Section 1115 of the Social Security Act permits the Secretary of the Department of Health and Human Services (HHS) to conduct social welfare experiments “likely to promote the objectives” of the Medicaid program and, in doing so, waive certain federal Medicaid requirements that normally would apply.
Consistent with its view that compelled work promotes Medicaid’s objectives, the Trump administration allowed Georgia in 2020 to implement a compelled work experiment as part of an 1115 waiver project to partially adopt the Affordable Care Act (ACA) Medicaid expansion for low-income adults. The Biden administration tried to prevent Georgia from moving forward, finding on several grounds that the demonstration undermined, rather than advanced, Medicaid’s core objective of covering low-income people. Georgia sued and a federal court allowed the work experiment to proceed, rejecting efforts by the Biden administration to reverse the Trump administration’s approval. The court greenlighted the experiment despite the fact that more than a dozen similar state Medicaid work experiments approvals have fizzled, either halted by courts as unlawful or never implemented. The Biden administration has not appealed. Georgia thus becomes the only state with a compelled Medicaid work experiment in effect.
Georgia’s Medicaid experiment requires work as a condition of eligibility, along with other changes aimed at restricting eligibility, including capping eligibility for working-age adults at 100 percent of the federal poverty level (i.e., $24,860 for a family of three in 2023) and making premiums mandatory for beneficiaries. The experiment is expected to radically reduce — by more than 80 percent, from over 400,000 to 50,000 — the number of low-income working-age adults who will qualify for Medicaid, compared to the number who would be eligible under the ACA Medicaid expansion without such restrictions.
In its decision, the court concluded that CMS’s reversal of the Trump administration approval failed on multiple grounds. According to the court, CMS erroneously classified Georgia’s expansion as an eligibility reduction by measuring the proposal against full adoption of Medicaid expansion rather than looking at the experiment on its own terms. The court found that even if the number of newly eligible people fell by 80 percent, the Georgia model nevertheless was an expansion that promoted Medicaid’s purpose — the cardinal rule under section 1115.
Furthermore, the court concluded that CMS failed to consider that even if the expansion was severely limited, some people would qualify and be harmed if the experiment were halted. The court also dismissed as irrelevant other cases that found that compelled work experiments reduced eligibility. In those cases (Kentucky, Arkansas, and New Hampshire) the Medicaid expansion was already in place and therefore, compelled work effectively rolled back coverage among people who could not meet the rules. In contrast, Georgia did not have an expansion in place. In short, from the court’s perspective, CMS treated Georgia’s experiment as a reduction when it was a beneficial expansion, even if comparably modest.
The court also rejected CMS’s effort to halt the experiment because it conflicted with health equity, concluding that health equity is not a purpose of Medicaid, and the CMS conclusion was meaningless. Furthermore, the court found that CMS failed to consider the harm that Georgia would experience by stopping a demonstration already in its early implementation phase. Ultimately, the court concluded that CMS failed to act reasonably in this case. Rather than appealing, CMS has allowed Georgia’s experiment to proceed.
The Georgia decision effectively forces the HHS Secretary to continue a state Medicaid demonstration that excludes hundreds of thousands of eligible people from assistance they would otherwise receive under the ACA and creates a narrow coverage pathway only few can navigate. The Biden administration will not approve more demonstrations like Georgia Pathways, given the evidence regarding the impact of compelled Medicaid work experiments on poor people. But the model could appeal to future administrations.
Furthermore, while the decision focuses on the narrow circumstances of the Georgia case, it raises a more fundamental question. Does Section 1115 empower the HHS Secretary to approve demonstrations that undermine eligibility standards adopted by Congress and established in law? In the ACA, Congress decided that providing Medicaid coverage to working-age adults with incomes up to 138 percent of the poverty level (i.e., $34,307 for a family of three) is good policy. If so, then what does the Georgia Pathways demonstration test, other than ceding to state preferences that fall below federal minimums?
This question could have implications in other areas. For example, the new legislative postpartum option specifies 12 months of Medicaid coverage that conforms to professional guidelines regarding the appropriate length of postpartum care. Texas is proposing that HHS waive the 12-month rule so that it can limit postpartum coverage to six months. Is section 1115 satisfied simply because Texas prefers its own test, which is contrary to professional standards and medical evidence? Where does the Georgia precedent end? Simply put, Congress enacted section 1115 to enable states to improve federal programs, not reduce their reach.
