Are Work Requirements for Medicaid Doomed?

The first lawsuit fighting the Trump-approved policy was filed this week. If a court sides with opponents, work requirements could be dead before they even begin.
by | January 25, 2018
Acting Health and Human Services Secretary Eric Hargan speaking to reporters earlier this month at the Kentucky Governor’s Mansion as Gov. Matt Bevin looks on. (AP/Adam Beam)

It took 18 months -- and a change in White House administration -- for the federal government to give Kentucky the green light to make work a requirement for some low-income people to get health insurance.

Now, the state might have to wait even longer.

On Wednesday, The Southern Poverty Law Center, the National Health Law Program and the Kentucky Equal Justice Center filed a lawsuit against the U.S. Department of Health and Human Services (HHS) on behalf of 15 Medicaid recipients in Kentucky who say they would be in danger of losing health coverage once the changes take effect.

Kentucky is one of 10 states that asked the federal government to require Medicaid beneficiaries to work or volunteer in the community at least 20 hours a week. The Obama administration repeatedly denied their requests, but the Trump administration reversed course earlier this month, approving Kentucky's waiver first.

The lawsuit alleges that the “authorization of work and community engagement requirements is categorically outside the scope of the [HHS] Secretary’s Section 1115 waiver authority.” (Section 1115 is part of the Social Security Act and used to grant states the ability to carry out policies that don't meet federal rules.)

“When you look at the Temporary Assistance for Needy Families program [cash welfare], there’s a clause in the statute to end the dependence of needy parents on government benefits by promoting job preparation. When you look at SNAP [Supplemental Nutrition Assistance Program, otherwise known as food stamps], there’s an entire piece in there about work. The statutory design of Medicaid is about health services, and nothing else,” says Leonardo Cuello, director of health policy for the National Health Law Program.

Up to 100,000 people are expected to lose coverage in Kentucky as a result of this waiver, which plantiffs argue violates the objectives of Medicaid.

"Waivers are supposed to be experimental," Cuello says. When you knowingly take away health benefits, "what is the experiment? What are you testing?"

Supporters of Medicaid work requirements believe that childless, able-bodied poor people should have some elements of personal responsibility tied to their health insurance to help them rise out of poverty.

Regardless of the legality, Matt Salo, executive director of the National Association of Medicaid Directors, says more restrictive policies like work requirements may be "politically necessary."

“Sometimes these policies are politically necessary in order to sustain political support for the expansion [of Medicaid] and can mean the difference between coverage and no coverage for a lot more people,” says Salo.

Case in point: Kentucky's Republican governor, Matt Bevin, signed an executive order last week to undo Medicaid expansion if the courts strike down his waiver. That would effectively end health insurance for almost half a million Kentuckians.

Under the Affordable Care Act, the federal government offers states money to make more low-income people eligible for Medicaid. The feds foot 100 percent of the bill at first, but their support gradually ticks down to 90 percent. Most Democratic-controlled states have chosen to expand Medicaid, but only some Republican-led states have taken the federal funding.

In Kentucky, Medicaid was originally expanded under Democratic Gov. Steve Beshear. It would be logistically and politically difficult for Bevin, an ally of President Donald Trump, to reverse the progress -- but it’s not impossible, since the U.S. Supreme Court ruled that Medicaid expansion is optional.

There is more in Kentucky's waiver than just work requirements. The state also received approval to lock people out of coverage for six months if they fail to take a health or financial literacy course, report a change in income or pay premiums. The lawsuit argues all of these are illegal under the Medicaid statute.

Even if a court overturns Kentucky’s Medicaid changes, it may not directly impact other states. Sara Rosenbaum, a health law professor at George Washington University, says it's unlikely that a judge will make a sweeping ruling regarding work requirements in general. But, a ruling for the opponents could make the Trump administration less likely to approve similar waivers.

Every waiver is unique, and most of the states are also asking for other unprecedented proposals like drug testing requirements and limits on how long someone can have Medicaid coverage. The other states awaiting approval to employ work requirements are: Arizona, Arkansas, Indiana, Kansas, Maine, Mississippi, New Hampshire, Utah and Wisconsin.

Kentucky’s new rules are set to take effect in July. Cuello says the plaintiffs are keeping an eye on the clock, and if it looks like the regulations will go into effect before a court has weighed in, then they will seek a temporary injunction.