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Explaining Stewart v. Azar, the Federal District Court Decision Invalidating Kentucky’s Medicaid Waiver

A new issue brief from the Kaiser Family Foundation explains the June 29 federal court ruling invalidating the Kentucky HEALTH Medicaid waiver program and its implications for other states. The DC Federal District Court decision in Stewart v. Azar blocked Kentucky from implementing the waiver on July 1, including its work requirement, monthly premiums up to 4% of income, coverage lockouts for failure to timely renew eligibility or timely report a change in circumstances, and other provisions.

The court held that the primary purpose of Medicaid is to provide affordable health coverage. It determined that the approval of the waiver by the federal secretary of Health and Human Services violated the law because he did not consider the plan’s impact on furnishing medical assistance – providing affordable health coverage — to the low-income populations identified by Congress in the Medicaid statute. Specifically, the secretary never discussed how many people would lose coverage, despite the state’s estimate that 95,000 people would lose Medicaid, the court found.

The secretary also failed to cite any evidence that some enrollees would gain private coverage as a result of the waiver or estimate how many might do so. In addition, the court found that the secretary cannot prioritize the impact on “traditional” or “vulnerable” Medicaid populations at the expense of the Medicaid expansion group.

The court vacated the waiver and remanded it to HHS to make a decision that is supported by the administrative record. The ruling comes at a time when the Trump administration is encouraging states to impose work requirements in Medicaid. The decision sets the stage for appeals and future litigation that could affect the other states with approved  work requirement waivers as well as how HHS and the states address these issues in the future.

For more information on which states are seeking waivers for work requirements and other provisions, visit our Medicaid waiver tracker.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.