Six days after inviting states to submit Section 1115 Medicaid work demonstrations and five days after approving Kentucky’s proposal last January, the Centers for Medicare and Medicaid Services (CMS) notified Indian tribal leaders that federal civil rights laws that bar discrimination based on race or national origin prevented the agency from exempting the American Indian and Alaska Native population from work requirements. Four months later, CMS Administrator Seema Verma signaled a partial reversal, suggesting that states could exempt the Indian population at their option: “We believe we can give states flexibility and discretion to implement the community engagement requirements with respect to local tribal members.”
It’s clear that the potential consequences of CMS’s failure to recognize the unique constraints on Section 1115 demonstration powers posed by federal laws safeguarding Indians’ health are significant. In 2014, more than 28 percent of the American Indian and Alaska Native population — nearly twice the national average — lived in poverty. Nearly a quarter of working-age Indians say they are in fair to poor health, compared with 15 percent of other working-age adults. A key reason for Indians’ high poverty rate is that many live in remote areas with high unemployment rates. And many have nontraditional, subsistence jobs that do not generate the documentation needed to fulfill work requirements. According to Indian law experts, having to document their work to fulfill requirements would mean many Indians would not apply for Medicaid.
But what lies behind this question of whether Indians can or must be exempted from Medicaid work requirements?
The Special Status of American Indians
The U.S. Constitution bars discrimination based on race or national origin; federal laws implementing this bedrock principle prohibit not only intentional discrimination but also policies and practices under state-administered programs such as Medicaid that have a discriminatory impact on a racially identifiable subgroup. The federal government cannot permit any state to proceed with a Medicaid demonstration that has a racially discriminatory effect, and Medicaid work demonstrations could carry such implications.
Indians are a specific racial subgroup. Therefore, it would seem axiomatic that the federal government could not approve any state Medicaid demonstration that exempted Indians any more than it could countenance one that exempted whites.
But where American Indians are concerned, other, bedrock legal considerations come into play. Under law, Indian tribes enjoy a special relationship with the federal government that arises from the Constitution; this relationship is embedded in treaties and laws dating back to the nation’s founding. This relationship is grounded in what is known as the U.S. government’s “trust responsibility” toward Indians, one that the Supreme Court has recognized as political in nature, meaning, in this context, an agreement between sovereign governments. Under this relationship, the federal government can confer special benefits on Indian tribes and tribal members in accordance with treaties or laws, and in doing so, the courts will consider these benefits to be granted on the basis of governing consensus rather than one that favors a particular racially identifiable group. This special status recognition is conferred in respect for Indian nations and recognition of what Indians have lost.
Central Role of Health Care in Federal/Indian Relations
Since the 19th century, health care has been a central feature of treaties and laws between the federal government and Indians. Chief among them is the 1976 Indian Health Care Improvement Act, which strengthened health care under the Indian Health Service (IHS) and created the Urban Indian Health Program, Indian health professions scholarship programs, and others. To ensure a stable funding base for the IHS, Congress in 1976 amended Medicaid to ensure that IHS clinics and hospitals are paid for the cost of care they furnish. Under these amendments, the federal government assumes 100 percent of these costs.
Thus, Medicaid is a central part of the federal government’s Indian health policy. Medicaid payments represent 13 percent of total IHS program operations. One of four working-age American Indian and Alaska Natives and 50 percent of such children rely on Medicaid.
States Must Act in Accordance with Federal Commitments
Because state Medicaid programs must operate in accordance with federal laws, as of January 2018, four states proposing Medicaid work requirements — Arizona, Arkansas, Indiana, and Utah — had sought to exempt Indians or deem them in compliance when enrolled in tribal employment programs. It was these requests that prompted the Trump administration’s January 17 notification. Apparently four months later, CMS partially relented, given Administrator Verma’s suggestion that states that sought to exempt Indians from work requirements could negotiate to do so.
But choosing whether to honor federal commitments to Indian health is not a state option. To be sure, states have broad discretion over many elements of their Medicaid programs. But Medicaid’s special treatment of IHS funding has long been understood as a critical element of the federal government’s treaty obligation to provide health care for Indians and therefore one that lies outside Medicaid’s state discretion norms. The Medicaid provisions relevant to the IHS are the means by which the U.S. transfers nearly one of every eight dollars available to support health care for the American Indian and Alaska Native population, through a system of hospitals and clinics especially critical to the poorest and most remote groups. The federal government can no more permit states to design experiments that defeat this treaty-driven funding arrangement than it could cease paying the IHS directly.
Stakes for Indians and the IHS Are High
Should a Medicaid work requirement result in a mass loss of eligibility among American Indians, it would likely have spillover effects on the Indian Health Service, which relies to a great extent on Medicaid revenue. The potential injury that could come from Medicaid work requirements cannot be measured only in terms of the numbers likely to lose coverage: what is also at stake is viability of the health care system on which a large part of the American Indian and Native Alaskan population depends.