Federal officials approve Gov. Bevin's plan for work requirements, premiums and penalties in Medicaid; changes start July 1

Bevin makes the announcement.
(Photo: Alex Slitz, Lexington Herald-Leader)
By Al Cross
Kentucky Health News

Some Kentuckians on Medicaid will have to work, perform community service or take job training to keep their health-care benefits, under a plan proposed by Gov. Matt Bevin and approved by federal officials. It would also require some to pay small, income-based premiums and co-payments.

Bevin announced the approval Friday, saying the changes would be "transformational." Kentucky is the first state to establish requirements for work-related activities, under a new policy of the Trump administration.

"I am excited by the fact that Kentucky will now lead the nation," Bevin said at a Capitol news conference. "We're ready to show America how this can and will be done." Critics predicted legal action, saying federal law doesn't allow work requirements.

The plan is called Kentucky HEALTH, for "Helping to Engage and Achieve Long Term Health." It mainly affects the 480,000 or so Kentuckians who are on Medicaid by virtue of its 2014 expansion, under the Patient Protection and Affordable Care Act, to people in households with incomes up to 138 percent of the federal poverty level: $16,643 for a single person and about $34,000 for a family of four.

The plan requires beneficiaries to spend a total of 80 hours a month working, looking for work, doing volunteer work, taking job training, going to school, or taking care of someone with a disabling health condition. The rule would not apply to pregnant women, the chronically homeless or the "medically frail," which includes people with a substance-abuse disorder.

“There is dignity associated with earning the value of something that you receive,” Bevin said. “The vast majority of men and women, able-bodied men and women … they want the dignity associated with being able to earn and have engagement.”

Nationally, most beneficiaries of Medicaid work, mostly in low-wage jobs that don't offer health insurance, according to the Kaiser Family Foundation. Kentucky figures indicate likewise for the state.

Medicaid covers about 1.4 million Kentuckians. A list of enrollment by type and county in June 2017 is at http://www.uky.edu/comminfostudies/irjci/MedicaidenrollmentbycountyJune%202017.xlsx.

Premiums and co-payments

A bigger and broader change is that most Kentuckians on Medicaid will be required to pay small monthly premiums, initially $1 per person to $15 per family, depending on income. People with disabilities, pregnant women, children, caregivers and former foster children under age 26 won't have to pay.

Failure to pay premiums would result in suspension of benefits for those above the poverty line; those with less income would be required to make co-payments. When Indiana implemented such a program, 55 percent of those affected missed at least one premium payment in the first 21 months.

The financial part of the plan would go into effect July 1, but the work requirements are to be phased in, starting in areas where more jobs are available. Medicaid members are to get 90 days advance notice that the new requirement applies to them.

Members will be required to report changes in their income, employment or community-service status within 10 days, and failure to do so would result in a six-month disqualification. Disenrolled members could re-enroll earlier if they complete a financial- or health-literacy course, unless they have defrauded Medicaid.

Details of the program are at https://kentuckyhealth.ky.gov/Pages/Parts.aspx.

Critics and politics

One of the most-criticized aspects of the plan is its removal of dental and vision benefits from the basic benefit package for people in the Medicaid expansion. They could qualify for coverage by getting preventive physical, dental or vision exams. State oral-health leaders have said the change would cost more money than it would save.

Another major criticism of the plan is that many Medicaid members will find the reporting requirements hard to meet, be dropped from the program and be discouraged from re-enrolling.

The Bevin administration estimated in its proposal that with it, the Medicaid rolls in five years will have 95,000 fewer people than without it. It gives two reasons: "program non-compliance" and "participants are expected to transition to commercial coverage," but doesn't explain how they will be able to afford that.

Bevin has said the state can't afford to pay its share of the expansion, which is is gradually rising to the health-reform law's limit of 10 percent in 2020. The program was expanded by his predecessor, Democrat Steve Beshear.

Friday, Bevin downplayed the possible cost savings and said the plan is needed to improve the health of Kentuckians because the four-year-old expansion of Medicaid hasn't improved the state's health status. Four years ago, officials said that would take longer than four years.

When he was seeking the Republican nomination for governor, Bevin said he would do away with the expansion, but after being nominated said he would seek approval for a plan like Indiana's. The Indiana plan was drafted by Seema Verma, now director of the Centers for Medicare and Medicaid Services, which approved Bevin's plan as a waiver from federal rules under Section 1115 of the 1965 law that created Medicare and Medicaid.

Bevin proposed the plan when Barack Obama was president, and said that if it wasn't approved, he would end the expansion. While the Donald Trump administration welcomed the plan, it might run into trouble in court, and Bevin's press release referred to that possibility and renewed his threat.

"Gov. Bevin has consistently said since submitting the 1115 application that these are the terms under which Kentucky is able to maintain expanded Medicaid," the release said. "Accordingly, Gov. Bevin has signed an executive order directing the commissioner of Medicaid to take necessary actions to terminate Kentucky’s Medicaid expansion in the event that a court decision prohibits one or more of the components of the Section 1115 waiver from being implemented."

Insure Kentucky, a coalition of groups favoring health reform and opposing the waiver, said such waivers are supposed to "demonstrate that a state can expand coverage, improve access and provide better, more efficient care than under standard federal rules." It noted what it called "overwhelming" objections from citizens and groups.

Senate Majority Leader Mitch McConnell said in a press release, “I applaud CMS and Gov. Bevin for recognizing the unaffordable mess left behind by his predecessor and responding with innovative, common-sense steps to engage patients, improve health, and reduce the burden on Kentucky taxpayers. Today’s announcement by CMS is a step toward taking the power out of Washington and sending it back to the state while also ensuring the long term fiscal sustainability of the Medicaid program.”

Democratic U.S. Rep. John Yarmuth of Louisville said, “During the campaign, Bevin pledged to end Kentucky’s highly successful Medicaid expansion, but as governor, he did not have the courage to do it. Instead he is sabotaging it by raising premiums for families who can’t afford them and creating new barriers to coverage that will—by the governor’s own admission—force tens of thousands of Kentuckians to lose access to life-saving health care. Make no mistake: people will die because of this. Thousands of Kentucky families will face financial ruin. Gov. Bevin and President Trump are creating an entirely unnecessary crisis in our commonwealth for entirely political reasons.”

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