their medicaid programs more cost effective and the mechanism that has been the principal focus of these cases test our work oriented requirements that are modeled on those in the existing federal tanna and snap food assistance programs in order to see if the application of those requirements helps to transition medicaid recipients from the medicaid program into commercial coverage and it's critically important to emphasize that that commercial coverage will not be limited to employer based insurance but also would include the heavily subsidized  exchange insurance that is that what they're trying to test whether it turns efficient people to commercial covered i thought that was sort of a a little not the central objective of the  in that doing even a job that there is no commercial insurance is correlated with them and therefore there isn't data in the record about people getting a leg up into a market through work requirement and eventually how many of them get commercial insurance i didn't see the out of part of the record well let me unpack the various questions so both are true it is improved health in part as a result of these work going to requirements and also other aspects of these demonstrations that are matched to increase preventive her preventive health services uptake which is very low the expansion population so that is definitely a piece of it but in the record for example the kentucky application in july th team kentucky made various not occasions 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 covered before these are these demonstrations were approved and in kentucky us into a sliver so it's not it's not just people who for the st time are are if i mean answering the question  expansion states so they elected that they didn't have to go to a man their state plans in order to provide coverage to these newly eligible and i don't know that happened before arkansas did it in connection with a demonstration but it still it in ended its state meaning to be dead and just to be clear under and out by the states that choose to do that have the privative to change their mind and that was important and explicitly covered you know with under the a c a with the benchmark plan with no additional conditions on her ability and that's what was happening before these demonstrations were approved the reason that we e given and that of course the secretary's given that the testing these particular measures are likely to promote the coverage expand coverage in the long term is because medicaid is a dynamic program in which an enormous amount of spending is optional 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 on to the exchanges or go back to just killers question by making it more cost effective while all the participants are in the medicaid program that is what frees up scarce resources that can then be used for other people in need what is the  would like your help and putting down what is the hypothesis or the hypotheses that are being tested here but one of them i gather is whether the application of these requirements is going to transition people to commercial  another is whether the people who remain in harvard going to have improved as a result of work oriented activity yes but not exclusively so also the i mean there are one hundred dollars pages of special terms and conditions attached to the kentucky approval letter and the backend has evaluation and not agreeing and the application has a series of hypocrisy used but i just don't want to forget about the premiums and wait in the theory that the that a j just back in two thousand and fifteen approved for the indiana demonstration comparable you know some extent identical measures like premiums elimination of retroactive  these were after extended negotiations with the indiana this was the agreement that was reached that allowed indiana and idiotic shows to do the expansion because it was being also allow any degree the number of congress persons and therefore the states to wrack that unless this is approved they will give up the expansion gives them license basically to  offer grandson and grounds whatsoever you're not depending on no one to be clear that that is not what the secretary said and just to look at the facts arkansas part of arkansas is the demonstration only to the expansion and it requested proposed to drop the eligibility for one hundred and thirty three percent of federal poverty level to one hundred percent and he just said no so under the by no means are we suggesting it's a free for all just because the qualifications were required of kentucky before c m s gave that ultimate approval even the st pro ball and particularly mention online with the china and snap programs so the requirement that anyone exempted under think we st very much disagree with that premise that help if i'm explaining let's start with helping people who are in the adult expansion population transition to the exchanges you might wonder you know why is the federal government here  as this court in the pharma versus thompson opinion recognized and supreme in farmer versus walsh and more generally and well you know recognize 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 promotes the objectives of the medicaid program and part of the reason it does you have to understand that about fifty percent of state medicaid spending is optional optional  statistics that were seventeen thousand people who temporarily lost coverage at the rollout of the arkansas project and this is a point i want to differentiate between and that but i am in no way diminishing the significance of that but the point of having state demonstrations is so that you identify that type of rollout issue two at the local level where it can be fixed easily and if the court remembers the rollout of medicare part d in two thousand and six when you were supposed to have six million elderly medicaid recipients transitioned to medicare part d that was a girl and it was not addressed that usually in twenty states had it all an act emergency legislation so roll out problems are demonstration they did apply and that is the budget neutrality work sheet that is judged referenced in the opinion but he misunderstood what it was saying and he also overlook changes that were made after the time of that projection so he misunderstood what was saying in terms of the person hours rather than the brutal or person more and more importantly he assumed that any reduction in coverage meant people going without medicaid as opposed to what i'm going to read from this is if for twenty seven dollars of the kentucky administrative record and this is the public notice that data because it hasn't been implemented out there hypotheses about what could happen if the tannin and snap type requirements are tested on populations that are materially program's objective exam yes because it would just look around this we don't just mean is it on the verge of collapse we mean the way the supreme court said in the in the justice stevens opinion of the farmer versus walsh if you keep the borderline populations out of medicaid that frees up resources that the state can then use but on os and hans and did not involve taking people who are eligible under the  are not grumble that all that is why this is a demonstration if you need a demonstration authority is is being used in order to test requirements that in congress's judgment are reasonable means to mandatory populations and the medically needy which is the big an optional population and still is under under medicaid so if you can come up with ways to shift people in the now optional ac expansion population d to the exchanges that frees up more money that can be used but that's mixing apples and oranges because the medically needy were optional in the sense that you can strive to give them some coverage where is your it's our home more of an on off switch i thought you weren't relying on the notion that because the city can all together refuse to cover be expansion population that they can you know cover any fraction of that population and so i once you buy that when you're in for the expansion that is a mandatory population then i'm not sure what your argument  actually i'm not sure the premise is correct about the medically needy but even if it were just and again this is going to what just it just seems pointed out in that farmer versus washington even with respect to mandatory services like inpatient hospital days states have huge discussions discretion in deciding how to reimburse and so just as even cited an example of tennessee as a cost cutting measure dropped the annual free up state medicaid money that opens the possibility of providing coverage whether it's more services services to more people and that is was the same theory that animated the decision in pharma versus war closely speaking to the issue in this case and that the court says that the fact that the program there the prescription benefit program provide 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 and by by analogy we have a proposal that the were the ok there has a question whether if it causes a dramatic reduction has the secretary taken that into account yes and this is where when the secretary keeps emphasizing that these conditions are be evidence but congress is judgment as reflected in those other statutes is that for this population it is reasonable to ask for twenty hours a week of the list of activities that is materially identical to  here is actually more flexible under the kentucky and arkansas project or if there were evidence that not watching television was you know made people healthier could the secretary say when there were a demonstration project and if you watch we have not left incomplete the point i was just making that 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 know you've got states here that have voluntarily chosen to participate in the sickest expansion 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 montana also recently an active legislation like that and so i just don't 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 and a big part of that is if you've got the populations whom congress has independently trying and can be appropriately asked to do twenty hours a week of these activities in order to congress's judgment  requirement with monthly reporting that will you know that this still needs to be a voluntary program in arkansas but not that there wasn't the level of uptake the been wanting and so they said well we're go i think we're maybe talking past each other but congress in the separate programs made a judgment that these requirements help people you help to break the cycle of poverty and lift them out of the welfare program in the medicaid context how does that work if you're talking about a demonstration project if you get a roughly ringback full time minimum wage you graduate of the expansion population onto the exchanges where you are eligible for very high federal subsidies that is a good thing this is of course a hypothesis because it's a demonstration and it hasn't been tested health we don't have demonstration of instruments in the record and really i don't know what's in the record but again this is longstanding 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 cns that that's not a new i argue under the regulations that are not part of kentucky but there 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 can gordon with the terms and conditions so that's not that's not a new practice   move just because it was not raised by the pla as premiums waivers of retroactive eligibility as in the demonstrations approved in the last administration are designed to provide incentives for greater uptake of preventive health services which are very very low among the expansion adults so notwithstanding all the money that's being spent you're not seeing a dramatic improvement in the health and just to close the loop if the health of medicaid recipients improves that makes the him yes well that is the you know the be careful not to overstate this is a hypothesis and the literature establishes correlation it is very difficult in this area to prove causation in the u k but again you believe the plaintiffs are challenging the last administration's approval of the indiana plan now but this is not a new concept is a familiar concept and it's certainly a hypothesis that can be tested in the context of a demonstration and  morning your honor is may it please the court as part of a purported experiment to promote the object is a better case the secretary has for the st time in the history of the act approved a combination of eligibility restrictions penalty provisions and benefit reductions that collectively will deny both health coverage and access to care to hundreds of thousands of medicaid recipients judge posner was to correct was correct to conclude that these approvals were arbitrary capricious and for at least three reasons which i'd like to get out st st and most important as judge edward noted 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 the purpose of medicaid is to furnish medical assistance to those who are needy and these experiments do precisely the opposite nd the analysis the secretary did provide cannot carry the day 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 and to the extent he sought to address other goals that his improving health and cutting costs he did so only by reducing medical assistance not by furnishing it and rd this was all part of an effort to transform and restructure medicaid 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 but transforming and restructuring medicaid to make it more like snap and talent or otherwise is for congress through legislation not to the secretary through administrative action know where addressing it's opening january letter the effect on coverage loss even though it was obvious from the face of the document even the commenter suggested there would be massive coverage loss even though kentucky itself estimated coverage losses in the hundreds of approaching one hundred thousand dollars which we think substantially underestimates and by the time the final kentucky approval happened even though twenty percent of the recipients in arkansas had been kicked off medicaid as a result of the experiment in those circumstances to not address the coverage loss which is the principal purpose of medicaid renders the secretary's approval arbitrary and capricious it's simply a failure to do to address a substantial part of the problem under several settled medicaid law now when the secretary was actually asked by after just those words st opinion to address coverage loss i'm sort of confused actually as to what the government's position is today as to judge and tells blackmail question when you look at what the secretary said about coverage was this the pros with the government saying today what the secretary said and this is on page twelve of the approval or under the response to coverage unless kentucky has repeatedly made clear is continued expansion of coverage the a c expansion population is conditioned on implementation of this demonstration it's said it over and over i don't want to bore d the board but if you look at like six or seven times he points to the four hundred and fifty thousand people who would be denied coverage that's the blackmail argument that's the sustainability argument that's what the secretary based the approval on when judge was very asked him to explain now maybe the government is this is valid now although i think you heard today that actually the sustainability of providing services to that extension population is still an issue so let me just address it briefly that kind of blackmail theory cannot be cannot be a justification here st of all we disagree with the government that it's lawful that 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 statutes i did my brief says it's the policy of the commonwealth to take advantage of all federal funds that may be available for medical assistance and  so it's not clear to us that it's lawful at all but even setting that aside there is of course no limit in principle it's not just the it that you that there's an expansion population of course medicaid itself is one terry and so if you believe the government all the state needs to do is say well we're going to drop out of medicaid and then anything that the state does increases coverage because again somebody is out of their position today which is more i think along the lines of you know we can't afford to do what we agree with there is no attempt to condition the expansion population on this demonstration rather kentucky has expanded these people who are getting coverage it has been the coverage rate the uninsured rate in kentucky has dro eleven percent these people before in fifty people are getting coverage so this is not conditions but i understand it doesn't get to the core of your honest question so the core of your st question is this i think there are two principle has st that cutting costs by reducing everybody did that so a couple of things so st of all just to step back for answer this question directly which i suppose were said and picking up which i did was point that may be fine but in implementing that you don't think it's fine but even if you thought that was fine you can are critical st 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 in this is the real point in wal that's the basis of the th circuit's decisions in newton nations and beano right there these kinds of issues have been addressed by the courts and it's good precisely to the contrary to the government in fact it's business firings in the that they think walsh helps them rather than hurts th from congress's perspective is it's a deal great congress gives a huge chunk of money to the states and in return the states have to cover certain populations and and provide certain floor benefits now there's a lot of flexibility but congress gives the floor it's not up to the states to say well we'd like to cover some things and not other we'd like to cover some people and not that kind of all a carte approach to medicaid is not the deal that congress has provided i will also say that targeting this particular population the a c s population i think should give the court some pause remember this is a population that the government is currently providing ninety three percent of the money to this population were to take it off the health problems still remain and the costs still remain and yet ninety three percent of the funds to pay for that has disappeared and so i think there's a real skepticism that one might have and of course here the skepticism is very clear there's a reason now is sure to be a 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 requirements and indeed mr i was pretty candid about that today what the government thinks it's doing is exactly what the government purported to do did in the in the in the program that was at issue in a glial but is a one million miles from here into friendlies opinion makes that clear of course the purpose of c was not to burnish 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 just aro trying to blur snap snap and tanach and a f d c on the one hand and medicaid on the other when judge friendly said was not only is the purpose difference but from the very beginning from the one thousand nine hundred and thirty s there were training programs that were similar to the things that the government was doing in that in the late in the sixty's there was a work incentive program that had been put into the f t c and he looked at the legit legislative history and saw the same thing to me is i'm just really said these things are all in the act of the purpose of the act  congress is an act of statutes to do it is precisely the opposite here it seems to me that the the analogy to a while is the problem not the solution what about the one provision that mr klein mentioned which does authorize states to exactly which is something about the consistency between tampa and snap and that that one of the courses that the state can have is if it's if it's cutting people for failure to work those programs you can also cut them right there to ninety six thirteen yes you are so that's that is the only provision that they say what that is is a provision that says if you support for the notion that it's not inconsistent with the medicaid program to new proposed a work of one man or to have or to terminate coverage for failure to comply with the work requirements so why not me of purposes of medicaid it's the classic elephants and mouse holes kind of problem where it was passed as part of a package where congress knew expressly how to put it in the language about making financial independence work requirements part of the act in congress did that in one way or the other that done and which leads me to a related question which is what's your position on the level of governance to the secretary and i so i think that is so i guess i would say this year or so i don't think it's fair to read that provision which is a you know as i say it's a it's a minor administrative provision that was put in at the same time congress refused more broadly to change the purposes to change the purposes and have anything so we actually are dubious that overall the imposition of work requirements is something that will receive chevron deference regardless of what you know whether this deference would extend to what the purposes of the act are we think is a closer question i think i guess we come out  basically where judge posner 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 in that it would but even if ever applied it would violate children at step one or the court it's the answer this is a it is a critical part of the problem and judge posner recognized recognizes in direct response to those question that i agree you don't have to do we do think that promoting financial independence is not a go act and with respect to health improving health and cutting costs i think just did was we had it right which is to say that if your method and this is related to judge at this point if your method for doing so is by cutting coverage not by adding to coverage big absolutely right and i should promise all of my answers and getting questions i want to answer them directly but i if i could put in an implied an implied preview to a prologue to every answer i say you don't need to reach that because coverage of coverage is the focus of the act and as judge posner of said the government never wrestled with coverage at all and with the exception of this blackmail theory if you would if i could add that is a standing objection that the government says look it promotes all this healthy behavior but what's critical to us is for you want to eat eat which says none of this can affect your eligibility for benefits or the level of benefits you receive and so it's precisely that i think reinforces our point that sure health might be a part in some circumstances but the chalk congress specified a means as well as an end and just as judge posner said you know that's what that's what was going on with with interested in for in cover version coverage and to say i want to improve health at the expense of coverage is or you know it independent of coverage is really not one of the purposes of the act at all and ar experiment in any sort of way shape or form you know this is now effectively it's available nationwide there are i think ten states that have gotten approvals and another seven waiting in the wings you know there isn't th kind of rigor that you would expect particular you know the court understands this but you know we're talking about real people losing real coverage with real health problems and those are in the record and and i think are obvious to all and the  idea that this is an experiment without the kind of you know rigor at the front end that one would expect is a concern but we have not encounter in your honor knows in our brief that we have not independently identified we like to just start with judge edwards question about where in the records the secretary pleaded the upside the potential to increase coverage against the risk of coverage loss so for example on the kentucky administrative record this is the decision document at six thousand seven hundred and thirty one the secretary recognized that if you create an effective incentive to take these actions states may attach penalties for failure to take the measures and this may mean beneficiaries who fail to comply will do is medicaid coverage at least temporarily however the incentives included in the demonstration are not designed to encourage this result 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 including both employee health and independence of the beneficiaries to comply and the commonwealth's enhanced ability to stretch its medicaid resources and maintain the fiscal sustainability of the program and the evaluation like you want to know like how does the secretary make that judgment and why isn't quantitative it 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 x expected to succeed so this is because this is a demonstration 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 speculative to which we be saying we're speculative we haven't done it yet so i just want to make sure it like that the suggestion that the agency did not way is inaccurate so so as i was score or numbers of people call hard time three where you're going to say wait a minute this is just beyond what we expected and we can't have people not cover for this you know because it's want to provide coverage to eligible people because if they don't you know think what happens they just end up in the emergency room it's not it's much better for these people to have health insurance whether it be from medicaid or through the exchanges or employer and these are states that have chosen to expand and are you know come january st they're going to have to pay twenty percent of the claims cost and are trying to just figure out what ways can we do it better more economical that are more sound and you know that's what boils down to is one thousand one hundred and fifteen dollars gives the secretary broad authority when in his judgment a demonstration will promote the purposes of the statute and the congress