Feds Will Allow Medicaid Work Requirements. Here’s What It Means For Kentucky

Nov 8, 2017

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Despite numerous failed legislative attempts to repeal and replace the Affordable Care Act, the Trump administration is rolling out regulatory changes that are likely to clear the way for Kentucky’s plan to remake its Medicaid system.

At a National Association of Medicaid Directors conference in Arlington, Virginia on Tuesday, Trump administration official Seema Verma said the government will give states more freedom over their Medicaid programs, including allowing states to require Medicaid enrollees to work or volunteer to keep their coverage.

These work requirements are a key part of Kentucky Governor Matt Bevin’s plan to overhaul the state’s Medicaid expansion. Bevin is currently waiting for federal government approval on those changes, and Verma’s comments suggest the Trump administration is likely to sign off.

“Believing that community engagement requirements do not support the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration,” Verma said. She is the head of the federal agency that creates rules for state Medicaid programs.

Kentucky Work Requirements Could Begin In July

In 2013, former Governor Steve Beshear expanded Kentucky’s Medicaid program under the Affordable Care Act. The move meant Kentuckians making up to 138 percent of the poverty line could get on the federal insurance program. But the federal government only paid for the full cost of the additional program for three years. In July, Bevin introduced a plan to roll the expansion back.

The expansion was too costly for Kentucky, he said. His new plan is estimated to trim the Medicaid rolls by nearly 100,000 people, and the state estimates it will save $2.4 billion over the next five years.

And one of Bevin’s provisions includes requiring people to work or volunteer in order to stay on Medicaid — something that wasn’t allowed under the Obama administration.

These work requirements, which Verma and Bevin call a “community engagement” requirement, would mean “able-bodied” adults will either have to work or volunteer for 20 hours a week to keep their Medicaid coverage. Pregnant women, children and caregivers would be excluded from this requirement, and the government has yet to define what an “able-bodied” adult is.

Kentucky Medicaid Director Stephen Miller said at the conference that he was pleased with Verma’s comment and hopes to implement the state’s work requirement by July.

“We are in sync with what she had to say [on work requirements],” Miller said.

Dustin Pugel with the Kentucky Center for Economic Policy said allowing a work requirement will only push people off Medicaid.

“They have disregarded [previous rules], effectively taking down the guardrails meant to protect Medicaid enrollees and put up new criteria that I think is really going to hurt people,” Pugel said.

Miller said he anticipates around 200,000 Medicaid enrollees would be affected by the new rules overall. He said work requirement would help save money for the state by lowering its Medicaid rolls.

“We don’t think of this as punitive,” he said of the work requirements. “We need to do more than give enrollees access to health care and access to an insurance card.”

Medicaid Cuts Would ‘Free Up Dollars’

Almost a third of Kentuckians are covered by the state Medicaid program. And while three-fourths of those people are children and adults, a little over half of the state’s Medicaid spending is for people with disabilities and the elderly. Miller said more needs to be spent on groups of people who were covered by Medicaid before expansion.

“All this new Medicaid expansion spending [for non-disabled adults] has crowded out spending on the other side of the house for other Medicaid populations,” Miller said. “We are hoping this helps free up dollars.”

Kentucky is also looking to add monthly premiums, similar to what the Indiana Medicaid program did in 2015.

Monthly premiums would range from $1 per person to $15 per family, depending on income. But other than people with disabilities, pregnant women, children and caregivers, no one will be excluded from paying some sort of premium.

At the conference, Miller said the administrative costs of collecting those premiums would be higher than the actual amount of premium collected. But he said the point of the change isn’t to make money — it’s to encourage enrollees to transition out of Medicaid and into private coverage.

In Indiana, Pugel said the policy has had mixed results.

“In Indiana, a lot of folks above the poverty line that were covered by Medicaid lost coverage because they couldn’t comply with a lot of the requirements, and only about half of them ended up with coverage elsewhere,” he said.

Miller also reiterated the timeline set out in a Medicaid hearing earlier this year. He’d like the work and volunteer requirements to go into effect starting July 2018 in regions where the state finds it feasible.

Phil Galewitz of Kaiser Health News contributed to this story.

This story has been updated to correct the government’s expected cost savings and the number of Kentuckians on Medicaid.