Kentucky on Friday became the first state to win approval from the Trump administration to impose strict work requirements on some Medicaid beneficiaries as part of a massive overhaul of the state’s program.
The state will require able-bodied adults without dependents to do 80 hours a month of community engagement to qualify for coverage. The engagement could include work, education, community service or job training.
The state will also require people who gain coverage through the Medicaid expansion to pay monthly premiums, based on income levels.
In an approval letter, Kentucky said it expects the waiver will “strengthen beneficiary engagement in their personal health care plan and provide an incentive structure to support responsible consumer decision-making.”
Kentucky is one of ten states seeking waivers from the Centers for Medicare and Medicaid Services to require certain Medicaid beneficiaries to work in order to be eligible for the program.
According to state officials, Kentucky’s Medicaid waiver will save the state $2 billion over the course of the five-year project, and will result in 95,000 fewer people on Medicaid.
In a call with reporters, state officials estimated that currently, there are about 350,000 people across the commonwealth that will be impacted by the work requirements. About half of that number are either working or already in some sort of activity that qualifies, officials said.
In a press conference, Republican Gov. Matt Bevin said Kentuckians want the “dignity” of being able to work, and decried that “able-bodied people” are essentially getting free medical care without contributing to society.
Requiring work for benefits is a GOP policy staple, and the party points to welfare and food stamps as a model.
The state’s previous Democratic governor Steve Beshear expanded Medicaid eligibility under ObamaCare to people earning up to 138 percent of the federal poverty level. Those newly eligible beneficiaries are the biggest drivers of health spending in the state, officials said, so the work requirements are primarily aimed at them.
The approval comes just one day after the Trump administration announced new guidance intended to encourage states to apply for such waivers, something that has never before happened in the 50-year history of the Medicaid program.
Democratic groups are expected to sue over the changes, arguing that the administration does not have the power to make them without action from Congress. Approving waivers from states must be done to further the “objectives” of the Medicaid program, which Democrats argue is not accomplished by a policy that could cause people to lose insurance.
“CMS has not previously approved a community engagement requirement as a condition of eligibility," the agency's approval letter said.
"Given the potential benefits of work and community engagement, we believe that Medicaid programs should be able to support these activities and test incentives that are appropriate for this population and lead to improved health outcomes,” the agency wrote.
In the approval letter, CMS officials noted that voluntary employment programs have not been historically effective in other states. However, they said they expect Kentucky will be different because the threat of losing Medicaid coverage will be a strong incentive for people.
Kentucky’s program makes a variety of exemptions from the work requirements, including for people with disabilities, children, pregnant women and older adults — all of which aligns with the federal guidance.
The waiver also exempts "medically frail" individuals, such as people with cancer, blood clotting disorders, or alcohol or substance abuse disorders.
Bevin, a fierce opponent of ObamaCare, was elected in 2016 partly on a promise to change the state’s expansion of Medicaid that came as part of the law.
Bevin has said the program is not fiscally sustainable, but the state’s uninsured rate has fallen from about 20 percent in 2013 to less than 8 percent by 2016, among the largest coverage gains in the country.
The waiver also would impose a six-month coverage lockout if Medicaid beneficiaries get a new job or a new salary and don’t tell the state.
Policy experts and advocates say the idea that poor people are taking advantage of the Medicaid system is a false characterization of the state-federal health program for the needy.
There’s also concern that work requirements in a state like Kentucky, which has been hit hard by the opioid epidemic, might be a barrier for people seeking addiction treatment.