As Kentucky moves toward a Medicaid overhaul, some are wondering whether the commonwealth could be the next Arkansas, where thousands have lost coverage recently due to a new work requirement.

“I’m very worried that we’re going to see in Kentucky something very similar to what happened in Arkansas in terms of coverage losses,” given the complexity of Kentucky’s waiver, said Dustin Pugel, a policy analyst with the left-leaning Kentucky Center for Economic Policy.

The Arkansas Department of Human Services (DHS) announced earlier this month that it had cut off the coverage of more than 4,300 people who failed for three consecutive months to report activities under a new work and community engagement requirement.

“While many fully complied by taking advantage of work opportunities under the work requirement, there were some that either found work, moved onto other insurance, or moved out of state without notifying DHS,” Arkansas Gov. Asa Hutchinson stated in a news release. “Some simply chose not to comply. Those are the ones who will lose their Arkansas Works coverage for the remainder of 2018.”

In addition, more than 5,000 additional people were reported to be out of compliance for two months, putting them at risk of losing coverage at the end of September unless they take action, according to the Arkansas Democrat-Gazette.

August 2018 Arkansas Works Work & Community Engagement Report

While concerns have been raised that Kentucky could see a similar drop-off in Medicaid recipients, a spokesman for the Kentucky Cabinet for Health and Family Services said the state has made extensive preparations toward getting its program up and running.

“Kentucky is not Arkansas,” Cabinet spokesman Doug Hogan said via email. “Arkansas operationalized within a few months after getting approval, whereas Kentucky has worked over the course of 1.5 years with providers, nonprofits, MCOs (managed care organizations) and members to get information out, invest in a new IT system, conduct training across the state for all stakeholders.”

Kentucky is seeking to impose a community engagement requirement on certain Medicaid beneficiaries as part of a Section 1115 Medicaid waiver. The Medicaid demonstration project, also known as Kentucky HEALTH, is under federal review as a result of a ruling in a lawsuit brought by more than a dozen Medicaid recipients, but the administration has said that it’s ready to move forward with the plan once given the green light.

Under a component of Kentucky HEALTH called PATH, able-bodied adults, ages 19 to 64, who don’t have an exemption would have to complete 80 hours a month of work or community engagement, such as job training or volunteering, to keep their medical benefits. An online portal called Citizen Connect has been created for them to report their hours.

The purpose, Hogan said, is to “improve health outcomes, upward mobility, and overall quality of life for beneficiaries.”

But during a recent federal comment period, the majority of the online responses from the public were overwhelmingly against Kentucky HEALTH.

“Kentuckians strongly reject the notion that complicated new requirements and harsh penalties will do anything to improve the health or economic well-being of low-income workers and families,” Emily Beauregard, executive director of Kentucky Voices for Health, said in August. “If (the Centers for Medicare and Medicaid Services) re-approves the same punitive work and reporting requirements, Kentuckians are guaranteed to face more barriers accessing the care they need to be healthy and productive.”

Kentucky garnered national attention in January when it became the first state to receive approval for its plan after the Trump administration signaled that it would allow states to impose work requirements as a condition for coverage. But Arkansas became the first state to actually implement a Medicaid work requirement in June.

The Arkansas work requirement is being phased in for 30- to 49-year-olds from June through September, then individuals ages 19 to 29 roll in starting in January, according to Arkansas DHS.

Arkansas Gov. Asa Hutchinson | Courtesy of governor’s office

The program, Arkansas Works, calls for recipients to report 80 hours a month of work or other approved activities, such as education or volunteering unless they have an exemption. The state says it’s done “extensive outreach and education” to make people aware of it.

However, anecdotal evidence from interviews and focus groups with Arkansas enrollees show that many were not aware of the reporting requirement, and many don’t have access to the internet at home, Dee Mahan, director of Medicaid Initiatives for Families USA, noted in a recent analysis.

In that piece, she questioned whether the program will move people up the economic ladder.

“Cutting thousands off Medicaid will not help move them out of poverty and up the economic ladder,” she wrote. “In fact, quite the opposite will be true. Medicaid coverage has been shown to help improve enrollee’s financial security by doing what insurance is supposed to do: shielding them from medical debt when they access needed health care. Cutting people off Medicaid because they don’t report work hours will set them back financially, cut off their access to health care and lead to worse health outcomes.”

Gov. Hutchinson said at a recent press conference that Arkansas Works is not designed to be punitive and is a good program.

“It’s providing assistance to those that are trying to help themselves,” he insisted. “It’s also about the value of work that’s important and the value of responsibility. I think this achieves a good balance there, and we’re working very hard to make it work right.”

Both states’ programs are the subject of ongoing litigation.

Soon after Kentucky initially won approval of its waiver, a group of Medicaid recipients filed a lawsuit saying the Trump administration’s approval of the waiver violated federal law and that the program would put the health care coverage of tens of thousands of Kentuckians at risk.

Dustin Pugel

In late June, U.S. District Judge James Boasberg kicked the program back to the U.S. Department of Health and Human Services for further review after finding fault with the way the Trump Administration had approved the plan.

Calling the approval “arbitrary and capricious,” Boasberg said the U.S. Health and Human Services secretary had neglected to consider whether the program would help provide medical assistance to the state’s citizens, one of Medicaid’s main objectives.

Pugel, of the Kentucky Center for Economic Policy, said that if Kentucky’s waiver gets approved, “a lot of us expect there to be a lot of churn, so people coming on and off coverage as they fail to meet the requirements and then either backpay their premiums or make up the work that they were supposed to do and then come back on.”

There also are likely to be many Kentucky Medicaid recipients “deciding it’s not worth the hassle … and ending up uninsured,” he said.