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Kentucky is taking Medicaid expansion hostage to win its work requirements lawsuit

The Kentucky case could determine the fate of the Trump administration’s crusade to remake Medicaid in its image.

Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

Any day now, we should be getting a federal court ruling on whether Kentucky and the Trump administration can legally require many Medicaid recipients to work.

US District Judge James Boasberg, an Obama appointee, heard oral arguments on June 15 in the lawsuit to block the state’s work requirements. He said he planned to rule by the end of the month because the state is set to begin implementing the new rules on July 1.

The case hinges on a pretty simple argument: Does requiring Medicaid recipients to work to receive benefits further the program’s goals? Many advocates, who argue that Medicaid is first and foremost a health insurance program, believe that work requirements are actually contrary to Medicaid’s purpose if they cut people’s access to health care.

The state of Kentucky and the Trump administration, which approved the state’s proposal, obviously feel differently. They have argued that requiring work should improve people’s economic station and therefore their health — in spite of evidence that most Medicaid recipients already work or would not be expected to work. And those who do work could still lose their coverage because the work requirements are not structured in a way that reflects the realities of low-income work, like irregular hours.

But Kentucky is taking all of this one step further. Not only is it trying to institute work requirements, but the state is threatening that, if the court blocks it from putting those rules in place, it will end Medicaid expansion entirely. The roughly 400,000 people covered by expanding Medicaid in the state would lose their insurance, more or less out of spite.

According to several people who attended oral arguments, Kentucky’s lawyer attempted to paint a dire scene: If the judge rules against work requirements, Medicaid expansion would quickly end. That isn’t actually true, but the desired effect was clear. “Blackmail much?” one person who was there told me.

If you look at the actual text of Kentucky Gov. Matt Bevin’s executive order that set this Catch-22 up, it’s a bit more complicated. The order says that:

  • If any part of Kentucky’s Medicaid work requirement waiver is invalidated by a court
  • If all judicial appeals have been exhausted
  • After six months
  • Then Medicaid expansion must end

Adding to the confusion, Bevin didn’t even really need to issue that executive order. He could end Medicaid expansion any time he wants, with the Trump administration’s approval.

”It was just a threat to the judge,” Joan Alker with Georgetown University’s Center for Children and Families told me. “He could terminate the waiver and expansion with six months’ notice if CMS [Centers for Medicare and Medicaid] agreed.”

But the through-line here is clear: Bevin is trying to take Medicaid expansion hostage, arguing that if Kentucky isn’t allowed to implement a work requirement, then there will be no more expansion. By the Bevin administration’s logic, work requirements do advance the goals of Medicaid because, without them, Kentucky is going to end its expansion and hundreds of thousands of the state’s most vulnerable citizens will lose their insurance.

Based on reports from oral arguments, Boasberg was skeptical of Kentucky’s arguments. So we may find out very soon whether Bevin is willing to follow through on his threat. Even then, the story isn’t likely to be over.

”If he tries to end coverage, massive political backlash and much litigation under various theories to slow him down,” Sara Rosenbaum, a health law professor at George Washington University, told me. “Lots of potential legal arguments, beginning with the fact that they would need to redetermine eligibility under traditional rules for every single enrollee.”

We’ll be watching closely because the outcome of the Kentucky case could determine the fate of the Trump administration’s crusade to remake Medicaid in its image.

This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.

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