Federal Court Decision Blocks Medicaid Work Requirement in Kentucky

In January, the Centers for Medicare & Medicaid Services (CMS) approved a Medicaid waiver in Kentucky that would allow the state to make participation in a work or “community engagement” program a condition for Medicaid eligibility. A group of advocates sued on behalf of Kentuckians who would be at risk of losing Medicaid coverage, and last month a federal judge put Kentucky’s Medicaid work requirement on hold. His decision called into question CMS’s attention to vital details about the Kentucky Medicaid waiver, including whether the waiver violates one of the primary purposes of the Medicaid statute—to provide health coverage.

The judge said that the agency was “arbitrary and capricious” in its decision-making, and showed no evidence that it considered the concerns that stakeholders raised in comments on the proposal. In addition, the agency did not appear to independently evaluate the waiver’s impact on coverage for people with Medicaid.

As a result, the court’s decision invalidates the approval of the waiver and leaves open several options. In response to the decision, CMS could appeal to a higher court; they could revisit the waiver to correct the errors that led to the court decision, if possible; or they could abandon the waiver attempt. It is unclear at this point if the waiver can conform to the court’s requirement that it not violate a primary purpose of Medicaid.

Importantly, this does not mean that states cannot limit eligibility based on work. The decision only ends the work requirement in Kentucky. It is likely, however, that advocates in other states will bring suits based on the reasoning of this case.

Medicare Rights opposes the implementation of Medicaid waivers that appear to be intended to push people out of the Medicaid program. Most Medicaid beneficiaries who can work are already working, and increasing bureaucratic burdens will do nothing to help them keep jobs or health insurance coverage. Such requirements can also hurt family caregivers for people with Medicare.

Read our concerns about the Kentucky waiver.

Read the court’s decision.

Read more about the implications of this decision from Kaiser Family Foundation.