Seema Verma, the administrator for the Centers for Medicare and Medicaid Services, argued the requirement rule helps lift people out of poverty by getting them into employer-provided insurance.
Asa Hutchinson's office didn't immediately return a request for comment.
The U.S. Court of Appeals for the District of Columbia today affirmed a lower court ruling that struck down Arkansas's controversial Medicaid work requirement. They would have to record the activities.
Medicaid health care coverage was originally provided to the elderly, needy families with children and the disabled, including the blind.
Kentucky, under a new, Democratic governor, dropped its work requirement on December 16 and asked the court to dismiss its appeal without affecting any others. But in 2010, Congress expanded the program to low-income adults that didn't fit the previous categories. Opponents disagree, saying it ignores real-world circumstances faced by Medicaid recipients. Almost 20 states are in various stages of trying to implement work requirements.
Kentucky estimated that 95,000 adults would lose coverage under the new rules. More than 10 million people have gained coverage as a result.
The federal appeals court reasoned Congress did not amend Medicaid to require proof of work while considering two other welfare programs that did mandate the work standards.
"Regardless of your impressions of the Medicaid Act, the broad waiver authority that was granted to the secretary gives more than enough authority for this particular waiver", said Wes Butler, outside counsel for the Kentucky Hospital Association, which advocated for the state programs to be upheld.
What's next: The most likely next step is an appeal to the Supreme Court.
It isn't clear whether the justices would take the case.
Friday's ruling may serve as a warning for future approvals. It is a huge part of the health care system, and the Trump administration has been fully committed, since day one, to shrinking it. "But they probably won't".