Politics & Government

Federal judge strikes down Kentucky's Medicaid work rules

Ronnie Stewart, standing outside his Lexington apartment in February, is the lead plaintiff in a federal lawsuit to block Gov. Matt Bevin’s changes to the Medicaid program.
Ronnie Stewart, standing outside his Lexington apartment in February, is the lead plaintiff in a federal lawsuit to block Gov. Matt Bevin’s changes to the Medicaid program. cbertram@herald-leader.com

A federal judge in Washington D.C. struck down Kentucky's plan to require some Medicaid recipients to work or volunteer in order to continue receiving benefits.

The Friday ruling blocks Gov. Matt Bevin's administration from implementing an overhaul of the health insurance program for the poor and disabled, which was scheduled to start Sunday in one Northern Kentucky county and extend to most of the state by the end of the year.

Sixteen Kentucky Medicaid recipients sued the federal government in January to block Bevin's planned changes to the state's Medicaid program. The plaintiffs claim that Bevin's plan — known as Kentucky HEALTH — should not have been approved; they say it violates the 1965 law establishing Medicaid because it will reduce poor people's access to health care..

Simultaneously, to uphold Kentucky HEALTH, Bevin is suing those same 16 Medicaid recipients in Frankfort before U.S. District Judge Gregory VanTatenhove.

The Frankfort lawsuit is about a month behind its Washington counterpart, setting up the possibility that a judge in one federal circuit could strike down Bevin's Medicaid changes while a judge in another could say that he had every right to make them.

Bevin has said that if he loses in court and cannot prevail on appeal, he will end expanded Medicaid in Kentucky, which has extended health coverage to about 400,000 people with incomes just above the poverty line.

"Kentucky HEALTH was developed in Kentucky for Kentuckians, and its validity ought to be decided in Kentucky," Bevin's attorney, Stephen Pitt, wrote in a May court filing before VanTatenhove. "This matter should be decided quickly so that the commonwealth can move forward with Kentucky HEALTH or withdraw from expanded Medicaid."

Bevin had no immediate comment on Friday's ruling, but Health and Family Services Secretary Adam Meier said in a statement that the ruling invalidates Kentucky HEALTH "on a very narrow basis."

"While we disagree with the court's ruling, which delays implementation of Kentucky HEALTH, we look forward to working with CMS (Centers for Medicare and Medicaid Services) to quickly resolve the single issue raised by the court."

He warned that "without prompt implementation of Kentucky HEALTH, we will have no choice but to make significant benefit reductions."

In his 60-page ruling, U.S. District Judge James Boasberg said the plaintiffs in the suit "fear that Kentucky HEALTH will relegate them to second-class status within Medicaid, putting them and others 'in danger of losing' their health insurance altogether."

In their lawsuit, the plaintiffs challenged the secretary of the Department of Health and Human Services' approval of Kentucky HEALTH.

"Although the Secretary is afforded significant deference in his approval of pilot projects like Kentucky's, his discretion does not insulate him entirely from judicial review," the judge wrote. "Such review reveals that the Secretary never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid. This signal omission renders his determination arbitrary and capricious."

The judge's ruling vacated the federal government's approval of Kentucky's plan and sent it back to the Department of Health and Human Services for further review.

"Reason has prevailed once again against Gov. Bevin and the Republican majority's attack on everyday Kentuckians," said Kentucky Democratic Party Chairman Ben Self. "Bevin's work requirements for Medicaid recipients was not only immoral but goes against who our leaders should stand up for and who we are as Kentuckians."

The Republican Party of Kentucky, meanwhile, warned that Kentucky can't afford the "politically motivated promises" Democrats previously made, referring to former Gov. Steve Beshear's decision to expand Medicaid under the federal Affordable Care Act.

"Republicans are working to find a way to deliver on as many of those promises as possible but the money simply isn't there to sustain the status quo," said Tres Watson, communications director for the Republican Party of Kentucky.

While much of the controversy over Kentucky HEALTH has focused on Bevin’s 80-hour-a-month "community engagement" requirement, which could be satisfied by work, school or volunteering, the Washington-based suit also called attention to other new hurdles that Medicaid recipients will have to jump in order to keep their coverage.

Those hurdles include monthly premiums, initially from $1 to $15, although they eventually top out at $37.50; monthly check-ins to report employment and income status; annual re-enrollments; and ongoing verification of extra tasks people must complete if they want to win back the vision and dental coverage they previously had as part of their basic coverage.

Missing a payment or notification could trigger a six-month lockout on basic health coverage. Missing the enrollment window could mean waiting nine more months for the next opportunity.

The Bevin administration estimates 95,000 people will lose their coverage over the next five years out of the more than 400,000 Kentuckians just above the poverty line who are currently enrolled in expanded Medicaid under the Affordable Care Act.

“Members may have health coverage temporarily suspended for not meeting the community engagement and employment initiative requirements, failing to pay required monthly premiums or failing to report a change in circumstances,” the Bevin administration told the U.S. Centers for Medicare and Medicaid Services last year in its waiver application.

State health advocate Sheila Schuster said the waiver would hamper efforts to help Kentuckians with substance use disorders. "The many barriers and requirements made it more unlikely that people with addictions would seek much needed treatment," she said.

Terry Brooks, head of Kentucky Youth Advocates, said in a statement that the ruling "inevitably means further court wrangling and continued uncertainty for Kentucky's families."

"Health coverage is so vital, and it's tough on families who are left with more questions than answers as the case moves to the next court setting," he said.

Health policy experts say Kentuckians are likely to fall off the Medicaid rolls because of the paperwork obstacle course. Someone juggling a low-wage job, children and the usual turmoil associated with poverty is unlikely to have time for regular check-ins with Medicaid officials, even assuming they have reliable internet access or transportation to a state office building in their community, the experts say.

“When you’re considering assistance programs, the research shows that each time you require a point of contact between the state and the enrollee — each time you require an active choice — you lose people,” Laura Dague, an economist who studies changes in Medicaid policy at Texas A&M University, told the Herald-Leader in February.

On Friday, Gov. Matt Bevin strongly defended a change to the state’s Medicaid program that will require many recipients to work.

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