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A federal judge on Friday blocked Kentucky’s closely watched plan to require many Medicaid recipients to work, volunteer or train for a job as a condition of coverage. The state had been poised to start carrying out the new rules next week and to phase them in fully by the end of this year. (Goodnough, 6/29)

The decision by U.S. District Judge James E. Boasberg vacates that approval and sends the state’s program, Kentucky HEALTH, back to the federal Department of Health and Human Services for further review. Boasberg said that top HHS officials “never adequately considered whether [the program] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.” That “signal omission” renders the decision “arbitrary and capricious,” he concluded. (Sun and Goldstein, 6/29)

The judge vacated the HHS approval and sent the proposal back to the department for further review. Kentucky had hoped to save about $33 million as it reduced the number of beneficiaries by about 90,000 through the new requirements under its new Medicaid program, called Kentucky HEALTH. “The Secretary never provided a bottom line estimate of how many people would lose Medicaid with Kentucky HEALTH in place,” wrote Judge Boasberg, who was appointed by President Barack Obama. “This oversight is glaring, especially given that the risk of lost coverage was ‘factually substantiated in the record.’ ” (Armour, 6/29)

The decision is a setback for the Trump administration, which has been encouraging states to impose work requirements and other changes on Medicaid, the joint state and federal health insurance program for the poor and disabled. Kentucky was the first state in the country to get that permission, and the new rules were scheduled to take effect Sunday in a northern Kentucky suburb of Cincinnati. (Beam and Alonso-Zaldivar, 6/29)

Kaiser Health News: Judge Blocks Kentucky Medicaid Work Requirement
“Today’s decision is disappointing,” said Seema Verma, administrator of the Centers for Medicare & Medicaid Services. “States are the laboratories of democracy and numerous administrations have looked to them to develop and test reforms that have advanced the objectives of the Medicaid program. The Trump administration is no different.” The administration is now reviewing its legal options, she said. (Galewitz, 6/29)

Legal observers believe the case eventually could reach the U.S. Supreme Court, which, by that time, will have at least one new member named by President Donald Trump. The president said Friday that he intends to name his nominee to replace retiring justice Anthony Kennedy by July 9. Senate Majority Leader Mitch McConnell (R-Ky.) has indicated that he wants to move quickly to fill the seat. "A staunch conservative may be more receptive to the kinds of changes the Trump administration is making to Medicaid than a progressive justice," said Nicholas Bagley, a University of Michigan law professor. (Meyer, 6/29)

The ruling carries broad implications for Republicans across the country hoping to trim enrollment in Medicaid, which now covers more than 70 million Americans. Three other states have received federal approval for work rules — Arkansas, Indiana and New Hampshire — and several other states are seeking permission. The Arkansas work requirement took effect earlier this month. (Pradhan, 6/29)

A number of health policy experts praised the ruling, which they've described as "scathing" and "savage." "The court made the right decision," says Elizabeth Lower-Basch, director of income and work supports at the Center for Law and Social Policy. "It found that HHS did not even consider the basic question of whether the waiver would harm the core Medicaid goal of providing health coverage, and it prohibits Kentucky from implementing it until HHS makes such an assessment." (Kodjak, 6/29)

Kentucky is almost certain to appeal the decision. A separate countersuit filed by Republican Gov. Matt Bevin arguing that the state’s plan should be deemed lawful is also pending in a different federal court in Frankfort. Experts say it’s possible the issue could eventually rise to the Supreme Court. (Williams, 6/29)

Kentucky is one of four states that received approval this year from President Donald Trump’s administration to make significant changes to Medicaid, the state-federal health program for low-income Americans. Kentucky’s plan, known as Kentucky Health, was proposed by Republican Governor Matt Bevin. It would have required many recipients to pay monthly premiums and document at least 80 hours of work or other community activity each month to remain eligible for coverage. (Tozzi, 6/29)