Medicaid work requirement in Michigan may have hit a snag

Todd Spangler | Detroit Free Press

WASHINGTON — A federal judge on Friday threw out Kentucky's new work requirements for Medicaid coverage in a decision that could affect a similar program proposed in Michigan as well several other states.

U.S. District Judge James Boasberg said in a 60-page opinion that U.S. Health and Human Services Secretary Alex Azar did not adequately consider the effects on medical coverage for low-income residents before approving the program this year.

The Trump administration early this year signaled that it was prepared to give waivers to states to allow them to experiment with work rules for Medicaid expansion coverage authorized under the Affordable Care Act, otherwise known as Obamacare.

So far, four states — Arkansas, Kentucky, Indiana and New Hampshire — have been granted waivers and eight others, not including Michigan, have applications pending. Michigan's Republican-controlled legislature recently passed a law requiring the state to ask for a waiver that will require Medicaid recipients with incomes above the poverty limit and who are able-bodied to work or be involved in training, education, community service or a job search activity for 80 hours a month or risk losing their benefits.

More: 4 things to know about Michigan's Medicaid work requirements

Some estimates have suggested as many as half of the 670,000 or so people on the Healthy Michigan program might fall under work requirements, though there are other indications that it could be far less than that.

Boasberg's ruling Friday could slow the process for Michigan and other states considerably depending on what the Trump administration does next. It also means there could be court challenges made to other states' programs as they moved forward.

Angela Minicuci, with the state Department of Health and Human Services, on Friday said only that the agency will "review the ruling to determine how it may impact Michigan."

The Trump administration issued a more forceful response, with Seema Verma, the administration of the Centers for Medicare and Medicaid Services, calling the decision "disappointing" and saying states have often "develop and test reforms that have advanced the objectives of the Medicaid program."

"We are conferring with the Department of Justice to chart a path forward," she said. "In the meantime, we will continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program by improving health outcomes for thousands of low-income Americans.”

In a lawsuit, more than a dozen Kentucky residents and health advocates argued that the state's expansion program and new work requirement — called KY HEALTH and set to begin Sunday — violated a law that limits Medicaid projects to those advancing the objectives of the program, which is to extend health care coverage, not limit it.

Boasberg did not appear to rule specifically on that but said instead that Azar "never adequately considered" that question before approving the program. "This signal omission renders his determination arbitrary and capricious," the judge said in his decision, sending it back to the Department of Health and Human Services for review.

"At minimum," Boasberg wrote, "(Azar) failed to 'adequately analyze' coverage. ... This oversight is glaring, especially given that the risk of lost coverage was 'factually substantiated in the record.'" Some 90,000 Kentuckians were expected to be off Medicaid roles by the end of the five-year project.

By sending the proposal back to HHS, it means that the agency could attempt a deeper analysis that would meet the judge's concerns — one that could be used in looking at the other states' programs. Or it could appeal the lawsuit to a higher court, or both.

As for other states' programs, they're not impacted directly by the ruling. But it's a fair bet that Michigan's program may have to meet whatever standard is eventually worked out — if any — between the Trump administration and the courts.

“Today’s court decision emphasizes Medicaid’s mission: Medicaid is about health insurance. Period. And policies that make it harder for people to get health insurance run counter to the program’s purpose," said Frederick Isasi, executive director of Families USA, a group promoting health care access.

"Today’s win means ... Kentucky residents will continue to be able to see their doctors, stay healthy, and take care of their families," he continued. "And it should give pause to the Trump administration, Kentucky and other states seeking illegal and harmful Medicaid changes that take health care away from families.”

Contact Todd Spangler at 703-854-8947 or at tspangler@freepress.com. Follow him on Twitter at @tsspangler.