Judge plans to rule by July 1 on Kentucky’s Medicaid overhaul

WASHINGTON—A federal judge says he hopes to rule by July 1 on whether Kentucky can carry out its controversial overhaul of the state’s Medicaid program that would require some recipients to find jobs, volunteer or lose their benefits.

Lawyers for 16 Kentucky Medicaid beneficiaries who are suing the federal government for approving Gov. Matt Bevin’s plan, known as Kentucky HEALTH, took their case Friday to U.S. District Court Judge James E. Boasberg.

They maintained the Kentucky plan, which is scheduled to go into effect July 1, would impose “onerous” work and record-keeping requirements and would end up limiting access to health insurance, the prime objective of Medicaid.

“The obvious intent is to undermine Medicaid,” said Ian Gershengorn, an attorney for the National Health Law Program, which argued the case for the plaintiffs.

The case has national implications. Kentucky was the first of four states to win federal approval to impose a work requirement for Medicaid enrollees and seven other states, including Kansas and Mississippi, have asked to impose work restrictions.

Government lawyers argued that states would be more likely to embrace Medicaid expansion if they could impose similar restrictions.

States have been struggling with the cost of expanding Medicaid to cover a larger adult population and an adverse ruling “could put all these expansion programs on the chopping block,” warned Deputy Assistant Attorney General Ethan Davis. “It could affect states that are just now looking at Medicaid expansion.”

Davis argued that HHS has the discretion to make the call, but Boasberg asked whether HHS could determine that there would be no coverage for blind people.

“You can always think of extreme hypotheticals,” Davis replied.

Gershengorn said that Medicaid, unlike some other forms of public assistance, is not a job-training program and the Trump administration lacks the authority to turn it into one.

“That kind of transformation is for Congress and lawmakers,” he said.

Gershengorn noted that during the program’s 50-year history, other states had asked for similar provisions and not been granted permission.

“The purpose of the act is provide care and coverage,” he said as Boasberg asked whether the Health and Human Services Secretary has the authority to grant waivers to the states.

Boasberg asked whether the federal government could issue waivers to keep the program running “if a state was going bankrupt.”

Gershengorn said waivers are only supposed to be allowed for pilot projects or experiments.

Critics of the state initiative argue that its part of a conservative effort to put curbs on Medicaid, which was part of President Lyndon Johnson’s anti-poverty Great Society in the 1960s.

The state of Kentucky has estimated that about 95,000 people could lose coverage over five years as part of the changes which include monthly premiums and call for 20 hours a week of mandatory “community engagement” for able-bodied adults. By expanding Medicaid to include such adults with no children, the state’s Medicaid rolls grew by more than 400,000 people.

The judge pressed Davis on how requiring “community engagement” helps with medical care, adding that promoting health and medical assistance “are two different things.”

Davis said the program includes a boost for addiction treatment and noted that a “variety of studies” have shown a relationship between health and community involvement.

“The idea is Kentucky HEALTH will result in people graduating Medicaid into commercial insurance” plans, Davis said. “The goal here is not to have benefits cut.”

Bevin has said he’ll take away Medicaid expansion coverage if his plan is struck down. Matthew Kuhn, his deputy general counsel, told Boasberg the program was a 16-month effort to make sure that Medicaid remains “viable” in a state with pressing health concerns and persistent poverty.

When Bevin applied to the federal government in 2016 for permission to change the state’s Medicaid program, he said he could shave $2.2 billion off the expected $37.2 billion cost over the next five years, according to the state’s waiver application.

Following Medicaid expansion, nearly one in three Kentuckians was covered by the program, something Bevin said was not sustainable. More recently, however, Bevin has told reporters that he doesn’t know “nor do I really care” what the cost savings would be under Kentucky HEALTH. The more important goal is helping dependent people to become healthy and productive, he said.

But Kuhn said it would help the state avoid spending “money that the Commonwealth does not have.”

“This is the only way we could afford to have expanded Medicaid,” Kuhn said, even as Boasberg asked whether the federal government does not pick up a greater share of the cost for Medicaid expansion, which extended health coverage to about 400,000 people with incomes just above the poverty line.