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Regulation and Compliance > State Regulation

Trump Administration Challenged in Court on Medicaid Overhaul

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Advocacy groups filed the first lawsuit challenging the Trump administration’s efforts to overhaul Medicaid by allowing states to require some beneficiaries to work or pursue jobs.

The suit, filed in federal court in Washington on behalf of more than a dozen Kentucky Medicaid recipients, seeks class-action status to halt changes to the state’s Medicaid program that the administration approved this month. It says the changes go beyond what’s allowed under current Medicaid law and regulations and were imposed without following appropriate government processes.

(Related: Trump Clears Path for States to Require Employment for Medicaid)

Kentucky was the first state cleared to shift its Medicaid program in a more conservative direction, after the Centers for Medicare and Medicaid Services said this month it would let states require some Medicaid recipients to prove they are working, training for a job, or volunteering as a condition of gaining coverage.

Nine other states have asked Washington to let them make similar changes, adding to the significance of the first legal clash.

In Kentucky, about 1.3 million people are covered by Medicaid, after the state expanded eligibility under the Affordable Care Act under a Democratic governor. Republican Governor Matt Bevin, elected in 2015, has been pushing to reduce the rolls. He said in an interview after the changes were approved that work requirements fit with the purpose of Medicaid.

“If you read what the purpose of Medicaid is, it’s to get people engaged and to create work opportunities,” Bevin said in a Jan. 16 interview. “When Medicaid was originally designed, it was designed to help assimilate disabled people back into society to the absolute extent possible, to create work opportunities. These are some of the underlying tenets of Medicaid for the traditional Medicaid population.”

Bevin signed an executive order on Jan. 12 saying he would reverse the state’s expansion of Medicaid if a court strikes down any portion of Kentucky’s waiver application, once appeals are exhausted.

About 350,000 Kentuckians would be subject to the work requirements, according to the state’s waiver application. In five years, the plan is expected to reduce Kentucky’s Medicaid enrollment by about 95,000 and save $2.4 billion.

The groups bringing the suit are the National Health Law Program, Kentucky Equal Justice Center and the Southern Poverty Law Center.

Leonardo Cuello, the director of health policy for the National Health Law Program, said the Trump administration is overstepping its legal authority.

“This abuse of authority cannot go unchecked, and we expect a court to step in and protect rule of law in America and the health of Kentuckians,” Cuello said in an email.

— Read ACA Medicaid Funding Rules Stink, Witness Says on ThinkAdvisor.

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