Kentucky’s Governor Wants to Gut Medicaid Benefits—One Way or Another

GOP Gov. Matt Bevin has threatened to undo Medicaid expansion in Kentucky if courts rule against his administration's changes to Medicaid, as approved by Trump's HHS.

[Photo: Matt Bevin speaks with President Donald Trump]
In response to the lawsuit filed against the proposed changes to Medicaid, Bevin issued an executive order threatening to end the state’s Medicaid expansion should the court rule against any of the state’s proposed Medicaid overhauls. Mark Wilson/Getty Images

A federal judge on Friday blocked Kentucky Republicans’ proposed changes to the state’s Medicaid plan just days before the new restrictions were set to take effect, ruling the Trump administration acted arbitrarily and capriciously in allowing Kentucky to impose requirements that certain beneficiaries work or lose their benefits.

The judge’s ruling could be the first step in Gov. Matt Bevin (R) attempting to end Medicaid expansion in Kentucky if he doesn’t get his way on Medicaid work requirements. That would make more than 400,000 Kentuckians ineligible for Medicaid benefits.

In response to the lawsuit filed against the proposed changes to Medicaid, Bevin issued an executive order threatening to end the state’s Medicaid expansion should the court rule against any of the state’s proposed Medicaid overhauls. The order instructs the secretary of the Cabinet for Health and Family Services and the Medicaid commissioner to “take necessary steps to terminate Kentucky’s Medicaid expansion” if any part of his administration’s proposed changes are struck in court. Bevin’s order calls for the expansion to start being dismantled “no later than six months” after all appeals are exhausted.

The Bevin administration on Sunday announced it’s ending dental and vision benefits for Medicaid expansion beneficiaries immediately.

U.S. District Judge James Boasberg ruled the Department of Health and Human Services (HHS) never adequately considered whether the work requirements and other restrictions pushed my Bevin and Republican lawmakers would violate the program’s purpose of providing medical assistance to vulnerable people.  

“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,” Boasberg wrote. “This signal omission renders his determination arbitrary and capricious.”

Kentucky legislators and the state’s then-Democratic governor expanded the state’s Medicaid program shortly after the Affordable Care Act (ACA), or Obamacare, was enacted. According to court documents, by April 2016 more than 428,000 new residents had enrolled in the program. 

Then President Trump took office. 

In March 2017, Seema Verma, administrator for the Centers for Medicare & Medicaid Services, the agency within HHS that oversees Medicaid, along with then-Secretary of HHS Tom Price, issued official guidance to every U.S. governor, declaring her belief that the ACA’s Medicaid expansion “was a clear departure from the core, historical mission of the program.” The letter encouraged states to apply for “waivers” of some of the program’s coverage requirements—especially for the expansion group—promising to “fast-track” approval of such petitions. 

Kentucky was among the first states to do so, filing a request for waiver in August 2016, which was approved in January 2018.

Kentucky’s waiver plan called “Kentucky HEALTH,” requires “able-bodied” Medicaid recipients to pay premiums and have a certain number of “community engagement” hours per week, which includes work, volunteering, or training or risk losing their benefits.

Kentucky’s waiver approved by the Trump administration would allow the state to deny coverage to any “able-bodied” adult who cannot prove they are working, volunteering, or in school for at least 20 hours per week. The plan would have charged premiums to low-income Medicaid recipients, and eliminated full coverage of dental care, vision services, and over-the-counter medications for many adults. 

The GOP-backed waiver would have implemented a six-month lockout period for people who failed to re-enroll in the Medicaid program in time or report a change in income.

Attorneys representing fifteen Kentucky residents, each of whom is enrolled in the state’s Medicaid program, sued to block the changes, arguing that it would result in a substantial reduction of benefits. They argue that the Trump administration’s approval of the Kentucky waiver violates the HHS secretary’s authority because the waiver provisions are not consistent with the objective of the Medicaid statute, which is to furnish health coverage.

The state’s estimates predicted that the work requirements and other restrictions would cut almost 100,000 people from Medicaid program.

On Friday, Judge Boasberg agreed. 

“At bottom, the record shows that 95,000 people would lose Medicaid coverage, and yet the Secretary paid no attention to that deprivation,” Boasberg wrote. “Nor did he address how Kentucky HEALTH would otherwise help ‘furnish … medical assistance,’” as the Medicaid statute required. 

“In other words, he glossed over ‘the impact of the state’s project’ on the individuals whom Medicaid ‘was enacted to protect.’”

“We are very pleased that Judge Boasberg’s ruling recognizes that Kentucky’s Medicaid waiver would not have furthered the purpose of Medicaid, which is to provide medical care to those who cannot afford it,” said Anne Marie Regan, senior attorney for the Kentucky Equal Justice Center, one of three legal nonprofits representing the plaintiffs  “Instead, the waiver would have reduced medical services, set up bureaucratic barriers to care and resulted in nearly 100,000 Kentuckians losing Medicaid. We need to refocus on continuing to improve overall health, as Kentucky has been able to do since expanding Medicaid.”

Kentucky’s Medicaid work requirements were set to start taking effect July 1, but Friday’s ruling halts their implementation for now and sends the waiver request for review back to HHS.

Verma in a statement called the decision “disappointing.” “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,” Verma said.

“We are conferring with the Department of Justice to chart a path forward. In the meantime, we will continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program by improving health outcomes for thousands of low-income Americans.”

Kentucky was among the first states to have its proposed Medicaid changes approved by the Trump administration. Three other states, Indiana, Arkansas, and New Hampshire, have had their proposed work requirements approved. Arkansas began implementing its requirements in June.

Seven other states, Arizona, Kansas, Maine, Mississippi, Ohio, Utah, and Wisconsin are waiting on the Trump administration to approve their plans for making Medicaid less generous by imposing work requirements.