicaid is a dynamic program in which an enormous amount of spending is optional. [00:08:45] Speaker 01: And so if states can find ways to make their programs more cost effective, and that can be either by helping people who can graduate onto the exchanges do so, or to go back to Judge Pillard's question, by making it more cost effective while the participants are in the Medicaid program, [00:09:03] Speaker 01: That is what frees up scarce resources that can then be used for other people in need. [00:09:10] Speaker 03: I just would like your help in pinning down what is the hypothesis or the hypotheses that are being tested here? [00:09:20] Speaker 03: One of them, I gather, is whether the application of these requirements is going to transition people to commercial coverage. [00:09:27] Speaker 01: Yes. [00:09:27] Speaker 03: Another is whether the people who remain covered are going to have improved health [00:09:33] Speaker 03: as a result of work-oriented activities? [00:09:37] Speaker 01: Yes, but not exclusively. [00:09:39] Speaker 01: There are 100 pages of special terms and conditions attached to the Kentucky approval letter, and the back end has evaluation and monitoring, and the application has a series of hypotheses. [00:09:52] Speaker 01: But I just don't want to forget about the premiums and the elimination of retroactive eligibility and the Kentucky MyRewards program. [00:10:01] Speaker 01: These were parts of a broader program, many of which are meant to encourage increase in preventive services. [00:10:09] Speaker 03: Including, for example, the anti-retroactivity provision is, you know, sign up early rather than wait until you get sick. [00:10:18] Speaker 03: That is going to, and when, there's a lot of sort of [00:10:21] Speaker 03: vague language in the briefing and in the record about enhanced engagement with your healthcare. [00:10:28] Speaker 03: That's talking about those non-retractivity provisions, right? [00:10:32] Speaker 03: It's not that you're gonna, as having a work requirement is gonna make you more engaged with your healthcare. [00:10:37] Speaker 01: No, the court is correct. [00:10:38] Speaker 01: That type of, it sounds like lingo, but this is the same theory that HHS back in 2015 approved for the Indiana demonstration. [00:10:50] Speaker 01: comparable, to some extent, identical measures like premiums, elimination of retroactive eligibility. [00:10:56] Speaker 03: Those have not been sustained by a court, have they? [00:11:00] Speaker 01: Well, that's the new Indiana lawsuit that was just filed. [00:11:04] Speaker 01: And if the court looks, it's a point I don't want lost, if the court looks at that complaint starting around paragraph 70, these were after extended negotiations with Indiana, this was the agreement that was reached that allowed Indiana, Indiana chose to do the expansion because it was being [00:11:24] Speaker 01: also allowed to test these requirements. [00:11:29] Speaker 03: I gather though that the government is not defending in this court that it serves the interests of Medicaid to increase in any degree the number of covered persons and therefore the state's threat that unless this is approved they will give up expansion [00:11:53] Speaker 03: gives them license basically to offer expansion on any grounds whatsoever. [00:11:59] Speaker 03: You're not defending on that. [00:12:00] Speaker 01: No, and to be clear, that is not what the Secretary said. [00:12:03] Speaker 01: And just to look at the facts, Arkansas, the demonstration applies only to the expansion. [00:12:11] Speaker 01: And it requested, proposed to drop the eligibility from 133% of federal poverty level to 100%, and HHS said no. [00:12:20] Speaker 01: So by no means are we suggesting it's a free-for-all just because the expansion was made optional by NFIB. [00:12:30] Speaker 05: But you plainly would not take the position that blackmail is a reason for voting. [00:12:38] Speaker 01: The federal government is not going to be easily forced to approve projects it doesn't want to approve. [00:12:45] Speaker 01: The Kentucky application was submitted in August 2016. [00:12:50] Speaker 01: These were years of back and forth in negotiations in which [00:12:54] Speaker 01: All sorts of additional qualifications were required of Kentucky before CMS gave that ultimate approval, even the first approval, and particularly meant to align with the TANF and SNAP programs. [00:13:06] Speaker 01: So the requirement that anyone exempted under TANF also has to be exempted from these work-oriented requirements. [00:13:16] Speaker 01: That was something that was added to the Kentucky demonstration at a fairly late stage, even after those July 2017 amendments. [00:13:25] Speaker 04: Can you tell me why, forgetting your position on reviewability, just assume I don't buy it. [00:13:32] Speaker 04: Yes, I'll assume. [00:13:34] Speaker 04: All right. [00:13:35] Speaker 04: Why Judge Boasberg's very thorough and careful analysis in very usual administrative law terms? [00:13:44] Speaker 04: is not eminently correct, principally based on the secretary's failure to consider the effects on coverage. [00:13:51] Speaker 04: He's alone enough. [00:13:52] Speaker 04: And your citing objectives, which he says, I think forcefully, are not objectives of the statute. [00:14:00] Speaker 01: So I think we first very much disagree with that premise. [00:14:04] Speaker 01: Let me explain. [00:14:05] Speaker 01: Let's start with helping people who are in the adult expansion population [00:14:11] Speaker 01: transition to the exchanges. [00:14:12] Speaker 01: You might wonder, you know, why is the federal government here supporting that? [00:14:15] Speaker 01: Because that means instead of the joint federal state financing of their health care, you've got massive federally funded subsidies for their health care. [00:14:25] Speaker 04: No, no, no, no, wait. [00:14:25] Speaker 04: He is saying, he's looking at data. [00:14:28] Speaker 04: He's saying you're not addressing the effects of the programs on coverage. [00:14:33] Speaker 04: The real effects, not hypothetical effects, the real effects. [00:14:36] Speaker 03: And I gather you point to a sentence where the secretary says, health benefits outweigh coverage losses. [00:14:48] Speaker 03: And is that the only place in the record where the secretary addresses that question? [00:14:54] Speaker 04: No. [00:14:55] Speaker 04: I understand my question. [00:14:57] Speaker 04: It's a very long, thoughtful, thorough opinion. [00:15:00] Speaker 04: Bottom line, you're saying you're not addressing something that's critical. [00:15:03] Speaker 04: In this case, the effects on coverage and the effects on coverage are not hypothetical. [00:15:08] Speaker 01: So he is assuming that any projected reduction in coverage means bad coverage loss, as in people going without coverage. [00:15:17] Speaker 05: That's what I'm trying to find out, I guess. [00:15:19] Speaker 05: The question that I didn't make very clear. [00:15:23] Speaker 05: Go ahead. [00:15:25] Speaker 01: So I just want to emphasize, from the start and in the Kentucky application, [00:15:31] Speaker 01: is the objective of helping people get the education that they need, the job training skills, you know, it could be a GED, volunteer opportunities. [00:15:41] Speaker 05: The statute makes that objective of this statute. [00:15:44] Speaker 05: I mean, those are all laudable goals, but the question we have here is whether the acceptance furthers the goals of the statute. [00:15:54] Speaker 01: Okay, I see. [00:15:56] Speaker 01: The reason it furthers the goal is because as this court in the Farmer v. Thompson opinion recognized and Supreme Court in Farmer v. Walsh and more generally in Dublino recognized, if you can conserve what are finite state Medicaid resources by having people who don't need to get Medicaid get their coverage in a different way, that is [00:16:18] Speaker 01: promotes the objectives of the Medicaid program. [00:16:20] Speaker 01: And part of the reason it does so, you have to understand that about 50% of state Medicaid spending is optional. [00:16:27] Speaker 01: Optional populations. [00:16:29] Speaker 04: Let's assume that's arguably correct to some extent. [00:16:33] Speaker 04: What Judge Boasberg said is there's data. [00:16:37] Speaker 04: There's real information, Bruce on the other side pointed out, where there are adverse effects on the population covered where people are dropping out. [00:16:46] Speaker 04: People are going to lose coverage because of the pilot. [00:16:52] Speaker 04: They're going to lose coverage. [00:16:54] Speaker 04: And what he is saying, importantly, is you haven't addressed that. [00:16:59] Speaker 01: OK, if the court is not even about the bargains. [00:17:00] Speaker 04: Let me make it very clear. [00:17:02] Speaker 04: And this is what Judge Santillo was just saying. [00:17:04] Speaker 04: And you can't point to other objectives that are not statutory objectives and say, well, we've addressed them. [00:17:10] Speaker 04: And he, I think, very convincingly says, no, that's not an answer. [00:17:14] Speaker 04: The principal objective is coverage. [00:17:17] Speaker 04: The data shows people are leaving because of the pilot program. [00:17:23] Speaker 04: And you haven't explained it. [00:17:24] Speaker 04: You haven't addressed it. [00:17:26] Speaker 04: You haven't accounted for it. [00:17:27] Speaker 01: OK. [00:17:28] Speaker 01: If the court is referring to the Arkansas statistics, there were 17,000 people who temporarily lost coverage at the rollout of the Arkansas Project. [00:17:38] Speaker 01: And this is important. [00:17:39] Speaker 01: I want to differentiate between and act like I am in no way diminishing the significance of that. [00:17:44] Speaker 01: the point of having state demonstrations is so that you identify that type of rollout issue at the local level where it can be fixed easily. [00:17:54] Speaker 01: And if the court remembers the rollout of Medicare Part D in 2006 when you were supposed to have six million elderly Medicaid recipients transitioned to Medicare Part D, that was a fiasco and it was not addressed that easily and 20 states had to enact emergency legislation. [00:18:11] Speaker 01: So rollout problems [00:18:13] Speaker 01: are real and they are a distinct category and that is part of the reason for this demonstration. [00:18:20] Speaker 03: Isn't one of the requirements of an application that you have a demonstration evaluation instrument and details in place and that you actually do estimate in a concrete way whether there will be losses in coverage. [00:18:37] Speaker 03: I see those pieces in the record. [00:18:39] Speaker 01: Well, in Kentucky, [00:18:42] Speaker 01: To the extent, this is post ACA, there are regulations that require certain information in the application. [00:18:48] Speaker 01: It does not apply to Arkansas because that was an amendment to an existing demonstration in Kentucky because it was a new demonstration. [00:18:59] Speaker 01: they did apply. [00:19:00] Speaker 01: And that is the budget neutrality worksheet that Judge Boesberg referenced in the opinion. [00:19:08] Speaker 01: But he misunderstood what it was saying, and he also overlooked changes that were made after the time of that projection. [00:19:18] Speaker 03: So he misunderstood what it was saying in terms of the person hours rather than individuals or personal months. [00:19:23] Speaker 01: More important. [00:19:24] Speaker 01: He assumed that any reduction in coverage meant people going without Medicaid, as opposed to what I'm going to read from. [00:19:33] Speaker 01: This is 5427 of the Kentucky administrative record. [00:19:40] Speaker 01: And this is the public notice that Kentucky put out at the simultaneous with that budget neutrality worksheet and says, in later demonstration years, more participants are expected to transition to commercial coverage. [00:19:54] Speaker 01: As distinct from, imagine a program in which you can get a GED that counts, that does not immediately transition you to commercial coverage. [00:20:02] Speaker 01: It might take another year of job skills training and another year of volunteer experience. [00:20:08] Speaker 01: These are over time hypotheses. [00:20:12] Speaker 01: Of course there are no data because it hasn't been implemented yet, but they're hypotheses about what could happen if the TANF [00:20:21] Speaker 01: and SNAP type requirements are tested on populations that are materially comparable to the people who are already subject to them under TANF and SNAP. [00:20:31] Speaker 03: So you're pointing to the fiscal soundness of the program as an objective and saying that getting more people into the private market serves the program's objective. [00:20:45] Speaker 01: Is that right? [00:20:45] Speaker 01: Yes, because [00:20:48] Speaker 01: Fiscal soundness, we don't just mean is it on the verge of collapse. [00:20:51] Speaker 01: We mean the way the Supreme Court said in the Justice Stevens opinion in the Farmer versus Walsh, if you keep a borderline populations out of Medicaid, that frees up resources that the state can then use. [00:21:06] Speaker 03: But Walsh and Thompson did not involve taking people that are eligible under the federal terms and cutting back and making them ineligible. [00:21:16] Speaker 01: Well, to be clear, these are not budget cuts. [00:21:18] Speaker 01: These are requirements, conditions, as under TANF and SNAP. [00:21:23] Speaker 05: TANF and SNAP, those are statutory conditions there. [00:21:27] Speaker 05: That is not comfortable with this at all. [00:21:30] Speaker 01: That is why this is a demonstration. [00:21:32] Speaker 01: I mean, the demonstration authority is being used in order to test requirements that in Congress's judgment, [00:21:40] Speaker 05: are reasonable means to help people get the skills they need to transition to financial independence. [00:21:54] Speaker 05: I'm not sure how you found that to be. [00:21:56] Speaker 01: So I'm going back to Judge Piller. [00:21:59] Speaker 05: The principal goal on the ACA, we're all putting our heads in the sand. [00:22:03] Speaker 05: If we don't, it was to provide greater coverage. [00:22:07] Speaker 05: That was what was the principal goal, just as Judge Bothberg said. [00:22:11] Speaker 05: And the other things that you're saying may be laudable goals, but to have them outweigh [00:22:16] Speaker 05: Because obviously the principal goal of the statute seems a bit strange. [00:22:21] Speaker 01: Let me make it concrete, because we're not saying they outweigh the principal goal of the statute. [00:22:24] Speaker 01: We're saying that these are means of accomplishing the principal goal of the statute. [00:22:28] Speaker 01: So again, think about the medically needy population for a moment. [00:22:31] Speaker 01: This is a massive, optional Medicaid population. [00:22:35] Speaker 01: It's what often allows elderly people in nursing homes to get Medicaid. [00:22:39] Speaker 03: What did you call them? [00:22:40] Speaker 01: Medically needy. [00:22:41] Speaker 01: Medically needy. [00:22:41] Speaker 01: Yes. [00:22:42] Speaker 01: This is in the Justice Stevens, the same opinion. [00:22:44] Speaker 01: He just explains. [00:22:46] Speaker 01: This is undisputed background. [00:22:48] Speaker 01: You've got the categorically needy, or also known as mandatory populations, and the medically needy, which was the big optional population and still is under Medicaid. [00:22:59] Speaker 01: So if you can come up with ways to shift people in the [00:23:06] Speaker 01: now optional ACA expansion population to the exchanges that frees up more money that can be used. [00:23:14] Speaker 03: But that's mixing apples and oranges, isn't it? [00:23:16] Speaker 03: Because the medically needy were optional in the sense that you can [00:23:20] Speaker 03: strive to give them some coverage, whereas here it's optional in more of an on-off switch. [00:23:27] Speaker 03: I thought you weren't relying on the notion that because the state can altogether refuse to cover the expansion population, that they can cover any fraction of that population. [00:23:40] Speaker 03: And once you buy that when you're in for the expansion, that is a mandatory population. [00:23:47] Speaker 03: then I'm not sure what your argument is. [00:23:48] Speaker 01: Well, actually, I'm not sure the premise is correct about the medically needy. [00:23:53] Speaker 01: But even if it were, just again, this is going to what Justice Stevens pointed out in that Farmer versus Walsh opinion. [00:24:02] Speaker 01: Even with respect to mandatory services, like inpatient hospital days, states have huge discretion in deciding how to reimburse. [00:24:11] Speaker 01: And so Justice Stevens cited an example of Tennessee as a cost cutting measure [00:24:17] Speaker 01: dropped the annual cap on inpatient hospital services from 20 days to 14 days. [00:24:23] Speaker 01: It's a mandatory service, and he's just illustrating the breadth of a state's discretion. [00:24:30] Speaker 01: And so if you free up money, there is no question that if you free up state Medicaid money, that opens the possibility of providing coverage. [00:24:39] Speaker 01: whether it's more services, services to more people. [00:24:42] Speaker 01: And that was the same theory that animated the decision in Farmer versus Walsh, which is that you could impose certain types of burdens on existing Medicaid recipients in order to get drug rebates for non-Medicaid people in the hope that that means those people won't become Medicaid recipients. [00:25:01] Speaker 03: I guess in Walsh, to me, the thing that's more [00:25:05] Speaker 03: closely speaking to the issue in this case is [00:25:10] Speaker 03: that the court says that the fact that the program there, the prescription benefit program, provides benefits to needy people and curtails Medicaid costs would not provide a sufficient basis for upholding the program if it severely curtailed Medicaid recipients' access to prescription drugs. [00:25:29] Speaker 03: And here, by analogy, we have a proposal that the challengers are claiming does severely curtail [00:25:37] Speaker 03: Medicaid recipients access, not just to one benefit, but to eligibility overall. [00:25:42] Speaker 01: So I just, I think there's some... Well, this is what, so, okay, so I just want to make sure, so we're in agreement now on ends that if these [00:25:50] Speaker 01: conditions can help to successfully transition people to the exchanges? [00:25:54] Speaker 04: I'm not sure we are. [00:25:58] Speaker 03: Well, the premise of the question is at least... The premise of the question is even if that were the case, there is a question whether, if it causes a dramatic reduction, has the Secretary taken that into account? [00:26:11] Speaker 01: Yes, and this is where, when the Secretary keeps emphasizing that these conditions are designed to encourage compliance, [00:26:20] Speaker 01: and that they are crafted, tailored, like the TANF and SNAP requirements. [00:26:25] Speaker 01: to apply to those people who can reasonably be expected to meet them. [00:26:29] Speaker 01: So again, it's a hypothesis. [00:26:31] Speaker 01: It's an experiment. [00:26:32] Speaker 01: There's not going to be evidence. [00:26:33] Speaker 01: But Congress's judgment, as reflected in those other statutes, is that for this population, it is reasonable to ask for 20 hours a week of the list of activities that is materially identical to the list we have here. [00:26:47] Speaker 01: It's actually more flexible under the Kentucky and Arkansas projects. [00:26:51] Speaker 03: If there were evidence that not watching television made people healthier, could the secretary say, we're going to do a demonstration project, and if you watch television, you're off more than six hours a week? [00:27:07] Speaker 03: The correlation with health, I'm just not understanding. [00:27:12] Speaker 01: I want to turn back to that, but we just left objectives, and I just want to make sure that we have not [00:27:17] Speaker 01: left incomplete, the point I was just making. [00:27:22] Speaker 01: I'm focusing right now not just on the healthier beneficiaries cost less for Medicaid programs, which I'm happy to address, but I want to talk about this very real, you've got states here that have voluntarily chosen to participate in this expansion. [00:27:38] Speaker 01: You've got a number of states like Virginia in which the legislation authorizing the expansion was contingent on seeking a demonstration like this one. [00:27:47] Speaker 01: Montana also recently enacted legislation like that. [00:27:50] Speaker 01: And so I don't want to give any short trip to the idea that these states are struggling to make sure that their expansions are in a sound financial footing. [00:28:00] Speaker 01: And a big part of that is if you've got the populations [00:28:04] Speaker 01: whom Congress has independently determined can be appropriately asked to do 20 hours a week of these activities in order, Congress's judgment, in order to help lift them out of the programs. [00:28:19] Speaker 03: Where is your best evidence in the record that that would happen? [00:28:25] Speaker 03: The best evidence supporting the hypothesis that imposing a work requirement [00:28:31] Speaker 03: with monthly reporting that this stick, it used to be a voluntary program in Arkansas, but there wasn't a level of uptake that they wanted. [00:28:44] Speaker 03: And so they said, well, we're going to get better uptake and we're going to get people into great jobs with market insurance. [00:28:51] Speaker 03: Where is the evidence that this kind of stick is even plausibly going to cause that effect? [00:29:00] Speaker 01: It is the same social science evidence that has persuaded Congress not only to leave in place the TANF and SNAP, [00:29:08] Speaker 01: although they've been criticized, but to strengthen them in the 2000s. [00:29:13] Speaker 05: But Congress didn't put it here. [00:29:15] Speaker 05: Your argument is proving against you, because if Congress put it where they thought it would work and didn't put it here, then Congress didn't think it would work here, did it? [00:29:25] Speaker 01: Or at least more convenient? [00:29:26] Speaker 01: Congress chose to allow states to impose these requirements across the board as a matter of federal law and tannic and snap. [00:29:33] Speaker 01: Congress itself imposed it for Medicaid in 1996. [00:29:40] Speaker 01: Congress gave states authority to end the Medicaid benefits for TANF recipients who do not comply with the work-related requirements in that statute. [00:29:52] Speaker 01: And stop there. [00:29:54] Speaker 01: Yes. [00:29:54] Speaker 01: And we're not suggesting that the Secretary could, across the board, simply change [00:30:00] Speaker 01: Medicaid law and say there are now the same TANF and SNAP requirements for everyone. [00:30:06] Speaker 01: This is an explicit exercise of the 1115 Demonstration Project Authority that's intended to allow this type of innovation in the programs. [00:30:16] Speaker 01: And recall, we had 27 AFDC demonstrations. [00:30:21] Speaker 04: You're not answering to what Judge Pillard asked, which is what Judge Volsberg was resting his opinion on. [00:30:27] Speaker 04: You haven't addressed [00:30:28] Speaker 04: in any way that judges, at least, can digest what you said and be satisfied. [00:30:35] Speaker 04: This is reason decision making. [00:30:37] Speaker 04: That's what we're talking about. [00:30:39] Speaker 04: You're talking about hypotheses that are kind of up in the sky. [00:30:42] Speaker 04: Congress certainly didn't endorse them in the terms that you would like. [00:30:45] Speaker 04: And it's just that it's an administrative law process. [00:30:49] Speaker 04: You gotta have reason decision making. [00:30:51] Speaker 04: You're looking to objectives that are not in the statute and you're failing to address, as he said, the critical statutory objective, which is coverage. [00:31:00] Speaker 04: Bottom line, and Judge Piller just asked you again and you haven't been able to answer it. [00:31:06] Speaker 01: I think we're maybe talking past each other, but Congress in the separate programs made a judgment [00:31:14] Speaker 01: that these requirements help to break the cycle of poverty and lift them out of the welfare program. [00:31:22] Speaker 01: In the Medicaid context, how does that work? [00:31:24] Speaker 01: If you're talking about a demonstration project, if you get a roughly full-time minimum wage job, you graduate out of the expansion population onto the exchanges where you are eligible for very high federal subsidies. [00:31:40] Speaker 01: That is a good thing. [00:31:42] Speaker 01: This is, of course, a hypothesis. [00:31:44] Speaker 01: because it's a demonstration and it hasn't been tested. [00:31:56] Speaker 01: So I want to address your honest questions about health, but I know I have... You can finish the answer. [00:32:03] Speaker 01: On PELF, and this is addressed, these letters are the most comprehensive decision documents in the context of the demonstration project of all time. [00:32:12] Speaker 01: As Judge Friendly pointed out, there was no decision document in Aguayo, which is the seminal case on the 1115 authority. [00:32:18] Speaker 03: But on PELF... But we don't have demonstration evaluation [00:32:22] Speaker 03: instruments in the record, do we? [00:32:24] Speaker 03: Or am I missing something? [00:32:25] Speaker 01: I don't know what's in the record, but again, this is long-standing. [00:32:27] Speaker 01: Because the special terms and conditions are not established until the approval stage, there is routinely another period of time before the evaluation, you know, the protocols have to be submitted and approved by CMS. [00:32:42] Speaker 01: That's not anew. [00:32:43] Speaker 03: I thought you, under the regulations that you point out apply to Kentucky, [00:32:48] Speaker 03: that there is a requirement of the demonstration evaluations. [00:32:53] Speaker 03: And the professor's brief, Amika's brief, is very much focused on that. [00:32:58] Speaker 03: And I just wanted to know whether they're accurate when they say this was a case of experiment first and evaluate maybe. [00:33:06] Speaker 01: So we address that it's in a footnote, because it wasn't an argument made by the plaintiffs. [00:33:11] Speaker 01: And we're just making the point that this is routine. [00:33:13] Speaker 01: This is not a new practice. [00:33:15] Speaker 01: This being until Kentucky has the special terms and conditions, which is what it gets as approval, it really can't design the entire evaluation protocol, because that's supposed to be concordant with the terms and conditions. [00:33:30] Speaker 01: So that's not a new practice. [00:33:33] Speaker 05: That's in a footnote. [00:33:34] Speaker 01: Yes, because it was not raised by the plaintiffs, it was raised by an amicus. [00:33:42] Speaker 01: I actually try very hard not to use footnotes, but I was differentiating between arguments that were presented by the party and addressed by amicus. [00:33:51] Speaker 01: And so again, on health, and this, just making a point, these requirements such as premiums, waivers of retroactive eligibility, as in the demonstrations approved in the last administration, are designed to provide [00:34:04] Speaker 01: incentives for greater uptake of preventive health services, which are very, very low among the expansion adults. [00:34:12] Speaker 01: So notwithstanding all the money that's being spent, you're not seeing a dramatic improvement in the health. [00:34:19] Speaker 01: And just to close the loop, if the health of Medicaid recipients improves, that makes the Medicaid programs much more cost effective because they're less costly to care for. [00:34:28] Speaker 03: Just one last question. [00:34:31] Speaker 03: Are you relying [00:34:34] Speaker 03: And to what extent? [00:34:35] Speaker 03: And I thought it was a main feature of the underlying documentation. [00:34:39] Speaker 03: But your approach today makes me question, are you relying on the notion that work or the work substitutes, in fact, make people healthier? [00:34:50] Speaker 01: Yes. [00:34:51] Speaker 01: And to be clear, what the secretary said is correlate. [00:34:54] Speaker 01: with improved health. [00:34:56] Speaker 01: I understand. [00:34:57] Speaker 01: Yes. [00:34:57] Speaker 01: Well, be careful not to overstate. [00:34:58] Speaker 01: This is a hypothesis, and the literature establishes correlation. [00:35:03] Speaker 01: It is very difficult in this area to prove causation. [00:35:06] Speaker 01: Indeed. [00:35:08] Speaker 01: Yeah. [00:35:08] Speaker 01: But again, to be clear, this is [00:35:11] Speaker 01: It would be hard to prove that premiums cause greater investment in your health care, health consumption, and that they cause increases in preventive services, though nonetheless, and I realize the plaintiffs are challenging the last administration's approval of the Indiana plan now. [00:35:30] Speaker 01: But this is not a new concept. [00:35:32] Speaker 01: It's a familiar concept. [00:35:34] Speaker 01: And it's certainly a hypothesis that can be tested in the context of a demonstration. [00:35:39] Speaker 03: And I think the question, the main gravamen of their case is at what expense in terms of coverage. [00:35:47] Speaker 01: Yes. [00:35:47] Speaker 01: Thank you. [00:35:48] Speaker 03: We'll give you some time for rebuttal. [00:36:06] Speaker 03: Morning, Mr. Christian Warren. [00:36:07] Speaker 00: Good morning, Your Honors, and may it please the Court. [00:36:09] Speaker 00: As part of a purported experiment to promote the objectives of Medicaid, the Secretary has, for the first time in the history of the Act, approved a combination of eligibility restrictions, penalty provisions, and benefit reductions [00:36:21] Speaker 00: that collectively will deny both health coverage and access to care to hundreds of thousands of Medicaid recipients. [00:36:27] Speaker 00: Judge Bosberg was correct to conclude that these approvals were arbitrary and capricious for at least three reasons, which I'd like to get out first. [00:36:36] Speaker 00: First, and most important, as Judge Edward noted, [00:36:38] Speaker 00: Completely absent from the Secretary's analysis is any serious assessment of the massive impact on those who will lose coverage and be denied access to care as a result of these experiments. [00:36:49] Speaker 00: The purpose of Medicaid is to furnish medical assistance to those who are needy, and these experiments do precisely the opposite. [00:36:56] Speaker 00: Second, the analysis the Secretary did provide cannot carry the day. [00:37:01] Speaker 00: The Secretary invoked goals such as increasing upward mobility, reducing dependence on public assistance, and easing the transition to commercial coverage that are nowhere to be found in the Medicaid statute. [00:37:12] Speaker 00: And to the extent he sought to address other goals, such as improving health and cutting costs, he did so only by reducing medical assistance, not by furnishing it. [00:37:22] Speaker 00: And third, this was all part of an effort to transform and restructure Medicaid. [00:37:27] Speaker 00: That's what Kentucky said it was doing, that's what the administrator said she was doing, and that's what the Secretary said he was doing when he approved cookie-cutter waivers that have effectively made work requirements available nationwide. [00:37:39] Speaker 00: But transforming and restructuring Medicaid to make it more like SNAP and TANF or otherwise is for Congress through legislation, not for the Secretary through administrative action. [00:37:50] Speaker 00: So let me start with what Judge Edwards was pointing to, which of course is what Judge Boesberg was pointing to, primarily, which is the failure of the government to address at all the stated goal of the act, which is to furnish assistance. [00:38:03] Speaker 00: The government, the secretary, [00:38:05] Speaker 00: nowhere addressed in its opening January letter the effect on coverage loss, even though it was obvious from the face of the document, even though commenters suggested there would be massive coverage loss, even though Kentucky itself estimated coverage losses approaching 100,000, which we think substantially underestimates. [00:38:25] Speaker 00: And by the time the final Kentucky approval happened, even though 20% of the recipients in Arkansas had been kicked off Medicaid as a result of the experiment. [00:38:35] Speaker 00: In those circumstances, to not address the coverage loss, which is the principal purpose of Medicaid, renders the Secretary's approval arbitrary and capricious. [00:38:45] Speaker 00: It's simply a failure to address a substantial part of the problem under settled Medicaid law. [00:38:52] Speaker 00: Now, when the Secretary was actually asked by – after Judge Roseberg's first opinion to address coverage loss, I'm sort of confused actually as to what the government's position is today as to Judge Santel's blackmail question. [00:39:04] Speaker 00: When you look at what the Secretary said about coverage loss, as opposed to what the government is saying today, what the Secretary said – and this was on page 12 of the approval letter under the response to coverage loss – [00:39:16] Speaker 00: Kentucky has repeatedly made clear that its continued expansion of coverage to the ACA expansion population is conditioned on implementation of this demonstration. [00:39:26] Speaker 00: It said it over and over. [00:39:27] Speaker 00: I don't want to bore the court, but if you look at that, like six or seven times, it points to the 450,000 people who would be denied coverage. [00:39:35] Speaker 00: That's the blackmail argument. [00:39:37] Speaker 00: That's the sustainability argument. [00:39:38] Speaker 00: That's what the Secretary based the approval on when Judge Boasberg asked him to explain. [00:39:43] Speaker 00: Now, maybe the government is disavowing that, although I think you heard today that actually the sustainability of providing services to that expansion population is still at issue. [00:39:52] Speaker 00: So let me just address it briefly. [00:39:54] Speaker 00: That kind of blackmail theory cannot be a justification here. [00:40:01] Speaker 00: First of all, we disagree with the government that it's lawful. [00:40:04] Speaker 00: We don't ask this court to decide that now, but both as a matter of federal law and as a matter of Kentucky law, Kentucky statute cited in our brief says it's the policy of the Commonwealth to take advantage of all federal funds that may be available for medical assistance. [00:40:18] Speaker 00: And so it's not clear to us that it's lawful at all. [00:40:22] Speaker 00: But even setting that aside, there is, of course, no limiting principle to that. [00:40:26] Speaker 00: It's not just that there's an expansion population. [00:40:29] Speaker 00: Of course, Medicaid itself is voluntary. [00:40:32] Speaker 00: And so if you believe the government, all a state needs to do is say, well, we're going to drop out of Medicaid. [00:40:38] Speaker 00: And then anything that the state does increases coverage because it gets above the seaboard. [00:40:42] Speaker 03: But Mr. Bender, what about their position today, which is more, I think, along the lines of, [00:40:46] Speaker 03: You know, we can't afford to do the expansion, to accept the expansion population if we don't [00:40:55] Speaker 03: belt-tighten a lot. [00:40:57] Speaker 03: And the way we've chosen to do that is to hasten people who can work into work for all kinds of reasons, all kinds of policy reasons that are concordant with what's being done under Pahora, TANF. [00:41:10] Speaker 03: And we want people to be financially self-sufficient. [00:41:16] Speaker 03: And so that's a way that we are going to be able to afford [00:41:20] Speaker 03: our 10% and provide coverage for others. [00:41:26] Speaker 00: So I have a number of responses. [00:41:27] Speaker 00: So the first one, I think, goes back to the colloquy between Ms. [00:41:30] Speaker 00: Klein and Judge Santel. [00:41:32] Speaker 00: Just as a factual premise, and I think what she was saying is what we agree with, there is no attempt to condition the expansion population on this demonstration project. [00:41:43] Speaker 00: Kentucky has expanded. [00:41:44] Speaker 00: These people are getting coverage. [00:41:45] Speaker 00: it has been the coverage rate, the uninsured rate in Kentucky has dropped to 11%. [00:41:51] Speaker 00: These people, 450,000 people are getting coverage. [00:41:54] Speaker 00: So this is not conditioned. [00:41:55] Speaker 00: But I understand that doesn't get to the core of your Honor's question. [00:41:58] Speaker 00: So the core of your Honor's question is, I think, there are two principal answers. [00:42:03] Speaker 00: First, that cutting costs by reducing coverage is not an acceptable goal. [00:42:09] Speaker 03: Their view is we're not cutting costs by reducing coverage. [00:42:12] Speaker 03: We would be thrilled. [00:42:14] Speaker 03: if 100% of people subject to these requirements comply with them. [00:42:19] Speaker 03: And some of them would graduate into jobs and eventually onto the, keeping their Medicaid coverage for a while, while they're in school, while they're in jobs that don't have, and then they graduate up. [00:42:31] Speaker 03: Some of the people will show that they don't have an obligation. [00:42:34] Speaker 03: They'd be thrilled if everybody did that. [00:42:36] Speaker 00: So a couple of things. [00:42:37] Speaker 00: So first of all, just to step back for answer your honest question directly, what Judge Boasberg said and picking up on Judge Edwards' point, that may be fine, but in implementing that, we don't think it's fine, but even if you thought that was fine, you can't implement that without considering the massive coverage loss that might result. [00:42:54] Speaker 00: And there is no consideration of that. [00:42:56] Speaker 00: that's a substantial part of the problem. [00:42:58] Speaker 00: But second, I do think, Your Honor, that a couple of responses are critical. [00:43:05] Speaker 00: First of all, as Your Honor pointed out, the passage in Walsh that the government relies on for this idea that somehow making things more cost-efficient and improving beneficiaries' lives [00:43:17] Speaker 00: It misses the real point in Walsh, which is at pages 664 and 665, as Your Honor quoted, that curtailing costs is not a sufficient basis for upholding the program if severely curtailed Medicaid recipients access to the drugs there. [00:43:31] Speaker 00: This court said the same thing in the Farmer v. Thompson case, and of course that's the basis of the Ninth Circuit's decisions in Newton Nations and Beano, right? [00:43:39] Speaker 00: These kinds of issues have been addressed by the courts, and it's precisely to the contrary to the government. [00:43:45] Speaker 00: In fact, it's mystifying to me that they think Walsh helps them rather than hurts them. [00:43:50] Speaker 00: I guess I would also say, Your Honor, that to the extent the government is making an effort to justify, well, let me step back. [00:43:58] Speaker 00: In addition to that, I think it really is a fundamental change in the way Medicaid is being given. [00:44:05] Speaker 00: from Congress's perspective is it's a deal, right? [00:44:08] Speaker 00: Congress gives a huge chunk of money to the states. [00:44:11] Speaker 00: And in return, the states have to cover certain populations and provide certain floor of benefits. [00:44:16] Speaker 00: Now, there's a lot of flexibility, but Congress gives the floor. [00:44:20] Speaker 00: It's not up to the states to say, well, we'd like to cover some things and not other. [00:44:24] Speaker 00: We'd like to cover some people and not other. [00:44:26] Speaker 00: That kind of a la carte approach to Medicaid [00:44:28] Speaker 00: is not the deal that Congress has provided. [00:44:32] Speaker 00: I will also say that targeting this particular population, the ACA population, I think should give the court some pause. [00:44:38] Speaker 00: Remember, this is a population that the government is currently providing 93% of the money to. [00:44:45] Speaker 00: If this population were to be taken off, the health problems still remain, and the costs still remain, and yet 93% of the funds to pay for that [00:44:55] Speaker 00: has disappeared. [00:44:56] Speaker 00: And so I think there's a real skepticism that one might have. [00:45:00] Speaker 00: And of course, here the skepticism is very clear. [00:45:03] Speaker 00: There's a reason, not only should there be reason for skepticism, but actually the statements of the secretary and the governor and the administrator all make clear actually what's going on, is that this is an effort to impose work requirements. [00:45:16] Speaker 00: And indeed, Ms. [00:45:16] Speaker 00: Khan was pretty candid about that today, right? [00:45:19] Speaker 00: What the government thinks it's doing is exactly what the government purported to do, did in the program that was at issue in Aguayo. [00:45:29] Speaker 00: But Aguayo is a million miles from here, and Judge Friendly's opinion makes that clear. [00:45:33] Speaker 00: Of course, the purpose of AFDC was not to furnish medical assistance, as here, but it was to attain or retain the capability for the maximum self-support and personal independence, consistent with the maintenance of continuing parental care. [00:45:47] Speaker 03: Judge Friendly- [00:45:49] Speaker 03: resonant language in the Medicaid Act, which the secretary points to about [00:45:57] Speaker 03: improving people's independence. [00:45:59] Speaker 00: Yeah, so I noticed that the government didn't mention that this morning, and I would say with pretty good reason. [00:46:04] Speaker 00: The actual sentence that your honor points to is 1396-12, says rehabilitation and other services to help families and individuals attain or retain capability for independence or self-care. [00:46:19] Speaker 00: It seems very clear to me, and Judge Boesberg agreed, that that's talking about [00:46:23] Speaker 00: physical independence, it's rehabilitation services, self-care. [00:46:27] Speaker 00: It's not talking about support. [00:46:30] Speaker 00: And if I could just continue the Iguayo difference, because I think it's really critical. [00:46:33] Speaker 00: I mean, the government really is trying to blur SNAP and TANF and AFDC on the one hand and Medicaid on the other. [00:46:39] Speaker 00: What Judge Friendly said was not only is the purpose difference, but from the very beginning, from the 1930s, there were work training programs that were similar to the things that the government was doing. [00:46:49] Speaker 00: that in the late, in the 60s, there was a work incentive program that had been put into AFTC. [00:46:56] Speaker 00: And he looked at the legislative history and saw the same thing. [00:47:00] Speaker 00: So Judge Friendly said these things are all in the act. [00:47:02] Speaker 00: They're the purpose of the act. [00:47:04] Speaker 00: Congress has enacted statutes that do it. [00:47:06] Speaker 00: It's precisely the opposite here. [00:47:07] Speaker 00: It seems to me that the analogy to Aguayo is the problem, not the solution. [00:47:12] Speaker 03: What about the one provision that Ms. [00:47:16] Speaker 03: Klein mentioned, which does authorize states to, Zach Klein, which is something about the consistency between TANF and SNAP, and that one of the recourses that a state can have is if it's cutting people for failure to work off of those programs, it can also cut their Medicaid. [00:47:36] Speaker 00: Right, 1396 U1B3P. [00:47:41] Speaker 00: Yes, Your Honor, so that is the only provision that they say, and what that is is a provision that says if you already are losing your public assistance benefits for failing to work under TANF, you can also lose your Medicaid benefits. [00:47:58] Speaker 00: But remember, that was enacted at the same time, and this goes to something Judge Santel was talking about, that was enacted at the same time as the work requirements were added [00:48:05] Speaker 00: to SNAP and the purpose was changed. [00:48:09] Speaker 00: And yet that was the very time that Congress decided not to add those to Medicaid. [00:48:14] Speaker 03: As a categorical matter, but she's relying on that as support for the notion that it's not inconsistent with the Medicaid program to impose a work requirement or to terminate coverage [00:48:28] Speaker 03: for failure to comply with the work requirements, so why not? [00:48:31] Speaker 03: I mean, of course they shouldn't have to do it as a statutory matter without some regulatory authorized demonstrations. [00:48:40] Speaker 00: And our response to that, Your Honor, is that that provision cannot plausibly be read to completely and fundamentally change the purposes of Medicaid. [00:48:48] Speaker 00: It's the classic elephants and mouse holes kind of problem. [00:48:51] Speaker 00: When it was passed as part of a package where Congress knew expressly how to put in the language about [00:48:57] Speaker 00: making financial independence and work requirements part of the act, and Congress did that in related statutes, it seems to me a much more sensible interpretation of the acts as a whole to recognize this as a- Right, but I think all she's relying on it for is that it [00:49:12] Speaker 03: is a permissible purpose, not that Congress is directing one way or the other that it be done. [00:49:19] Speaker 03: And which leads me to a related question, which is, what's your position on the level of deference to the Secretary in defining what the permissible purpose is? [00:49:27] Speaker 00: So I think that, so I guess I would say this, Your Honor. [00:49:30] Speaker 00: So I don't think it's fair to read that provision, which is a, you know, as I say, it's a minor administrative provision that was put in at the same time Congress refused more broadly to change the purposes. [00:49:44] Speaker 03: And has any state used that? [00:49:48] Speaker 00: I don't know the answer to that question, Your Honor. [00:49:52] Speaker 00: I don't know the answer. [00:49:53] Speaker 00: I'll see if I can find that out before... I thought you were... Oh, go on. [00:49:57] Speaker 00: I'm sorry. [00:49:59] Speaker ?: Finish. [00:50:00] Speaker 00: I'm sorry, Your Honor. [00:50:02] Speaker 00: I forgot the second part of your question. [00:50:03] Speaker 03: The deference to the secretary. [00:50:06] Speaker 00: Oh, the deference to the secretary. [00:50:06] Speaker 00: Yes. [00:50:07] Speaker 00: So I think we think that the secretary overall is really trying to fundamentally change the act in a critical way. [00:50:17] Speaker 00: And so we actually are dubious that overall the imposition of work requirements is something that would receive Chevron deference. [00:50:24] Speaker 00: Regardless of whether this deference would extend to what the purposes of the act are, we think is a closer question. [00:50:31] Speaker 00: I guess we come out with basically where Judge Boesber was, which is to say that we think that promoting financial independence, upward mobility, getting people off public assistance is fundamentally not the purpose of Medicaid, and that even if Chevron applied, it would violate Chevron at step one of the court. [00:50:47] Speaker 04: I thought more fundamentally you were saying that [00:50:54] Speaker 04: work requirement may or may not be permissible in this context, but what Judge Boasberg said is, using administrative law principles, it can't be acceptable if you do not address coverage law. [00:51:10] Speaker 00: That is exactly correct, Your Honor. [00:51:12] Speaker 04: We don't even have to get to the question. [00:51:15] Speaker 04: could be possible. [00:51:17] Speaker 04: So this is not about whether work requirements are absolutely impermissible. [00:51:22] Speaker 04: It's that you have put something in place without addressing the principal requirement of the statute which is published. [00:51:28] Speaker 00: That's exactly right, Your Honor. [00:51:29] Speaker 00: And so regardless of what, yes, that's the answer. [00:51:34] Speaker 00: It is a critical part of the problem, and Judge Boesberg [00:51:38] Speaker 00: recognized that. [00:51:40] Speaker 00: In direct response to Judge Ploy's question, which I agree you don't have to reach, we do think that promoting financial independence is not a goal of the Act, and with respect to improving health and cutting costs, we think Judge Roseberg had it right, which is to say that if your method, and this relates to Judge Edwards' point, if your method for doing so is by cutting coverage, not by adding to coverage, [00:52:02] Speaker 00: and furnishing coverage, then that is not an acceptable means. [00:52:06] Speaker 00: In other words, Congress is able to specify not only the purposes and the goals, but also the means for the means to the end. [00:52:16] Speaker 03: So in your view, these sort of My Benefits accounts and premium-based incentives to exercise, to eat better, to do better preventative care with your diabetes or your [00:52:29] Speaker 03: you know, smoking cessation, all of those sort of efforts to give incentives might be permissible, but that conditioning your eligibility for the program on whether you do or don't pursue those, I think indisputably, health promoting objectives would be impermissible. [00:52:53] Speaker 00: I'm sorry. [00:52:54] Speaker 00: Yes, exactly. [00:52:55] Speaker 00: That's exactly right. [00:52:56] Speaker 00: Conditioning it on benefits would make it impermissible. [00:52:58] Speaker 00: Indeed, not only does it go to Your Honor's earlier hypo about TV watching, and Judge Boesberg talked about broccoli and others, but actually the provision the government cites in the D.C. [00:53:07] Speaker 05: Again, back to Judge Edwin's point, we don't have to decide whether they would be impermissible under all circumstances. [00:53:13] Speaker 00: Correct. [00:53:14] Speaker 05: I should premise all of my answers. [00:53:18] Speaker 05: The government has not justified it in terms of the objective. [00:53:21] Speaker 00: Absolutely right, Your Honor. [00:53:22] Speaker 00: I should premise all of my answers. [00:53:23] Speaker 00: I'm getting questions. [00:53:24] Speaker 00: I want to answer them directly. [00:53:25] Speaker 00: But if I could put in an implied preview to a prologue to every answer where I say, you don't need to reach that because coverage is the focus of the act. [00:53:37] Speaker 00: And as Judge Boasberg said, the government never wrestled with coverage at all. [00:53:41] Speaker 00: and with the exception of this blackmail theory. [00:53:45] Speaker 00: I could have that as a standing objection. [00:53:48] Speaker 00: That's all the court needs to decide. [00:53:50] Speaker 00: And all the court really should decide here. [00:53:54] Speaker 00: If I could just finish the answer to Judge Pillard, the government points to 4108, which is this grant making in the ACA, which the government says, look, it promotes all this healthy behavior. [00:54:05] Speaker 00: But what's critical to us is 4108E, which says, [00:54:09] Speaker 00: None of this can affect your eligibility for benefits or the level of benefits you receive. [00:54:15] Speaker 00: And so it's precisely, I think, reinforces our point. [00:54:18] Speaker 00: that sure health might be a part in some circumstances, but that Congress specified a means as well as an end. [00:54:25] Speaker 00: And just as Judge Boesberg said, that's what was going on with Congress. [00:54:33] Speaker 00: And Judge Boesberg pointed out the Joe and Dan hypothetical with the ACA. [00:54:38] Speaker 00: I think that really does go to the core of what was going on here. [00:54:43] Speaker 03: Do you agree with [00:54:47] Speaker 03: I mean, I'm going to oversimplify, perhaps unfairly, his view, but that health is not a permissible aim of Medicare. [00:54:59] Speaker 03: Judge Boasberg's conclusion that health itself, pursuit of health, qua health, is not a permissible aim of Medicare. [00:55:05] Speaker 00: So I think I would say that [00:55:08] Speaker 00: Correct. [00:55:08] Speaker 00: That health independent of coverage is not a critical aim. [00:55:14] Speaker 00: Again, with the hypothesis that you don't have to decide that. [00:55:17] Speaker 05: There's nothing in that statute that says we're trying to help people be more healthy. [00:55:20] Speaker 05: It says we're trying to give people coverage for medical care. [00:55:24] Speaker 00: Exactly. [00:55:25] Speaker 00: And I think that's what Judge Bozor was saying. [00:55:29] Speaker 00: We agree with that. [00:55:32] Speaker 00: It is health through a mechanism. [00:55:35] Speaker 00: And so the secretary cannot say, [00:55:37] Speaker 00: I am looking to improve health by conditioning Medicaid eligibility on no television, on eating broccoli, on doing Pilates or any of those other things. [00:55:46] Speaker 00: That Congress was interested in furnishing coverage and to say I want to improve health at the expense of coverage or independent of coverage is really not one of the purposes of the act at all. [00:56:00] Speaker 03: And are you challenging the [00:56:04] Speaker 03: failure to have this demonstration evaluation in place, or what's your position on it? [00:56:09] Speaker 00: So we have not independently raised that here. [00:56:12] Speaker 00: We do think that for a number of reasons this isn't a legitimate experiment in any sort of way, shape, or form. [00:56:21] Speaker 00: This is now effectively [00:56:24] Speaker 00: It's available nationwide. [00:56:26] Speaker 00: There are, I think, ten states that have gotten approvals and another seven waiting in the wings. [00:56:31] Speaker 00: You know, there isn't the kind of rigor that you would expect. [00:56:34] Speaker 00: Particularly, I know the court understands this, but we're talking about real people losing real coverage with real health problems, and those are in the record and I think are obvious to all. [00:56:45] Speaker 00: The idea that this is an experiment without the kind of rigor at the front end that one would expect is concerning. [00:56:55] Speaker 00: But we have not, in candor and your honor knows in our briefs, that we have not independently identified that. [00:57:00] Speaker 00: We've rested, identified that as a freestanding arbitrary and capricious APA problem. [00:57:07] Speaker 00: We've relied on Judge Bosberg's approach. [00:57:10] Speaker 00: Thank you. [00:57:10] Speaker 03: Thank you. [00:57:13] Speaker 03: Does Ms. [00:57:13] Speaker 03: Klein have rebuttal time? [00:57:15] Speaker 03: You may have two minutes. [00:57:20] Speaker 01: I'd like to just start with Judge Edwards' question about where in the record the Secretary weighed the upside, the potential to increase coverage against the risk of coverage loss. [00:57:40] Speaker 01: So, for example, [00:57:41] Speaker 01: on the Kentucky Administrative Record. [00:57:44] Speaker 01: This is the decision document at 6731. [00:57:47] Speaker 01: The Secretary recognized that if you, to create an effective incentive to take these actions, states may attach penalties for failure to take the measures. [00:58:01] Speaker 01: And this may mean beneficiaries who fail to comply will lose Medicaid coverage at least temporarily. [00:58:08] Speaker 01: However, [00:58:09] Speaker 01: The incentives included in the demonstration are not designed to encourage this result. [00:58:15] Speaker 01: Rather, they are intended to incorporate achievable conditions of continued coverage, and any loss of coverage that is the result of noncompliance must be weighed against the benefits Kentucky hopes to achieve through the demonstration project. [00:58:34] Speaker 01: including both improved health and independence of the beneficiaries who comply and the Commonwealth's enhanced ability to stretch its Medicaid resources and maintain the fiscal sustainability of the program. [00:58:48] Speaker 01: And the evaluation, like how does the Secretary make that judgment and why isn't it quantitative? [00:58:56] Speaker 01: It's qualitative. [00:58:57] Speaker 01: It's because unlike in Beno versus Shalala, where the so-called work incentive was being placed on children, on persons found disabled within the meaning of the social security benefits, so unable to work, here the work incentives are being placed on a population that can be reasonably expected to succeed. [00:59:22] Speaker 01: So this is because this is a demonstration [00:59:26] Speaker 01: it is entirely permissible for the agency to look at the soundness of the design, at the qualitative measures, and it does not require it to be broken down in some quantitative fashion, which, honestly, if the agency had tried to do so, I think the other side would be saying that's speculative, to which we'd be saying, of course it's speculative, we haven't done it yet. [00:59:47] Speaker 01: So I just want to make sure, the suggestion that the agency did not weigh is inaccurate. [00:59:55] Speaker 03: So as I was probing Mr. Gershengorn, you would agree with the notion that the secretary would be thrilled if everybody complied, dearly hopes everyone will comply. [01:00:07] Speaker 03: Do you have tripwires or numbers of people cut off or a time period where you're gonna say, wait a minute, this is just beyond what we expected [01:00:22] Speaker 03: And we can't have people not covered for this because it's monthly that you have to report. [01:00:32] Speaker 03: People are just not getting their eye together. [01:00:34] Speaker 01: Yes. [01:00:35] Speaker 01: Both formally, the letters, the secretary routinely reserves the authority to basically say, we're pulling back. [01:00:42] Speaker 01: We're changing our mind. [01:00:43] Speaker 01: But I'm wondering about metrics. [01:00:43] Speaker 03: I'm wondering how realistic. [01:00:46] Speaker 03: I know it's a very political negotiating process between the federal government and the states. [01:00:51] Speaker 03: Are there lines that the states can't cross in coverage laws? [01:00:57] Speaker 01: Again, in practice, if you look at the most recent, Judge Brosberg's opinion in New Hampshire, what you will see is that New Hampshire, on its own, concerned that its outreach wasn't working, that it wasn't getting the reports, delayed any disenrollments. [01:01:11] Speaker 01: Remember, these are states that want to provide coverage to eligible people, because if they don't, think about what happens. [01:01:19] Speaker 01: They just end up in the emergency room. [01:01:20] Speaker 01: It's much, much better for these people to have health insurance, whether it be from Medicaid or through the exchanges or employer. [01:01:28] Speaker 01: And these are states that have chosen to expand [01:01:31] Speaker 01: and come January 1st are going to have to pay 10% of the claims costs and are trying to just figure out what ways can we do it that are more economical, that are more sound. [01:01:45] Speaker 01: And what boils down to is 1115 gives the secretary broad authority when, in his judgment, a demonstration will promote the purposes of the statute. [01:01:56] Speaker 01: And though Congress tinkered with that language when it amended it in the ACA, quite notably did not impose new substantive constraints. [01:02:05] Speaker 01: They're all transparency and reporting requirements. [01:02:08] Speaker 01: Thank you. [01:02:10] Speaker 01: Cases submitted.