Kentucky's sweeping Medicaid work requirement experiment is about to begin

Republicans say that Medicaid recipients will become healthier and more financially independent if they work.

Kentucky is about to find out if that's true.

The Bluegrass State is about to launch a sweeping overhaul of its Medicaid program, taking advantage of new powers granted by the Trump administration that allows states to require many recipients to work or lose their benefits.

"There is dignity associated with earning the value of something you receive," Governor Matt Bevin said when the initiative was unveiled in January. Kentuckians want "an opportunity not to be put into a dead-end entitlement trap, but rather be put on a path forward and upwards so they can do for themselves."

Kentucky was the first state to receive permission to mandate work requirements -- a historic change in the 53-year-old program. What happens there will be closely watched by nearly a dozen other states that have either already been granted work requirement waivers or are seeking them.

Starting in July, residents of Campbell County in Northern Kentucky will have to fulfill the new rules of "community engagement," as state officials call the mandate. By the end of the year, up to 200,000 Kentuckians will have to comply as the state rolls out the requirements to nearly every county.

Related: Kentucky is first state ever to require Medicaid recipients to work

Even more low-income folks -- up to 500,000, according to state estimates -- will be subject to other new requirements starting July 1. They will have to start paying premiums of up to $15 a month and promptly report any changes to their income, employment or family size. If they fail to do so, some could be locked out of the program for up to six months.

Community advocates say the new rules could leave tens of thousands of residents without access to much needed medical care. They argue that it will reverse many of the coverage and health care gains the state enjoyed after its then-Democratic Governor Steve Beshear expanded Medicaid in 2014 as part of the Affordable Care Act. Kentucky's uninsured rate fell to 5.1% in 2016, down from 14.3% in 2013, according to the latest Census Bureau data.

"Medicaid coverage enables people to work," said Anne Marie Regan, senior attorney at the Kentucky Equal Justice Center, since it's harder to hold down a job when one is sick. "This [waiver] approval got it exactly backwards by conditioning health coverage on work."

The center is one of three groups that have filed a lawsuit in federal court seeking to block the work requirement mandate from taking effect. The judge's ruling is expected any day now.

The lawsuit has not stopped the state from moving forward. Since gaining federal approval, officials from several agencies have traveled around the state holding meetings and forums to explain the complicated layers of Kentucky HEALTH, which stands for Helping to Engage and Achieve Long-Term Health.

Related: Trump administration allows states to make Medicaid recipients work

The overhaul won't affect all of the 1.4 million enrollees in the state's Medicaid program, which covers about one-third of Kentuckians. The elderly and disabled won't see any changes, and many others will be exempt from the work requirement, including children, pregnant women, the medically frail, full-time students and primary caregivers of dependent family members.

Some 350,000 people, however, will be subject to the new mandate, according to state estimates. Of that group, at least half already have jobs or are in school.

The rest will have to find work or satisfy the requirement by searching for employment, enrolling in job training programs, taking classes, volunteering, serving as a caregiver or enrolling in drug treatment for at least 80 hours a month.

Related: States aren't waiting for Washington to require poor residents to work

Many of these folks didn't finish high school, while others have never held a job so preparing them to work will be a heavy lift. The state's regional workforce development boards, which help job seekers find positions and training, are bracing to assist thousands of new clients once the new work requirements are rolled out. Other nonprofit groups, health clinics and Medicaid insurers are also pitching in.

For many Medicaid recipients, it could take time to prepare them to join the labor market. The workforce agencies are not only focusing on getting these folks a job, but making sure they keep it.

"It's important that we do all we can to get people to succeed," said Jeff Whitehead, executive director of the Eastern Kentucky Concentrated Employment Program, one of the workforce agencies. "We don't want to rush to stick someone with an employer before they are ready."

In the more urban parts of the state, positions are available in hotels, construction, manufacturing and health care. But the selection is slimmer in the rural areas, where job openings are more likely in restaurants, retail stores and health care facilities. The boards are also hoping to place people in telecommuting posts so they can work from home since many don't have reliable transportation.

Kentucky has allocated $5 million in state money to aid Medicaid recipients' transition to employment in the first year of the roll out. The workforce boards will also be able to access about $3.5 million in existing federal job training funds to assist in the effort. But the leaders of several workforce agencies said much more is needed.

Employers also have to get on board, and that's still a work in progress, state and regional officials say. They are selling the program as a new source for workers at a time when many employers are struggling to fill their open positions because the economy has improved. But it remains to be seen whether the Medicaid recipients have the skills needed for these jobs and whether employers will be willing to hire these folks.

"We have to work with employers to embrace this population and develop them in jobs," said Michael Gritton, executive director of KentuckianaWorks, the workforce agency for the seven counties in the Louisville area. Gritton expects to service up to 30,000 new clients, double its existing caseload.

Community groups, however, maintain that the state's true mission is to shrink the Medicaid program.

The state itself estimates that 95,000 fewer people will be enrolled within five years, and that the overhaul could save $2 billion in state and federal funds over that period. Governor Bevin has said that once recipients get jobs, many won't qualify for Medicaid anymore.

But officials argue that their goal is to help get low-income residents more engaged in their communities and improve their lives.

"We wouldn't have put so much effort in if our only intent was to kick people off," said Kristi Putnam, deputy secretary for Kentucky's Cabinet for Health and Family Services, which is leading the Medicaid overhaul.

This is the first in CNN's series of stories looking at the rollout of Kentucky's new Medicaid requirements. We will cover its successes, challenges and failures.