Medicaid expansion is a straightforward deal: If states want the generous federal matching money, they have to cover all eligible individuals. Barriers to coverage like those in Gov. Matt Bevin’s Kentucky HEALTH — which are thinly disguised attempts to return to the pre-Affordable Care Act days of sorting deserving from undeserving poor — don’t pass legal muster.
That was made clear on June 29, when U.S. District Court Judge James Boasberg held that the Department for Health and Human Services (the federal agency that administers the Medicare and Medicaid programs) lacked the authority to approve Kentucky’s request for a Section 1115 “demonstration waiver” to dramatically alter Kentucky’s Medicaid program.
In essence, Boasberg held that HHS failed to consider the impact of the probable loss of coverage for at least 95,000 Kentuckians under the waiver. Federal Medicaid law clearly obliges states to ensure that medical coverage is provided to all eligible individuals, and waiver proposals must be consistent with this objective. To approve Kentucky HEALTH, HHS must decide whether a waiver can eliminate coverage for tens of thousands of Kentuckians and still further the objective of Medicaid. That won’t be easy for Kentucky to demonstrate or HHS to approve.
The Bevin administration has justified Kentucky HEALTH as a means of “preserving” Medicaid for people in the so-called “traditional” Medicaid program, meaning those eligible before the Affordable Care Act expanded coverage. But Judge Boasberg rejected this theory, explaining that whatever “the ‘traditional’ purpose of Medicaid ... the ACA ‘transformed’ Medicaid ‘into a program designed to meet the health care needs of the entire nonelderly population with income below 133 percent of the federal poverty level.’”
What happens next?
In January, Bevin ordered his administration to end the Medicaid expansion if courts invalidated any part of the waiver, which would end coverage for as many as 500,000 Kentuckians and inflict predictable economic harm on Medicaid providers, particularly rural hospitals.
Already, on July 1, the Kentucky Cabinet for Health and Family Services announced immediate elimination of dental and vision benefits for 460,000 Medicaid enrollees, falsely claiming that the court’s decision required the cuts.
Although CHFS Secretary Adam Meier says the Bevin administration will “work” with HHS to “quickly resolve” the “narrow” issue identified by the court, the thorny legal questions make a quick resolution unlikely. First, HHS will have difficulty finding consistency with the core Medicaid objective of providing medical coverage as long as Kentucky HEALTH is projected to cut nearly 100,000 Kentuckians from Medicaid.
Moreover, it is questionable whether HHS will prioritize approval of Kentucky HEALTH, if doing so risks creating negative legal precedent for other states’ waiver applications, some of which present less complicated legal issues than Kentucky’s proposal.
But, Seema Verma, the current head of the Centers for Medicare and Medicaid Services created Kentucky’s waiver design when she was a private consultant, and Kentucky HEALTH has become a model for other states, so this waiver may remain a high HHS priority notwithstanding the difficult legal issues.
Of course, Kentucky doesn’t need this waiver at all. Studies over the last seven years have consistently shown Medicaid expansion is affordable and provides billions in economic benefits to both public and private sectors in states that expand. Importantly, the data show that expansion is beginning to deliver real improvements in beneficiaries’ health, including by increasing access to substance use treatment and preventive services. And neighboring states like Indiana and Ohio have shown that financing expansion is readily achievable when elected officials are motivated.
Under Kentucky law, the governor has considerable authority over Medicaid. The prior governor expanded Medicaid, and Bevin has repeatedly promised to end the expansion unless this waiver is approved.
Now that decision point has arrived. For the 500,000 Kentuckians whose coverage is in jeopardy, the many thousands more who would be impacted by the waiver, and all who care about the health of the commonwealth, now is the time to demand stability in this vital health insurance program.
Emily Whelan Parento was executive director of the Office of Health Policy for Kentucky from 2013-2015. Nicole Huberfeld is professor of health law, ethics and human rights at Boston University School of Public Health and professor at the School of Law.