The Leaflet: Judge Halts Kentucky Medicaid Reforms

Published July 6, 2018

Last Friday, a single judge in the U.S. District Court for Washington, DC struck down Kentucky’s recently approved Medicaid reform package. A group of current Medicaid enrollees challenged the state’s Medicaid overhaul, called Kentucky HEALTH, which was set to take effect July 1. The plaintiffs argued Kentucky HEALTH was contrary to Medicaid’s mission of providing medical insurance and other related benefits to individuals with insufficient income.

In a last-minute decision, Judge James Boasberg ruled in favor of the plaintiffs, determining the secretary of the U.S. Department for Health and Human Services (HHS) did not satisfactorily evaluate the relevant data and objectives of Kentucky HEALTH before approving it. Specifically, Boasberg referred to the estimate suggesting 95,000 persons will leave the state’s Medicaid rolls over a five-year period as evidence the reform would be antithetical to the objective of the 53-year-old federal health insurance program. The Bluegrass State is expected to appeal the ruling.

These reforms would have saved the state approximately $331 million over the course of five years. More importantly, the reforms would have paved a pathway for low-income individuals to become self-sufficient and financially independent, eliminating their reliance on government handouts. Similar reforms have already been implemented in Arkansas. HHS has also approved Medicaid reforms for Indiana and New Hampshire, which will be enacted in 2019.

The now-halted reforms would have applied solely to those able-bodied recipients enrolled in Medicaid under the expansion program created by the Affordable Care Act. The reforms included monthly premium payments, annual eligibility reporting, and an 80-hours-per-month work or volunteer requirement. If individuals failed to meet these requirements, their benefits would have been suspended for six months, after which they would have become eligible to reenroll.                                                                                          

In 2013, Kentucky expanded its Medicaid population to include able-bodied adults without dependents (ABAWDs) with incomes up to 138 percent of the Federal Poverty Level ($16,643 a year for an individual). More than 420,000 Kentuckians enrolled in the expanded program. The new enrollees exceeded state projections by a whopping 134 percent, and they will cost Kentucky taxpayers an estimated $1.2 billion over the next five years.

Medicaid expansion’s financial instability and lack of improved health outcomes for recipients prompted HHS to contact state Medicaid directors, encouraging them to institute necessary reforms to help people escape government dependency. HHS is dedicated to granting innovative state waivers that boost consumer-directed health care, efficient care use, and other options to make Medicaid more akin to the private insurance market.

The Kentucky ruling should not deter state officials from seeking Medicaid reforms that include work requirements for able-bodied adults, which 70 percent of Americans support, according to a recent Kaiser Family Foundation poll. Legislators should also campaign to roll back Medicaid expansion so that only the truly needy—low-income families and disabled people—receive state medical assistance.


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