House passes public-assistance bill with plan for temporary health coverage for people who earn too much to stay on Medicaid

House Speaker Pro Tem David Meade presents House Bill 1. (LRC photo)

By Melissa Patrick
Kentucky Health News

A bill aimed at moving Kentuckians off public assistance includes several health-related provisions, including a new coverage plan for people who lose their Medicaid benefits if their income rises above the limit for the program.

A heavily revised version of House Bill 1 passed the House Feb. 21 by a vote of 58-32. It was along party lines, except one Democrat who voted for it: Rep. John Sims of Flemingsburg.

Other Democrats said the bill was rushed, but Speaker Pro Tem David Meade, R-Stanford, its lead sponsor, said “We are trying to find a good balance between compassion to help those folks in those situation who truly need care and help in these public assistance programs, but also a balance of accountability.”

Most of the bill is aimed at cracking down on fraud, but a major part of it would provide a temporary state health-insurance option for Kentuckians who stop being eligible for Medicaid because their income exceeds 138 percent of the federal poverty level, $17,609 for a single person. It would be available for those earning up to 200% of the poverty line, $25,520 for an individual.

This provision addresses the “benefit cliff,” the term for the loss of public benefits by people whose earnings exceed limits for programs but who are unlikely to have jobs with health insurance or the money to afford it. Republicans said they had heard stories of people who ask employers not to give them raises so they can keep their Medicaid benefits.

This health insurance program would require premiums and cost sharing to rise 25% for every 15% in income above 138% of the poverty line. Participants could stay in the program for a year after exiting Medicaid, with a possibility of extension on a case-by-case basis.

The Supplemental Nutrition Assistance Program is a major focus of the bill, as is Temporary Assistance for Needy Families. It would remove form the programs individuals who fraudulently misuse their benefits card, or are completely able-bodied adults with no dependents who choose not to participate in a community engagement program, including work, school or volunteering, if such requirements are implemented. It would expand many benefits, with task groups formed to explore further expansions.

Democratic objections

Some Democrats said they agreed with the goals of the bill, but said it was rushed. They questioned its enforcement costs and said it would lead to lawsuits.

“Although there are good elements in this piece of legislation that I’m glad to see move forward, they are really stamped and trampled on by the bad parts of this legislation,” said Rep. Charles Booker, D-Louisville.

Meade said, “What you’re hearing today is, we like the expansion of benefits, we want to continue to give people more but we don’t want to hold anyone accountable.”

The House adopted two amendments from Rep. Kim Moser, R-Taylor Mill, one of which had to do with health. It would require the state to apply for a waiver of the rules to allow Medicaid to pay for substance-use disorder treatment for people who are incarcerated.

The bill would ban from Medicaid and other programs people who violate the rules.

For example, those who are convicted of a drug-related felony who are released from incarceration and fail to sign up for substance-use treatment within 90 days of release would be banned from getting Medicaid, but the bill makes provisions for regaining coverage.

Dustin Pugel, policy analyst for the Kentucky Center for Economic Policywrote that “a similar ban in SNAP in Kentucky has led to thousands losing food assistance and likely more who never applied due to a past conviction.” Further, he writes that “Medicaid law doesn’t allow bans contingent on recovery status or for people with a drug-related felony conviction.”

If passed, Gov. Andy Beshear’s administration would be required to implement the measures within 120 days. Beshear said Friday, “I want to continue to see where they’re going, but I don’t believe in a system that pushes people off of benefits.” Mark Vanderhoff reports for WLKY-TV.

Beshear added, “I believe in a system that encourages people and gives them the tools to get jobs with higher wages where you naturally move off of them. I believe in providing people opportunity — not consequences.”

Medicaid work requirements?

Reflecting Republicans’ concern about the cost of the 2014 Medicaid expansion, the bill says that if the state General Fund appropriation for this population reaches half of General Fund spending on Medicaid overall, those who have been on the expansion for a year would have to participate in at least 80 hours a month of “qualifying activities,” presumably work, school or volunteering.

That seems unlikely; the Kentucky Center for Economic Policy reports that it is currently only 10.7% of the budget. Such requirements were an integral part of former Gov. Matt Bevin’s plan to overhaul the state’s Medicaid program. It and a similar plan in Arkansas were blocked twice by a federal judge, and Beshear rescinded the plan soon after taking office in December.

Several lawmakers predicted that this part of the bill would be challenged in court, noting that a federal appeals court recently upheld the rulings against Arkansas’s plan. The Supreme Court may or may not hear an appeal.

Meade said it is “well worth the risk” of a legal challenge to these community engagement requirements for able-bodied workers because they have been shown to move people off public assistance and increase their income in other states.

Concerns about fraud

Much of the debate was around the issue of fraud in public assistance programs, an issue that Rep. Nima Kulkarni, D-Louisville, said likely has to do more with perception than reality.

The U.S. Department of Agriculture reports that public-assistance fraud is 1%, and it was mentioned during the debate that it’s reported at 2% in Kentucky.

“My concern here is that we are ignoring actual facts, actual numbers . . . and going with opinions and potential numbers that are not in existence, that we have not heard about in this body,” Kulkarni said. “In our zeal to counteract the tiny fraction of fraud that may be occurring in Kentucky, we are potentially impacting millions of lives that are using these programs to simply lift their families out of poverty, to put food on the table at night. I really urge the body to think long and hard about the unintended consequences of this bill to those individuals that are properly using the benefits that they so desperately need.”

Early in the two-and-a-half-hour debate, Meade corrected a statement he made Feb. 20 that there were studies showing upwards of 40% of fraud in public assistance programs. He corrected that to say that a group had told him that with its current detection systems, Kentucky was likely only catching 30 to 40% of the fraud in the system. When asked who that group was, he declined to answer. But he said he thinks it is higher than 2% because people are very creative when they commit fraud. “To say that we only have a 2 percent fraud rate, that we feel we are catching it all, is just not imaginable in my mind.”

But House Minority Leader Joni Jenkins, D-Louisville, said, “I think what we have here is an attempt to go after a gnat, and when you go after a gnat with a sledgehammer, you tend to destroy the whole darn thing.”

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