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Oregon on Thursday led a last-ditch effort to block federal Medicaid work requirements that are set to go into effect next year, arguing in a new lawsuit that the major rule change would violate states’ rights.
Under HR1, aka the One Big Beautiful Bill Act, many beneficiaries of state Medicaid plans—Oregon Health Plan is the local branding—will soon have to start proving they are working or volunteering in order to receive the health benefit.
The law’s Republican backers made the changes in large part as a way to offset major tax cuts—the budgeting assumption being that the federal government will save money when millions of people lose their Medicaid benefits, either because they aren’t working or fail to prove they are to their state’s bureaucracy.
Officials estimate roughly 600,000 Oregonians will be subject to the new rules, and upwards of 200,000 could lose Oregon Health Plan access in the coming years if the requirements go into effect.
Still, with billions in federal funding in the balance, Oregon and other states have been revving up the administrative infrastructure to comply with the program.
Meanwhile, Oregon Attorney General Dan Rayfield has been among those seeking to block the rules instead.
The latest suit, which his office filed Thursday alongside several other states in federal court in Eugene, argues that HR1 infringes on states’ sovereign rights.
The argument goes as follows: Dating to 1965, Medicaid is a longstanding deal between the feds and the states “to deliver healthcare to the neediest among us.”
The program has been by no means static, and coverage has expanded over time. The Affordable Care Act, for example, allowed states to dramatically broaden eligibility—which resulted in hundreds of thousands of additional Oregon Health Plan beneficiaries.
Still, while notable, the plaintiff states argue, the changes “did not fundamentally alter the program’s original objective of providing access to healthcare based on need.”
HR1, the states argue, does something different. The federal government may well have been within its rights to repeal the ACA’s Medicaid expansion. Instead, the lawsuit argues, Congress and the Trump administration imposed a novel eligibility system that imposes a work requirement on expansion enrollees—fundamentally transforming a program established to provide medical assistance into a vehicle to encourage work.
In short, the plaintiffs argue, HR1’s work requirements alter the Medicaid program not in degree but in kind. Yet with major federal funding and the health benefits of hundreds of thousands of Oregon in the balance, the state has no choice but to implement the new rules.
That this is a legal problem is a subtle case to make. As the suit acknowledges, it is in fact extremely common for the federal government to attach strings to its funds.
But this power, the plaintiffs argue, is not absolute. They cite a major 2012 U.S. Supreme Court case regarding the ACA. One of the court’s findings was that Congress could not compel states to expand their Medicaid population by threatening to withhold all Medicaid funds. The court said the dynamic was akin to the feds placing a “gun to the head” of states. The pressure crosses the legal line, the court found, when it “leaves the States with no real option but to acquiesce.”
This, Oregon and its fellow plaintiffs argue, is the situation in which they now find themselves, and the court’s rationale, “if taken seriously, demands the same result here.”
Whether this federalist argument will persuade a federal judge to intervene to block the work requirements remains to be seen.
The White House referred comment to the Department of Health and Human Services, a defendant in the suit. The agency did not respond to a request for comment.
