(Adds comment from Kentucky official)
By Nate Raymond and Yasmeen Abutaleb
BOSTON/WASHINGTON, June 29 (Reuters) - A U.S. federal judge on Friday blocked Kentucky from implementing work requirements in its Medicaid program, potentially dealing a blow to the Trump administration’s effort to scale back the 50-year-old health insurance program for the poor and disabled.
Kentucky was the first of four states to receive approval from the U.S. Department of Health and Human Services (HHS) to require that able-bodied Medicaid recipients work at least 80 hours a month or lose their benefits. Arkansas began this month to implement its work requirements, while Kentucky was set to begin its program on Sunday.
The ruling could threaten the Trump administration effort to put a conservative stamp on Medicaid after the Republican-controlled Congress last year failed to repeal and replace the Affordable Care Act, commonly known as Obamacare, which expanded Medicaid in more than 30 states.
Another eight states await federal approval for similar work requirements. Virginia and Michigan have passed work requirements through their statehouses.
According to Kentucky state estimates, nearly 100,000 people could be eliminated from the Medicaid rolls within five years under the requirements.
U.S. District Judge James Boasberg in Washington, D.C., ruled that the U.S. Department of Health and Human Services never adequately considered whether Kentucky’s plan will actually help the state furnish medical assistance to state residents.
“At bottom, the record shows that 95,000 people would lose Medicaid coverage, and yet the (department) paid no attention to that deprivation,” Boasberg wrote, sending Kentucky’s proposal back to HHS for further review.
Kentucky said the judge had blocked the program on the “narrow basis” that HHS failed to consider its impact on Medicaid coverage, and that the state would work with HHS to address that problem so the program could take effect.
“We will have no choice but to make significant benefit reductions” without implementing the work requirements, said Adam Meier, secretary of Kentucky’s health department.
The new rules require many residents to engage in some combination of work, volunteer, job training or school for 80 hours a month or else lose their benefits.
“Today’s decision is disappointing,” Centers for Medicare and Medicaid Services administrator Seema Verma said in a statement. “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 agency said it was conferring with the U.S. Justice Department to “chart a path forward.” The Justice Department, which represented the federal government in the case, did not immediately respond to a request for comment.
The ruling could threaten changes in other states where work requirements have already been approved and those that await approval, said Timothy Jost, an emeritus professor at Washington and Lee University School of Law.
The judge ruled that cutting people off of Medicaid because they do not meet requirements that are “completely extraneous” to receiving medical assistance were not legitimate grounds for the federal government to approve changes to Medicaid, Jost said.
“It seems to me that the other state programs that have been approved have the same flaw,” Jost said.
Kentucky Governor Matt Bevin had threatened to scrap the entire Medicaid expansion under former President Barack Obama’s Affordable Care Act, which extended insurance to about 400,000 state residents, if the work requirements were overturned. He earlier signed an executive order that overturns the expansion in the event that appeals are exhausted.
The rules, which the state expected to begin implementing on July 1, cover people 19 to 64 years old, exempting some groups including pregnant women, the medically frail and former foster care youth.
“There are better – and legal – ways to help people find work,” said Jane Perkins, director of the National Health Law Program, which was one of three groups to file the Kentucky lawsuit.
The work requirements were approved by Republican President Donald Trump’s administration through a process that allows states to receive waivers from federal Medicaid law to test new approaches to the 50-year-old program.
A group of Kentucky residents sued in January, contending that, rather than testing a new approach, Kentucky had “effectively rewritten” the federal Medicaid law. (Reporting by Nate Raymond in Boston and Yasmeen Abutaleb in Washington Additional reporting by Brendan Pierson in New York Editing by Alistair Bell and Cynthia Osterman)