Three Things to Know About Kentucky’s New Medicaid Waiver

Earlier this month, two changes occurred  that will alter the direction of the country and one of its largest welfare programs, while cementing a signature achievement of President Trump’s first term.

On January 11, the Trump administration alerted state Medicaid directors of its desire to work with states to implement Medicaid work requirements.

A day later they made it official.

The administration approved a number of Medicaid reforms requested by the state of Kentucky, including the first-ever work requirements in the program — and now the proverbial floodgates are open.

Before these recent developments, there were already a dozen states that had either authorized or submitted Medicaid work waivers; now even more states are moving in that direction.

As momentum continues to grow and states begin writing their new waiver requests, the details of Kentucky’s approved reforms become even more important.

Here’s a closer look at three major reforms Kentucky won that other states will need to replicate.

  1. A strong work requirement.

Under the terms of the Kentucky waiver, Medicaid expansion enrollees — able-bodied adults, ages 19 to 64—will be required to work, train, or volunteer for 80 hours per month in order to keep their welfare benefits. They’ll also be able to fulfill the work requirement by going to school or receiving substance abuse treatment.

Certain individuals will be exempt, including pregnant women, those with acute medical conditions, and full-time students. But in general, if you’re an adult with no mental or physical disabilities keeping you from working, you’ll be required to at least volunteer a few hours a day in order to keep your welfare.

Enrollees who refuse to meet this commonsense requirement will have their benefits suspended. To come back to the program, they’ll have to complete 80 hours of work, training, or volunteering or complete a course on health or financial literacy. They can also come back if they qualify for an exemption.

Overall, Kentucky’s work requirement is a gigantic step forward from the status quo that fosters dependency. Never before have work requirements been allowed in the Medicaid program, even though they’ve proven to be wildly successful at helping people increase their incomes and get out from welfare.

Numerous states have asked for work requirements before, under previous administrations, and they’ve been rejected time after time. Those days are gone.

  1. A first-of-its-kind six-month ban on enrollees who commit welfare fraud.

Medicaid law requires that enrollees have a review at least once every 12 months to see if they still qualify for welfare. But life changes like moving, switching jobs, or getting married — all of which affect eligibility — don’t just happen on a twelve-month calendar.

When these changes occur, enrollees are supposed to notify the state and the state will initiate a review. But, believe it or not, the changes often go unreported and people who don’t qualify for welfare keep getting it.

(See: Arkansas, which just removed 25,000 people from Medicaid who were receiving benefits in more than one state and 16,000 people for unreported income.)

That’s a really big problem, especially when you consider that there are nearly 650,000 truly needy individuals on Medicaid waiting lists nationwide, waiting for home- and community-based services. Every dollar wasted on welfare fraud is a dollar that isn’t going to them or to other individuals who depend on the Medicaid program to survive.

Under the terms of Kentucky’s new waiver, Medicaid expansion enrollees who fail to report life changes will be removed from the program and banned from it for six months. Enrollees will now have an incentive to comply with Medicaid rules and stay on top of their reporting.

More importantly, this reform will reduce fraud. More individuals reporting changes more often means more reviews and more opportunities to remove ineligible enrollees.

In the grand scheme, six months seems like a light punishment for someone who fraudulently takes welfare benefits. But this is a good starting point and could be expanded in the future.

  1. Kentucky will eliminate retroactive eligibility, which is good news for taxpayers.

While this provision is less transformational than the first two, it does have the potential for cost savings for taxpayers. Under the status quo, able-bodied adults can apply for Medicaid after they’ve accumulated medical bills and have those costs shifted onto taxpayers retroactively.

But under the terms of the waiver, Kentucky will largely be able to eliminate this loophole for expansion enrollees.

Kentucky’s new waiver is truly monumental. Its work requirements will massively reduce dependency and help individuals increase their incomes. And beyond that, the Trump administration has given the state new tools to fight fraud and protect taxpayers.

If Kentucky’s waiver is a sign of things to come — as it surely is — there’s real hope the Medicaid dependency crisis is finally beginning to end.

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