Trump administration loses first court test of Medicaid work requirements

In a closely watched case, US District Court Judge James Boasberg voided the federal government's approval of Kentucky's request to implement work requirements and kicked the matter back to the Department of Health & Human Services for further review.

"...The [Health] Secretary never adequately considered whether Kentucky HEALTH would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid," Boasberg wrote, referring to Kentucky's Medicaid overhaul. "This signal omission renders his determination arbitrary and capricious."

The ruling could have national implications as the Trump administration seeks to implement work requirements in more federal programs for low-income Americans, particularly Medicaid. In addition to Kentucky, nearly a dozen other states have either already been granted waivers for Medicaid work requirements or are seeking them.

Governor Matt Bevin, a Republican, has threatened to end Medicaid expansion if the state cannot proceed with the waiver. His administration did not immediately return a request for comment.

Kentucky HEALTH was set to launch on July 1. Kentucky was the first state to receive permission to mandate work -- a historic change in the 53-year-old program. Its waiver was approved in January.

The National Health Law Program, along with the Kentucky Equal Justice Center and the Southern Poverty Law Center, filed a lawsuit in federal court in Washington, D.C. about two weeks later. The suit charges that the approval of Kentucky's waiver -- which also requires many Medicaid recipients to pay premiums and locks them out of the program for up to six months if they violate certain rules -- runs counter to Medicaid's objective of providing the poor with access to health care.

The requirement, which can also be fulfilled through volunteering, going to job training and participating in other activities, applies to working age, non-disabled adults without dependents. Many of these recipients became eligible for Medicaid in 2014 after Kentucky's former Democratic Governor Steve Beshear expanded the program under the Affordable Care Act.

Medicaid beneficiaries in northern Kentucky's Campbell County would have been the first to have to fulfill the new rules of "community engagement," as state officials call the mandate. By the end of the year, up to 200,000 Kentuckians would have had to comply as the state rolls out the requirements to nearly every county.

Boasberg heard the case in mid-June.