A day after the Trump administration announced that it would allow states to compel poor people on Medicaid to work or get ready for jobs, federal health officials on Friday granted Kentucky permission to impose those requirements.
Becoming the first-in-the-nation state to move forward with the profound change to the safety-net health insurance program is a victory for Kentucky's Republican governor, Matt Bevin, who during his 2015 campaign for office vowed to reverse the strong embrace of the Affordable Care Act by his Democratic predecessor.
Bevin first pledged to undo the state's expansion of Medicaid, which had helped to shrink the ranks of uninsured Kentuckians more than in almost any other state. He then pivoted to the idea of keeping the additional people in the program — with strings attached that the federal government had never permitted in Medicaid's half-century history.
The federal Centers for Medicare and Medicaid Services announced early Friday afternoon that it had approved a "waiver" — that is, the state's application to experiment with changes to Medicaid's usual rules. At a news conference at the capitol in Frankfort, Bevin said that state agencies will phase in the "community engagement and employment initiative" in different parts of the state from July to November.
The governor said the changes will be "transformational . . . in good ways and powerful ways." He argued that helping people find work will lead them out of poverty and government dependence, ultimately improving Kentuckians' subpar health status.
"Why should a working-age person not be expected to do something in exchange for what they are provided?" Bevin said.
He focused in particular on the ACA's expansion population, repeatedly calling them people "for whom Medicaid was not originally designed." Bevin has been one of many Republican governors contending that their state budgets cannot afford the extra beneficiaries, even though federal money covers the vast majority of the expense. While Kentucky officials previously said the changes would rein in Medicaid costs, Bevin on Friday suggested that increases in job-training efforts might offset any savings from fewer Medicaid beneficiaries.
Since Kentucky expanded Medicaid under the ACA four years ago, to include people with incomes of up to 138 percent of the federal poverty level, nearly half a million newly eligible residents have joined the program.
Briefing reporters, aides to the governor estimated that about half of 350,000 able-bodied, working-age Medicaid recipients subject to the "community engagement" requirement already meet its terms to work at least 80 hours per month, volunteer or be in job training. Individuals will need to send documentation to prove their compliance.
Those who do not will receive a notice after a month, then be given one more month to "cure" their violation. After that, their benefits will cease until they prove they have begun following the rules.
When the state first applied for federal permission in 2016, it proposed that "community engagement" gradually increase to 80 hours a month over the first year. Officials later altered their application to require 80 hours from the beginning, saying that the requirement aligned with rules for people on welfare or the Supplemental Nutrition Assistance Program, as food stamps are now called.
The country's first work requirement applies to Kentucky residents who joined Medicaid under the ACA, as well as traditional Medicaid beneficiaries who are not pregnant and not primary caretakers.
The requirement is among several changes that the CMS is allowing Kentucky to adopt. They include a system that will require some people in the program to make small monthly premium payments, incentives to adopt healthy behaviors and different benefits provided to certain groups.
Once the changes take effect, the program can lock out for six months people above the federal poverty line who fail to pay required premiums or who do not reapply in time to determine whether they remain eligible. People also can be penalized if they do not promptly report any changes in their income.
One aide to Bevin said the state's Medicaid rolls are forecast to be reduced by about 95,000 people by the end of the five years that the CMS granted for this experiment. He did not say how many of those individuals would lose eligibility vs. no longer needing the program.
Critics of the Trump administration's move had vowed to sue once the first state waiver was granted, contending that work requirements violate the objectives of the vast insurance program created in 1965 as a major advance in access to care for the nation's poor.
Leonardo Cuello, health policy director at the National Health Law Program, said that the plan approved by the CMS "will harm thousands upon thousands Kentuckians and contains numerous violations of the Medicaid statute" and that the organization "is very, very carefully considering taking legal action."
Brad Woodhouse, director of Protect our Care Campaign, a pro-ACA group in which many alumni of the Obama administration are involved, said that the federal agency's decision "marks not just a shift in policy, but a shift in the fundamental decency of the United States. . . . Changing Medicaid will do nothing to help Americans find jobs. It will merely take away their health care."
Bevin rejected such criticism, calling the CMS's approval "a significant milestone on our journey to lead the nation in transforming Medicaid in a fiscally responsible way."