Kentucky Medicaid enrollees sue to block work requirement waiver

(Updated at 7:45 p.m. ET)

Groups representing Kentucky Medicaid beneficiaries sued the federal government Wednesday to block the state from implementing its Medicaid waiver program that includes a work requirement.

The proposed class action complaint alleges the changes, which include premiums, cost-sharing and a controversial work requirement, will lead to substantial reductions in Medicaid coverage.

The CMS approved Kentucky's Medicaid waiver application this month. The controversial work requirement means able-bodied beneficiaries will have to complete 80 hours per month of community engagement activities, such as employment, education, job skills training or community service to maintain their Medicaid eligibility.

More than 1 million Kentucky residents are Medicaid beneficiaries, and 15 were named plaintiffs in Wednesday's suit.

Nine other Republican-led states are seeking to require some residents to participate in work, education or volunteer activities to receive and keep their Medicaid benefits.

The CMS released guidance earlier this month to help states reshape their Medicaid programs and include provisions like work requirements. CMS Administrator Seema Verma said at the time she believes the waiver approvals would prevail in litigation.

"The 1115 (statute) gives broad authority to the secretary to approve state experiments and programs that promote the objectives of the Medicaid program," Verma said.

The CMS is expected to OK Indiana's similar proposal soon.

Kentucky's Republican Gov. Matt Bevin had threatened to end his state's Medicaid expansion, which covers more than 400,000 low-income adults, if waiver opponents sued to halt the waiver program. Bevin's office did not respond to a request for comment on the lawsuit or what he will do now.

Bevin has argued that people who receive public health benefits should be required to work, and that it will be better for their health.

The Medicaid beneficiaries' lawsuit alleges that the Trump administration's approval of the Kentucky waiver violates the HHS secretary's authority because the waiver provisions are not consistent with the objective of the Medicaid statute, which is to furnish health coverage.

"The evidence shows that imposing a Medicaid work requirement gets it exactly backward, because having insurance and staying healthy enables people to work," said Jane Perkins, legal director at the National Health Law Program, the lead attorney in the suit.

She criticized Bevins for threatening to end the Medicaid expansion if the suit was filed. "The threat by the governor to cut off insurance for 400,000 Kentuckians is alarming and hard-hearted."

Meanwhile, a liberal advocacy group released an analysis Wednesday challenging claims by Kansas Republican Gov. Sam Brownback that his state's proposed Medicaid work requirement would improve the health and financial well-being of low-income Medicaid recipients.

The Center on Budget and Policy Priorities' report examined state-collected data on work requirements for families in the Temporary Assistance for Needy Families program, which provides cash benefits for very low-income people. The group found that the vast majority of families leaving the TANF program due to the work requirement did not find economic security as proponents in Kansas claimed.

Instead, the group said, these families were left without access to cash assistance for their families when they hit tough financial times. Although some families' earnings rose after leaving TANF, most remained far below the federal poverty line.

Bob Murray, Gov. Brownback's spokesman, blasted the report as coming from a "left-wing organization trying to advance a welfare-for-all narrative while ignoring the data. The facts are clear: work requirements in Kansas are helping more people succeed." He added that "we look forward to replicating these successes with commonsense (Medicaid) work requirements."

The Kansas Medicaid waiver proposal, called Kancare 2.0, would have Medicaid managed-care plans connect beneficiaries to jobs, educational services or employment training. Because the state has not expanded Medicaid and the income eligibility threshold is far below the federal poverty level, people who work even a part-time job at minimum wage might no longer qualify for Medicaid coverage.

"Those who work are healthier and achieve a greater well-being and self-sufficiency," said Kansas Republican Lt. Gov. Dr. Jeff Colyer.

But the Kansas Hospital Association said in comments to the CMS that "making people ineligible for services through work requirements and time limits does not equate to self-sufficiency or earnings levels that would allow them to purchase health insurance."

Critics, including many healthcare providers, say Medicaid work requirements will cause a significant number of people to lose access to healthcare, which will harm their health and make it more difficult for them to work. The Bevin administration itself projects that 95,000 fewer Kentuckians will have Medicaid coverage in five years due to the new requirements for premium payments, work and regular reporting updates on income.

While the CMS this month argued that requiring Medicaid beneficiaries to work or participate in other community engagement activities would improve their health, there's no clear research evidence backing that position, according to a recent report by the Kaiser Family Foundation. The report said work requirements likely would cause many people to lose coverage because of the complex new state documentation and administrative processes involved.

In contrast to its new Medicaid work requirement, in the 1990s, Kentucky launched the so-called Ready to Work program for TANF designed to help low-income parents gain a post-secondary education. It provided supports such as transportation, child care and mentoring.

That voluntary educational approach has been more effective than a mandatory work requirement in helping low-income people move into decent-paying employment, said Rich Seckel, director of the Kentucky Equal Justice Center, who opposes the Medicaid requirement.

"The programs that really work empower the person to pursue something they're interested in, with mentors," he said. For the Medicaid work program, he added, "I'm not sure we have the elements of the most successful programs."