Kentucky Not Giving Up on Medicaid Work Requirements After Judge’s Ruling

The conservative movement to toughen up Medicaid health coverage requirements for low-income Americans suffered a setback Friday when a federal judge blocked a Kentucky proposal that would have required many of the state’s applicants to be employed or seeking employment in order to receive coverage.

The Kentucky work requirement championed by Republican Gov. Matt Bevin was set to take effect Sunday as part of the state’s proposed Kentucky HEALTH program. It would have required “able-bodied” Medicaid recipients to log a certain number of “community engagement” hours per week, meaning working, undergoing work training or doing volunteer work. The program also would have charged recipients premiums, eliminated full dental care coverage, some vision services, and free over-the-counter medications.

In his ruling, Washington, D.C.-based U.S. District Judge James Boasberg said the Kentucky plan didn’t seem designed primarily to “help the state furnish medical assistance to its citizens, a central objective of Medicaid,” and for that reason, he found the Trump administration’s approval of the plan “arbitrary and capricious.”

Boasberg, an Obama appointee, said the Trump administration’s Department of Health and Human Services offered no evidence of having considered the law’s impact on coverage in Kentucky and so sent it back to the federal department for further review.

The Kentucky plan was targeted in a lawsuit brought by the National Health Law Program, Kentucky Equal Justice Center, and the Southern Poverty Law Center, who represented 16 Kentuckians in the class action lawsuit Stewart v. Azar.

“The purpose of the Medicaid Act is to furnish medical assistance, and this approval could not stand because it was doing just the opposite—restricting coverage,” Jane Perkins, National Health Law Program legal director, said in a statement. “We all want stable and well-paying jobs, but taking away health coverage if a person fails to meet the requirement is not consistent with Medicaid’s purpose–which the Medicaid Act says is to furnish medical assistance. There are better–and legal–ways to help people find work—job training, child care, affordable transportation, and a decent minimum wage.”

Kentucky expanded its Medicaid program through the Affordable Care Act under then-Gov. Steve Beshear, a Democrat. In Kentucky, nearly 500,000 people gained health coverage under the expansion. Many conservative states resisted the expansion or have sought to alter Medicaid eligibility requirements.

Gov. Bevin, like many conservatives, sees the Medicaid program as part of big government machinery that contributes to escalating public spending on health care and other entitlement programs—spending that seems especially unnecessary where healthy adults are concerned.

The Trump administration’s Department of Health and Human Services took a similar view in January and made Kentucky HEALTH the first work-requirement Medicaid plan approved in the country. The department has also approved similar proposals put forward by Arkansas, Indiana and New Hampshire. Arizona, Kansas, Maine, Mississippi, Ohio, Utah and Wisconsin have submitted similar proposals to the department that have yet to be approved.

Centers for Medicare and Medicaid Services Administrator Seema Verma said in a statement that she was disappointed by the ruling.

“States are the laboratories of democracy and numerous administrations have looked to them to develop and test reforms that have advanced the objectives of the Medicaid program. The Trump Administration is no different,” she said, adding that the Centers will “continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program…”

Critics of work-requirements point to recent University of Michigan research that suggests most people covered by Medicaid are either working, unable to work or are students or retirees. They also argue that the requirements don’t take into account the nature of low-income work today, including its shifting contract and seasonal characteristics. The Kaiser Family Foundation also published data that showed most Medicaid beneficiaries would lose their coverage under work requirements not because they’re not working but because they would fail to properly submit the required paperwork.

The Bevin administration on Friday said it hoped to avoid an impasse by working fast on the Kentucky plan with the federal offices overseeing Medicaid coverage proposals.

"While we disagree with the court’s ruling... we look forward to working with [the Centers for Medicare and Medicaid Services] to quickly resolve the single issue raised by the court so that we can move forward with Kentucky HEALTH," Adam Meier, secretary of Kentucky’s Cabinet for Health and Family Services, said in a statement.

Indeed, Bevin turned up the pressure on the case long before Friday’s ruling was announced. Soon after Kentucky HEALTH drew the Stewart lawsuit, the governor issued an executive order saying he would end the federal Medicaid expansion program in the state if any part of the work requirement was invalidated by a court and all judicial appeals had been exhausted.

Many analysts expect Kentucky and the Trump administration to appeal Boasberg’s decision.