Federal Judge Blocks Kentucky's Medicaid Work Requirements

This story has been updated.

In a closely watched case testing an idea pushed by the Trump administration, a federal judge Friday blocked Kentucky’s Medicaid waiver, which required many beneficiaries to work, volunteer, or train for a job as a condition of coverage.

Judge James E. Boasberg of Federal District Court for the District of Columbia ruled that CMS' approval of the plan had been “arbitrary and capricious” because it had not adequately considered whether the plan would “help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

Four other states have already gotten permission to impose work requirements, and 7 more have asked for approval to do so; it is unclear how this ruling will affect the others. Boasberg is an Obama appointee.

CMS Administrator Seema Verma criticized the decision.

“Today’s decision is disappointing," she said. "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. 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.”

Advocates for the poor, however, are sure to be pleased, as they feared the waiver would create barriers to people receiving healthcare.

The lawsuit challenging the state was filed in January 2018 by the Southern Poverty Law Center (SPLC), the National Health Law Program, and the Kentucky Equal Justice Center, representing 16 Kentucky residents who filed the class-action lawsuit. The plaintiffs include a minister, a church administrator, a mechanic, a musician, a retired healthcare worker, and students, caregivers, house cleaners, a bank teller, and housekeepers for a healthcare center and a university.

Kentucky’s Republican Governor Matt Bevin put in place a plan to end Medicaid expansion in the state if the work requirements were lost. After the waiver to add work requirements was approved, Bevin signed an executive order that protected the work requirement. The order stated that if a lawsuit was brought against the work requirement waiver and a judgment made in favor of the plaintiffs, that the state would “take the necessary actions to terminate Kentucky’s Medicaid expansion program,” within 6 months after all appeals have been exhausted or waived.

In his decision, Boasberg said that HHS Secretary Alex Azar had failed to consider Medicaid's main objective, to "help the state furnish medical assistance to its citizens." While the waiver requirement had not yet gone into effect because of the January lawsuit, Boasberg said allowing it to do so "during remand...could be exceptionally disruptive for Plaintiffs. Many of them suffer from various chronic conditions, such as diabetes, hypertension, and mental-health conditions; they thus fear even a temporary implementation of Kentucky HEALTH could cause serious harm."

In a joint statement, the organizations representing the plaintiffs called the ruling a victory for "the rule of law."

"The purpose of the Medicaid Act is to furnish medical assistance, and this approval could not stand because it was doing just the opposite—restricting coverage," said National Health Law Program Legal Director Jane Perkins. "The proposal to take health coverage away from people who did not meet the new work requirements has been the focus of attention. Of course, we all want stable and well-paying jobs but taking away health coverage if a person fails to meet the requirement is not consistent with Medicaid's purpose–which the Medicaid Act says is to furnish medical assistance. There are better–and legal–ways to help people find work–job training, child care, affordable transportation, and a decent minimum wage."

Kentucky's health and family services chief, Adam Meier, posted a statement to the department's Twitter account, saying Azar had "simply failed to consider" the impact of Kentucky HEALTH, the name of the program that included work requirements, on Medicaid coverage, and said it looked forward to resolving the issue with CMS. Without implementing the work requirements, "we will have no choice but to make significant benefit reductions."

The extermination of Medicaid expansion would cause hundreds of thousands of beneficiaries in the state to lose their coverage.