Kentucky first to win federal approval to roll back Medicaid expansion under Obamacare

Courier Journal

FRANKFORT, Ky. — Calling it an "exciting day," Gov. Matt Bevin on Friday said federal authorities have given Kentucky broad power to reshape its Medicaid program, making it the first state in the nation to win such approval under rules that allow states to include work requirements for some recipients.

"I am excited by the fact that Kentucky will now lead the nation," Bevin said at a news conference at the Capitol Rotunda. "We're ready to show America how this can and will be done."

The news was released Friday by U.S. Rep. John Yarmuth just minutes before Bevin's announcement. Yarmuth called the move "dangerous and irresponsible," saying it will cause tens of thousands of Kentuckians to lose health coverage.

But Bevin dismissed such comments and said the plan will transform Medicaid.

"It will be a model for the nation," he said.

But advocacy groups disagreed, including Kentucky Voices for Health, a coalition of health organizations that had opposed the changes as unnecessary and harmful to low-income people who rely on Medicaid for health care.

"Gov. Bevin's plan to reform Kentucky Medicaid remains out-of-touch with what low-income, working Kentuckians and vulnerable families need to truly get healthy, stay healthy and contribute in their communities," the group said in a statement Friday.

But acting Kentucky House Speaker David Osborne praised it in a statement saying, "This is a truly innovative program that also retains current Medicaid benefits for our most vulnerable citizens."

The approval comes 16 months after Bevin, a Republican elected in 2015, announced sweeping changes to the $10 billion federal-state program that provides health care for 1.4 million low-income and disabled Kentuckians, arguing it is "not sustainable."

And it comes one day after the Centers for Medicaid and Medicare announced it has approved controversial new "community engagement" rules to allow states to require some Medicaid beneficiaries to work or volunteer in order to get health coverage.

Background:Bevin's controversial plan to make Medicaid recipients work will get federal approval

Kentucky's plan is certain to face a legal challenge, with advocates arguing that changes contemplated by the state's plan are not allowed under federal Medicaid law, including work requirements, the elimination of transportation services to medical appointments and monthly premiums charged to people in poverty.

"They are illegal and not permissible under law," said Leonardo Cuello, a lawyer with the Washington-based National Health Law Program, which anticipates filing a lawsuit challenging Kentucky's plan. "They also are a very bad policy for making sure people get health care."

Bevin agreed the plan might face a legal challenge but seemed unconcerned.

"It's conceivable," he said. "There's a lot of lawsuits that fly around."

And Bevin sidestepped questions about possible savings from the plan, although he had projected it could save Kentucky more than $300 million in Medicaid costs over the five-year life of the proposal when he announced it in 2016.

"Only time will tell," Bevin said Friday.

The program will be phased in starting in July, officials said Friday.

Bevin's plan would require some adults to work or volunteer at least 20 hours a week or be in school or job training to keep health benefits. He has said it will inject more personal responsibility into the government health plan and believes participants should have some "skin in the game."

Bevin relied on his now-familiar story of growing up poor and having a life of hard work in New Hampshire with no health coverage to explain his desire to give "able-bodied" people on Medicaid the dignity of work.

"This is a program that will allow people to rise up out of poverty," he said.

Cuello said Medicaid law is designed purely as a health law and efforts by states to add a work requirement, as authorized by federal aid programs such as food stamps, are not allowed.

"Medicaid is a healthcare program," he said. "It's about health services. It's not about employment encouragement."

Further, advocates argue, while the work requirement is aimed only at a portion of "able-bodied" adults on Medicaid — mostly the roughly half a million people added through the expansion of Kentucky's program under the Affordable Care Act — it will make Medicaid so complicated and bureaucratic that many will lose coverage or be terminated.

Advocates say the changes will cause up to 95,000 Kentuckians to lose Medicaid health coverage, according to the administration's own calculations.

Bevin's work requirement is aimed largely at "able-bodied" adults added to Medicaid under the Affordable Care Act and would exclude the elderly, disabled, medically frail, pregnant women or some adults caring for children or other relatives. The letter released Thursday by CMS authorizing work requirements contains similar language.

About 480,000 Kentuckians were added to Medicaid after the program was expanded under the Affordable Care Act, also known as Obamacare, to include anyone up to 138 percent of the federal poverty level, an annual income of $16,643 for an individual.

The Bevin administration has estimated the work requirements likely will affect about 200,000 of the adults added through the expansion.

But Cuello noted that many more beneficiaries will be affected by the new, more complex requirements, such as people who are exempt from work because of a chronic illness but will have to prove they are exempt. That's if they receive notification or understand new rules of the program, he said.

"People will just lose coverage," he said. "People will die."

Such "community engagement" requirements have never been approved before by CMS.

In its 10-page letter released Thursday approving work or volunteer requirements, the agency acknowledged its approval is a shift from past policy. But CMS said it is willing to allow states to attempt to demonstrate that such efforts can make people healthier "through the positive physical and mental health benefits associated with work."

From July:Speakers call Bevin's proposed Medicaid overhaul 'cruel' and 'immoral' at public hearing

Cuello said CMS has it backward, arguing people need to be healthy in order to work.

"They're going to try to force a square peg into a round hole," he said.

Kentucky was among nearly a dozen states seeking such approval for work requirements and other changes under a "waiver" it filed last year with the federal government. It is the first state to win such approval. Indiana also has a request pending.

Kentuckians on Medicaid won't see any immediate changes.

Kentucky Medicaid Commissioner Stephen Miller has said the state likely won't see any saving from the changes for the next two years.

Health advocates and state officials across the country had been watching closely to see whether Kentucky would win approval for its program.

The approval comes after the nation's top Medicaid official, Seema Verma, in a Nov. 7 speech to state Medicaid directors, said federal officials had decided to approve such work requirements for any state seeking them.

Verma said that the administration of President Donald Trump, a Republican, will approve the work requirements that had been denied under President Barack Obama, according to a report from Kaiser Health News.

She denounced the Obama policy as "soft bigotry of low expectations" and said "those days are over," Kaiser News said.

Verma, as a private consultant, helped design Kentucky's Medicaid waiver proposal before joining the Trump administration. CMS has said she would not be involved in reviewing Kentucky's application.

More information is available on the state website, www.KentuckyHEALTH.ky.gov.

Deborah Yetter: 502-582-4228; dyetter@courier-journal.com. Support strong local journalism by subscribing today: www.courier-journal.com/deborahy.