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After Medicaid Ruling, Most States Hit Pause But Some Proceed

Work requirements failed their first court test, in Kentucky. The case leaves the legality of other states' policies uncertain, but some of them are moving forward with business as usual anyway.

Arkansas Gov. Asa Hutchinson
Arkansas Gov. Asa Hutchinson discussing the state's request to add work requirements to Medicaid, which was approved earlier this year.
(AP/Andrew DeMillo)
It was over before it even started. Just hours before work requirements for Medicaid were set to go into effect in Kentucky, a federal judge struck them down, ruling that they were "arbitrary and capricious."

It would have been the first time in the United States that some people applying for the government health care program had to meet a certain number of hours working or job training -- a condition for insurance that the Obama administration repeatedly rejected.

But Kentucky isn't the only state that has received or requested approval from the Trump administration to implement Medicaid work requirements. The ruling leaves at least 10 states in limbo, as they await next steps from the federal Centers for Medicare and Medicaid Services (CMS).

CMS Administrator Seema Verma called the decision “disappointing” and said, "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."

There is no clarity from CMS, however, about how the ruling could impact approved or pending waivers for Medicaid work requirements. Seven states are still awaiting a decision: Arizona, Kansas, Maine, Mississippi, Ohio, Utah and Wisconsin.

"My guess is the [Trump] administration might pause in approving other waivers, including Ohio's, until the Kentucky decision gets figured out," said Rea Hederman, executive director of the Economic Research Center and vice president of policy at The Buckeye Institute, a right-leaning think tank, told The Cleveland Plain Dealer.

Hederman -- and the National Association of Medicaid Directors -- expect CMS to appeal the Kentucky ruling.

Representatives from state Medicaid offices in Arizona, Ohio and Utah all told Governing they are working with CMS and waiting to see how the agency reacts before deciding how to proceed.  

Tom Hudachko, director of communications for the Utah Department of Health, said in an email that they are "prepared to modify our request if CMS issues new guidance on the matter."

Officials in Wisconsin, whose pending waiver also includes a request for what would be the nation’s first Medicaid drug testing requirement, told Governing that they too are in talks with CMS but are "optimistic about moving forward with flexibilities requested under our 1115 waiver request."

Of the three other states that already had their waiver approved by CMS -- Arkansas, Indiana and New Hampshire -- some are proceeding with business as usual.

Thursday is the deadline for Medicaid applicants in Arkansas to prove that they met the state's new work requirement -- or risk losing their benefits. Marci Manley, a spokesperson for the Arkansas Department of Human Services, told Kaiser Health News that the state is moving forward.

"The ruling does not have an immediate effect on Arkansas’ work requirement," she said. 

People in Indiana and New Hampshire have a bit more time before work requirements start getting phased in in January.

CMS has 60 days from the ruling to decide whether or not to appeal. No other states currently face lawsuits over Medicaid work requirements. But the health advocacy organization that sued Kentucky told Kaiser Health News that it is "exploring enforcement and litigation options" in other states.

While the ruling will save some from losing Medicaid coverage in Kentucky, health policy experts are wondering if it could hamper Medicaid expansion efforts in other states.

The Trump administration's decision to allow states to add work requirements has made conservative states more open to expanding the number of low-income people eligible for Medicaid. For example, Virginia passed a Medicaid expansion deal in June after years of failed attempts, in part because of the promise of work requirements. It’s estimated that the deal, set to go into effect in January 2019, would cover 400,000 additional uninsured residents.

“To me, there is a distinction to adding limitations to expansion, like Virginia," says Sara Rosenbaum, professor of health law at George Washington University. "In the states where the design [of the work requirement] is to bring down enrollment [like Kentucky], there is very serious analysis that has to be done since the primary objective of Medicaid is to insure people."

*CORRECTION: A previous version cited Marci Manley as the spokesperson for the Arkansas Department of Health. She's actually the spokesperson for the state's human services department.

Mattie covers all things health for Governing.

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