Trump lacks the authority to change Kentucky's Medicaid law, lawsuit says

Deborah Yetter
Courier Journal
Gov. Matt Bevin, speaking last week to a joint session of the Kentucky General Assembly

This story has been updated to include a comment from Gov. Matt Bevin

Calling Medicaid "the cornerstone of the social safety net," health law advocates have filed a federal lawsuit aimed at blocking work requirements and other changes to Medicaid that Gov. Matt Bevin plans to enact in Kentucky, the first state to do so under new federal standards.

The lawsuit, filed Wednesday in U.S. District Court in Washington, D.C., challenges what it alleges is an unlawful attempt by President Donald Trump to rewrite the nation's Medicaid law in order to dismantle the Affordable Care Act, also known as Obamacare.

It comes as at least nine other states including Indiana are seeking approval for changes similar to Kentucky's including "community engagement" requirements for some people on Medicaid to either work or volunteer or lose health coverage.

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"The President lacks the authority to rewrite congressional statutes or to direct federal officers or agencies to effectively amend the statutes he is constitutionally required to execute," said the lawsuit filed by the Washington-based National Health Law Program, the Kentucky Equal Justice Center and the Southern Poverty Law Center.

Kentucky is the first state to win approval from the Trump administration for work requirements and other changes to its Medicaid program, changes aimed largely at those added through an expansion of Medicaid authorized by the Affordable Care Act.

Medicaid covers 75 million Americans — 1.4 million in Kentucky. The lawsuit asks that a federal judge block Bevin's efforts to alter Medicaid benefits and certify the case as a class action lawsuit on behalf of hundreds of thousands of Kentuckians it says would suffer under Bevin's plan known as a "waiver."

"The change will harm Kentuckians across the state — housekeepers and custodians, ministers and morticians, car repairmen, students, and musicians — who need a range or health services, including check-ups, diabetes treatment, mental health services, blood pressure monitoring and treatment and vision and dental care," the lawsuit said.

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Defendants include Eric Hargan, acting secretary of the U.S. Department of Health and Human Services, and Seema Verma, administrator of the Centers for Medicare and Medicaid Services. 

Late Thursday, a day after the lawsuit was filed, Bevin issued the following statement:

"We expected this legal challenge because this is what liberals do. They run to the courts in their perverse efforts to keep good people dependent on government programs. The people of Kentucky deserve better than to be financially enslaved by such dependence, and I have absolute confidence that the waiver will prevail against this baseless challenge. Many months of diligent collaboration between our team, CMS, HHS and the Trump Administration have resulted in a rock solid demonstration waiver. We know that we stand on a strong legal foundation. Kentucky now has an opportunity to prove to our citizens and to those in other states that the waiver will work and that all of Kentucky and America will be better for it."

The lawsuit comes 12 days after Bevin announced Kentucky had become the first state to win federal approval from Centers for Medicare and Medicaid Services, for its changes, known as a "waiver."

It is filed on behalf of 15 people across Kentucky who gained health coverage through Medicaid under Obamacare and who would suffer significant harm under Bevin's plan, the lawsuit said.

Among the plaintiffs, who range in age from 20 to 62 and include several low-income married couples, are a classical musician, a custodian, a housekeeper, a pastor, college students, a bank teller and an auto repairman. Most have significant health problems, including diabetes, heart conditions, high blood pressure or mental illness and would suffer harm if they lost heath coverage under the new rules, the lawsuit said.

Bevin has said he wants to reshape the state's Medicaid program to encourage more people to work and become more invested in their health and costs of health care.

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Advocates argue the rules not only violate federal law, they are unnecessary since research shows about 60 percent of adults on Medicaid already work at low-wage or part-time jobs that don't offer health coverage.

The changes also eliminate dental and vision coverage for the "able-bodied" population but members would be allowed to earn points for such services through a "My Rewards" program by volunteer work, attending classes or other activities.

While Medicaid covers about 1.4 million people in Kentucky,  Bevin's changes are aimed largely at the 480,000 people added under the 2010 federal health law that allowed states to expand it to add more low-income people.

Medicaid was previously a health plan mainly for very poor pregnant women, children, disabled people and low-income elderly in nursing homes. The Obamacare expansion allowed states to include anyone up to 133 percent of the federal poverty level, an annual income of about $16,400 a year.

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Bevin's plan is aimed at those he considers "able-bodied" adults. It would exempt some adults, such as pregnant women and those who are disabled or chronically ill.

But the rest would be required to work or volunteer at least 20 hours a week or face losing health coverage through Medicaid. They also would be required to make small monthly premiums and copayments for some services.

Bevin, in announcing the Trump administration's approval of his plan, recounted 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.

Kentucky won approval of its waiver the day after the Trump administration announced it would permit controversial changes to Medicaid rules including requiring some "able-bodied" adults on the federal-state health plan to work or volunteer to keep benefits.

The lawsuit alleges the work requirements violate federal law that establishes Medicaid strictly as a health plan and does not allow for requirements imposed by some other federal programs, such as food stamps, that participants must work.

But the lawsuit also challenges other provisions of Bevin's plan as illegal under Medicaid law, including charging monthly premiums to poor people, making dental and vision benefits contingent on a "rewards" program for volunteer work or other activities and a "lockout" provision of people who fail to pay premiums on time or meet other requirements.

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It cites a litany of health problems among the 15 plaintiffs as well as part-time or fluctuating work hours that would make it difficult, if not impossible, for people to keep up with regular reporting requirements about their employment and work hours to remain eligible for health coverage.

Some don't own cars and have difficulty getting to work, let alone getting to state offices to report any change in work status as required by the Bevin plan, it said. While the plan would allow people to make some changes online, not all Kentuckians own a computer or have access to one, it said.

The lawsuit describes a young woman in Eastern Kentucky who "is looking for a job outside the home, though without a license to drive and no public transportation available in Floyd County, the prospects are difficult," the lawsuit said.

A Berea Church administrator and his wife, a freelance writer, earn about $22,500 a year, working part-time so they can home-school their two sons, the lawsuit said. It said they fear they could lose health coverage through Medicaid if they aren't able to maintain and verify the 20-hour a week work requirement under the Bevin plan.

A Lexington man who retired at 62 because of significant health problems is unable to work full-time and fears losing his health coverage through Medicaid that covers costs of treatment for his diabetes, arthritis and high blood pressure, the lawsuit said.

It further alleges Kentucky's plan violates the law authorizing such waivers because they are meant to be pilot projects to expand or enhance health care under Medicaid. Bevin's plan projects it will cut Medicaid enrollment in Kentucky by about 95,000 people over the five-year life of the waiver.

Bevin has indicated he may simply pull the plug on Medicaid coverage for such individuals if his plan fails to win federal approval or loses a legal challenge.

In a recent executive order, he directed state health officials to strip Medicaid coverage from nearly half a million Kentuckians should his proposed overhaul of the federal-state health plan be struck down in court.

The order Bevin filed Friday directs the secretary of the Cabinet for Health and Family Services and the Medicaid commissioner to "take necessary steps to terminate Kentucky's Medicaid expansion" if any part of his plan is struck down in court and all appeals are exhausted.

That prompted a retort from one of the lawyers involved in the legal challenge,

"Is the governor of Kentucky saying that if he is caught doing something illegal, he will take health care away from hundreds of thousands of Kentuckians who have done nothing wrong?" asked Leonardo Cuello, director of health policy for the National Health Law Program.

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As a candidate, the Republican governor initially said he would scrap the expansion authorized by his predecessor, Gov. Steve Beshear, a Democrat. After Bevin was elected governor in 2015, he instead announced that he would seek federal approval to change the program to instill more personal accountability in some people on Medicaid and move those not working toward employment. 

He has said that he would end the expansion if he did not receive federal approval for the changes, a stance a Bevin spokesman underscored last week.

"Gov. Bevin has consistently said ... that these are the terms under which Kentucky will maintain expanded Medicaid," Woody Maglinger said.

The federal government provides about 80 percent of funds for Kentucky's $10 billion a year Medicaid program.

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