Key takeaways from lawsuit against Kentucky's Medicaid work requirements

Key takeaways from lawsuit against Kentucky's Medicaid work requirements
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Attorneys for the Department of Health and Human Services (HHS), as well as Kentucky Gov. Matt Bevin (R), began their legal fight Friday against a group of activists from the state who are suing the Trump administration over the approval of Kentucky’s Medicaid waiver.

Bevin has repeatedly said the state’s Medicaid expansion under ObamaCare is not fiscally sustainable, and that the waiver is needed to bring down the costs of covering so many new individuals. Kentucky was the first state in the country to win permission from the Trump administration to impose conservative Medicaid regulations.

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Bevin ran on a platform of ending the expansion, which was enacted by the state’s previous governor, Democrat Steve Beshear. But he backed down once elected.

The waiver, which allows the state to institute work requirements, premiums and other conservative changes to Medicaid, takes effect on July 1, only two weeks away.

The activists' lawsuit seeks to overturn the waiver entirely.

Here are the main takeaways from oral arguments:

Other states are watching closely

Kentucky was the first of four states to win approval for such a Medicaid waiver, and the case has nationwide implications. Close to a dozen other states are looking to adopt their own work requirements.

The attorneys for HHS and Kentucky argued that if the judge rules in favor of the plaintiffs, it could have a chilling effect on other states.

The defendants argue that if Kentucky’s waiver is invalidated, other conservative states will be less likely to consider expanding Medicaid coverage under ObamaCare. Virginia recently approved expansion, but as part of a compromise with state Republican lawmakers, there will likely be work requirements.

Advocates said they don’t believe HHS’s argument.

“The idea that there’s all these states waiting in the wings, who will expand if they can do this, but who won’t, it’s just not borne out by the facts,” said Eliot Fishman, senior director of health policy at Families USA. “We’re not concerned, or looking at a situation where we’re going to cross states off the list if we get a negative ruling here, it’s just not a reality.”  

The decision hinges on the purpose of Medicaid

The plaintiffs, represented by the National Health Law Program, the Kentucky Equal Justice Center and the Southern Poverty Law Center, argue the state’s waiver goes against the very purpose of Medicaid.

Kentucky’s waiver will allow the state to deny coverage to any nondisabled adult who cannot prove they are working, volunteering or in school for at least 20 hours per week.

Federal Judge James Boasberg, an Obama administration appointee, questioned the HHS attorneys whether Kentucky’s waiver, which the state estimated would cut up to 95,000 people from Medicaid, furthers the program’s goals.

Kentucky’s goals for the waiver included moving people out of poverty and into jobs. The administration’s attorneys said Kentucky’s waiver will help people “graduate” from Medicaid to other forms of coverage.

But according to Ian Gershengorn, who argued for the activists, that’s a fundamental, and unlawful, transformation of the program.

“There is no authority in the waiver to transform the nature of the program, to change it from a program designed to increase coverage and care, and turn it into one to get people off benefits and to promote [jobs]. That’s a job for Congress, that’s not a job for the administration,” Gershengorn told reporters after the hearing.

Requiring work for benefits is a GOP policy staple, but until this year, no state has ever been able to get federal approval to impose work requirements on Medicaid beneficiaries.

Gershengorn argued that Medicaid is not a welfare program, and that despite the administration’s arguments, it should not be treated like food stamp programs, which also have work requirements.

It’s not just work requirements

The work requirements get the most attention, but Kentucky’s waiver was notable for other reasons. It was the first state to charge premiums up to 4 percent of a person’s income. The current limit has been 2 percent.

Kentucky was also the first state to lock people out of coverage for up to six months for failure to timely renew their coverage or to alert the state if their income or family circumstances have changed. Beneficiaries can also be locked out if their income is at least 100 percent of the poverty level and they fail to pay premiums.

The Trump administration lawyers argued the lockouts are much more flexible than some that were approved under the Obama administration.

Judge appears dismissive of argument on standing

Boasberg appeared skeptical of the arguments used by the defendants, and his questions largely ignored them.

The lawyers for Bevin and the administration argued that the activists have no legal standing to sue.

Bevin has threatened to end Medicaid expansion if the state loses, so the lawyers argued that the plaintiffs can’t prove they will be harmed by the work requirements. Essentially, the plaintiffs will lose Medicaid coverage no matter which way the court decides.

Additionally, Kentucky’s waiver addresses dental coverage, vision coverage and substance abuse treatment. If the work requirements are invalidated and Bevin ends the state’s expansion, the state argued that coverage would also end.