Kentucky Medicaid Expansion: Work Requirements and Federal Cuts

Kentucky’s Medicaid expansion, adopted by executive order in 2013 and launched in January 2014, cut the state’s uninsured rate from 14.4 percent to about 5 percent and now covers roughly 464,000 adults on top of the traditional Medicaid population.¹² It survived a governor’s attempt to add work requirements and two federal court rulings that struck those requirements down. It now faces a 2025 state law reviving work requirements and a federal budget law that will begin cutting Medicaid funding in 2027.

How Expansion Started

Governor Steve Beshear announced on May 9, 2013 that Kentucky would extend Medicaid eligibility to all adults earning up to 138 percent of the federal poverty level.³ He did not need legislative approval, because Kentucky law had already delegated Medicaid eligibility decisions to the Cabinet for Health and Family Services.¹ Coverage began the following January.⁴

Enrollment moved fast. More than 400,000 Kentuckians signed up for expanded Medicaid in the first six months, and by 2016 total Medicaid enrollment had grown by more than 570,000 people.¹⁴ Beshear cited PricewaterhouseCoopers and Deloitte analyses projecting 40,000 new jobs and $30 billion in positive economic impact over eight years, and he rejected an Arkansas-style premium assistance model as too costly.³

What Coverage and Health Data Show

Kentucky’s uninsured rate fell faster than any other state’s after expansion. The rate dropped from 14.4 percent in 2013 to 8.7 percent in 2014, 6.1 percent in 2015, and 5.1 percent by 2016, a 62 percent decrease in the number of people without coverage.⁵⁶ Among households earning less than $25,000, the uninsured rate fell from 35 percent in 2013 to nearly 10 percent by the end of 2014.⁷ By 2015, the gap between Black and white uninsured rates had effectively closed, at 5.5 percent and 5.3 percent respectively. Gaps persisted for Hispanic and Asian Kentuckians, in part because of immigration-status barriers.

A JAMA study comparing Kentucky with non-expansion Texas found a 22.7-percentage-point reduction in the uninsured rate, a 12.1-point rise in having a personal physician, and an 11.6-point decrease in people skipping medications due to cost.⁸ In fiscal year 2014, physical exams rose 187 percent, adult dental visits 116 percent, breast cancer screenings 111 percent, colon cancer screenings 108 percent, and cervical cancer screenings 88 percent compared with the year before expansion.⁹ Emergency department visits fell by 6 percentage points while outpatient visits rose. Governor Andy Beshear’s 2019 executive order rescinding the state’s work-requirement waiver cited a study estimating that expansion had saved 704 lives among adults aged 55 to 64 between 2014 and 2017.¹⁰

Expansion also became central to Kentucky’s opioid response. The state ranks fifth nationally in the rate of Medicaid recipients diagnosed with opioid use disorder, and the program is described as the backbone of the state’s treatment system, with rates highest in rural Eastern Kentucky.¹¹ The uninsured rate among low-wage workers fell from 46 percent before expansion to 11 percent by 2023.¹² A 2019 Navigant analysis found 16 of Kentucky’s rural hospitals at high financial risk, with 10 of them considered essential based on trauma status, geographic isolation, and economic impact.¹³ National research has linked Medicaid expansion to better hospital finances and lower rural closure risk.¹⁴

The Bevin-Era Work Requirements and the Court Fight

Republican Matt Bevin won the governorship in 2015 and moved to restructure expansion. His June 2016 Section 1115 waiver, “Kentucky HEALTH,” would have required non-disabled adults to complete 60 hours per month of work, volunteering, or education, imposed monthly premiums between $1 and $15, and locked out non-compliant enrollees for six months at a time.¹⁵¹⁶

On January 12, 2018, the Trump administration approved the waiver, making Kentucky the first state cleared for Medicaid work requirements.¹⁷¹⁶

Medicaid beneficiaries sued. In Stewart v. Azar, U.S. District Judge James Boasberg vacated the approval on June 29, 2018, calling it arbitrary and capricious because HHS had failed to weigh the waiver’s effect on furnishing medical assistance and had ignored the state’s own 95,000-person coverage-loss estimate.¹⁸ After the administration re-approved the waiver, Boasberg struck it down again in March 2019, rejecting the argument that Section 1115 lets the Secretary “refashion the program Congress designed any way they choose.”¹⁹ The court did not hold that work requirements are inherently unlawful, only that the approvals were legally deficient.²⁰

Andy Beshear won the governorship in November 2019. On December 16, his sixth day in office, he signed Executive Order 2019-005 rescinding the waiver and withdrew Kentucky from the pending federal appeal.¹⁰¹⁶ The D.C. Circuit dismissed the appeal as moot, declined to vacate the district court rulings, and the case closed after a 2023 attorneys’ fee settlement.²¹

Where the Program Stands Now

Kentucky Medicaid is a $20 billion annual program, with about $15.4 billion, or 77 percent, from federal funds.²²² Washington pays 90 percent of expansion costs, compared with about 71.5 percent for traditional Medicaid.

The Kentucky Center for Economic Policy estimates every dollar spent on Medicaid generates $1.88 in broader economic activity, most of it outside health care. The share of non-elderly Medicaid-covered adults citing illness or disability as their reason for not working fell from 40 percent in 2013 to 23 percent in 2024.¹² The 2023 uninsured rate stood at 5.6 percent.²³

The 2025 State Work Requirement Law

In 2025, the Republican-controlled General Assembly passed HB 695, requiring the state to seek a community engagement waiver for Medicaid recipients. Governor Andy Beshear vetoed it. The legislature overrode the veto on March 27, 2025, by votes of 80-20 in the House and 29-7 in the Senate, and the law directs the Cabinet for Health and Family Services to submit the waiver to CMS within 90 days.²⁴ HB 695 also expands legislative authority over Medicaid and reinstates prior authorization for behavioral health services.²⁵ The state budgeted nearly $2.6 billion in General Fund dollars for Medicaid in fiscal year 2025.²³

Federal Cuts Under H.R. 1

President Trump signed H.R. 1 (Public Law 119-21) on July 4, 2025, after the Senate passed it 51-50 with Vice President Vance’s tiebreaking vote and the House passed it 218-214. The law reduces federal Medicaid and CHIP spending by roughly $990 billion over ten years and is projected to increase the number of uninsured Americans by 7.5 million through Medicaid cuts alone by 2034.²⁶

Several provisions bear directly on Kentucky’s expansion population:

Starting January 1, 2027, expansion adults ages 19 to 64 must document 80 hours per month of work, job training, education, or community service, or earn at least $580 per month, or lose coverage.²⁷
Also in January 2027, states must redetermine expansion enrollees’ eligibility every six months instead of annually.²⁶
Beginning October 2028, states must charge expansion adults with incomes above the federal poverty level up to $35 per non-exempt service, and providers may refuse care to those who cannot pay.²⁶
The law freezes new provider taxes as of July 4, 2025, and phases the safe harbor threshold on existing provider taxes down from 6 percent to 3.5 percent by 2032. Kentucky’s provider taxes on ambulance providers and community living supports exceed the eventual cap.²⁶
New caps on state-directed payments put an estimated $5.5 billion at risk for Kentucky, according to the state Cabinet for Health and Family Services.²⁸

CMS released the interim final rule on federal work requirements on June 1, 2026. It exempts pregnant individuals, caregivers of children 13 and younger, people with disabilities, veterans with a total disability rating, and former foster care youth, among others. States may waive requirements in counties with unemployment at or above 8 percent or 1.5 times the national average, a provision that could apply to distressed counties in Eastern Kentucky.²⁷

What Is at Stake for Kentucky

If the 90 percent federal match on the expansion population were reduced to Kentucky’s traditional rate of roughly 71.5 percent, the state would face a $1.4 billion shortfall to keep covering its nearly 500,000 expansion enrollees, according to the Cabinet for Health and Family Services. Full elimination of expansion would strip coverage from more than 450,000 people and cost the state’s economy an estimated $3.8 billion.²²

A Commonwealth Fund analysis projected that ending expansion would cut Medicaid revenues at Kentucky’s 55 safety-net hospitals by 32 percent, raise uncompensated care by 113 percent, and drop their operating margins from 7.7 percent to 2.0 percent.²⁹ The Kentucky Center for Economic Policy estimates $880 billion in federal Medicaid cuts would translate to $1.9 billion in lost federal funding for Kentucky annually, along with 13,000 health care jobs and 11,500 jobs in other sectors.¹²

Unlike 12 other expansion states, Kentucky has no statutory “trigger” ending expansion automatically if the federal match drops.³⁰ Any rollback requires affirmative action by the governor or the legislature. The state’s own fiscal analysis lists Kentucky’s options if federal funding drops: put in more state dollars, cut eligibility, reduce services, or lower provider reimbursement rates.²²

1
Mississippi Today. Steve Beshear Kentucky Medicaid Expansion
2
Kaiser Family Foundation. Medicaid Expansion Enrollment
3
Georgetown University Center for Children and Families. Governor Supports Medicaid Expansion
4
The Commonwealth Fund. Medicaid Expansion in Kentucky Early Successes Future Uncertainty
5
National Center for Biotechnology Information. Uninsured Rate Changes in Kentucky Following ACA Implementation
6
Kentucky Center for Economic Policy. New Census Data Shows Progress on Health Insurance Coverage Has Stalled
7
University of Louisville. Study Finds Kentucky’s Medicaid Expansion Provided Most Benefit to Those in Poorer Areas
8
JAMA Network. Changes in Utilization and Health Among ACA Medicaid Expansion Enrollees
9
Families USA. Kentucky’s Medicaid Expansion Yields Coverage and Access to Important Preventive Care
10
Office of the Governor of Kentucky. Executive Order 2019-005
11
Kentucky Center for Economic Policy. Federal Funding Cuts to Medicaid and Public Health Will Worsen Kentucky’s Opioid Crisis
12
Kentucky Center for Economic Policy. Medicaid Is Crucial to Kentucky’s Economy
13
Kentucky Legislative Research Commission. KHA Rural Hospital Presentation
14
MACPAC. Medicaid and Rural Health
15
Kentucky Cabinet for Health and Family Services. Kentucky HEALTH Proposal Announcement
16
Lexington Herald-Leader. Beshear Rescinds Kentucky HEALTH Waiver
17
PBS NewsHour. Kentucky Is First State Granted Approval for Medicaid Work Requirements
18
Kaiser Family Foundation. Explaining Stewart v. Azar
19
The Commonwealth Fund. Why the Court Once Again Struck Down Federal Approval of Medicaid Work Experiments
20
Family Voices. Federal Court Invalidates Approval of Kentucky Waiver
21
Civil Rights Litigation Clearinghouse. Stewart v. Azar
22
Kentucky Cabinet for Health and Family Services. Impact of Congressional Budget Proposals to Kentucky Medicaid
23
Kentucky Lantern. Hard Choices Face Kentucky Republican Tasked With Recommending Medicaid Cuts
24
Kentucky Legislative Research Commission. 25RS HB 695
25
Foundation for a Healthy Kentucky. 2025 Kentucky General Assembly Recap
26
Georgetown University Center for Children and Families. Medicaid CHIP and ACA Marketplace Cuts in the Budget Reconciliation Law Explained
27
Centers for Medicare and Medicaid Services. Medicaid Community Engagement Requirement Interim Final Rule
28
Kentucky Legislative Research Commission. Update on Federal Changes to the Medicaid Program
29
The Commonwealth Fund. Federal Cuts to Medicaid Could End Medicaid Expansion and Affect Hospitals
30
Georgetown University Center for Children and Families. How Would Changes to Federal Medicaid Expansion Funding Impact People in Trigger States