All three judges on a panel of the U.S. Court of Appeals for the District of Columbia Circuit lobbed hard questions at a Justice Department lawyer defending the policy at a hearing. The administration is appealing after losing the first round before a lower court.
At issue is whether a program created by Congress to provide medical care to the poor can also encourage low-income people to try to move up in society and make that a condition for them to keep getting help.
"You are looking to objectives that are not in (the Medicaid) statute, and you are failing to address the critical statutory objective, which is coverage," Judge Harry T. Edwards told Justice Department lawyer Alisa Klein, representing the administration.
"Those are all laudable goals," said Judge David B. Sentelle, referring to the administration's stated intent of promoting self-sufficiency. "But the question we have here is whether (work requirements) further the objectives of the statute."
The Trump administration has allowed states to require able-bodied adults drawing Medicaid benefits to work, volunteer or study. Officials argue that work can make people healthier. Nearly 20 states are in various stages of trying to implement work requirements. The cases on appeal involve Arkansas and Kentucky, whose requirements are on hold.
Attorneys for Medicaid recipients counter that Congress intended the program to provide "medical assistance," and that the administration failed to adequately consider the harm from potential coverage losses resulting from work requirements.
In Arkansas, about 18,000 people lost benefits. However, it's not clear how many of those got coverage elsewhere. Posing a hypothetical question, Judge Cornelia Pillard wondered whether the administration thinks it has legal authority to require Medicaid beneficiaries to take other actions that may improve their health. What about a limit on TV watching?
"Could the (health) secretary do that?" asked Pillard. "The correlation with health, I'm just not understanding." Government lawyer Klein responded that while promoting health remains a goal, the work requirement rules also have other objectives that benefit the program. For example, if a Medicaid recipient gets a job with health insurance, that would free up state and federal money to cover somebody who is needier.
Medicaid is a federal-state program that covers about 70 million people, from many newborns to severely disabled people and elderly nursing home residents. Under the Affordable Care Act, states gained the option of expanding the program to many low-income adults previously ineligible. More than 10 million people have gained coverage as a result.
About 6 in 10 adults on Medicaid already work in low-wage jobs, according to the nonpartisan Kaiser Family Foundation. Most of those not working cite reasons such as poor health, caring for an elder or a child, or going to school.
President Donald Trump supports work requirements for programs across the government. Last year, he signed an executive order directing Cabinet agencies to add or strengthen work requirements for programs including subsidized housing, food stamps and cash welfare.
The court did not indicate a timetable for its decision. Edwards and Pillard were nominated to the federal bench by Democratic presidents, while Sentelle was put forward by a Republican.