The state will challenge the federal government’s recent decision to reject major elements of Gov. Brian Kemp’s plan to slightly expand Medicaid in Georgia.

The future of the Republican governor’s health care plan has been uncertain since earlier this year when the U.S. Centers for Medicare and Medicaid Services raised concerns about a work requirement for low-income Georgians to gain and keep coverage. The proposal was initially approved by the Trump administration last October.

The Biden administration notified state officials Thursday that it has withdrawn approval of the work requirement, emphasizing the pandemic’s long-term impact on the poor.

“CMS believes that the COVID-19 pandemic and its expected aftermath have made the state’s work requirement infeasible,” Chiquita Brooks-LaSure, who leads CMS, wrote in a Dec. 23 letter to state officials.

The federal agency concluded the work requirement “significantly compromises” the program’s effectiveness in promoting coverage for those newly eligible for Medicaid. The feds also retreated from a state requirement for some participants to pay monthly premiums. The state can proceed with the rest of the governor’s plan.

Kemp’s spokeswoman, Katie Byrd, says the governor plans to challenge the decision.

“Georgia proposed and received approval to implement an innovative waiver that would expand coverage and access in a fiscally conservative way. We are disappointed the Biden Administration chose to turn its back on a bipartisan group in the Georgia General Assembly that came together to help create a fair and balanced healthcare framework that increases options and lowers costs,” Byrd said in a statement.

“Though they attempted to hide behind the holiday in announcing two days before Christmas, we plan to challenge their misguided — likely political — decision in a court of law.”

Other state GOP officials fired back directly at President Joe Biden.

“It is shameful that President Biden has denied thousands of Georgians healthcare coverage. Like the Grinch, he has stolen hope away from so many families who need it — right at Christmas,” House Speaker David Ralston, a Blue Ridge Republican, said in a statement.

Kemp, who is up for reelection next year, has continued the GOP’s decade-long resistance to full Medicaid expansion under the Affordable Care Act, dismissing it as too costly in the long run. Georgia is one of a dozen states that have not expanded Medicaid. Congress this year passed a new federal sweetener for holdout states, and Democrats have also proposed a federal workaround program.

Instead of full expansion, the governor has proposed extending Medicaid coverage to low-income adults who complete 80 hours of work, school or other qualifying activity every month. Up to 50,000 people would likely gain coverage through his plan over time.

The federal agency’s decision intensifies the debate over Medicaid expansion ahead of next year’s election. Stacey Abrams, the Democratic nominee for governor in 2018 who centered her campaign on Medicaid expansion, is running again.

“Rather than file suit to callously deny healthcare to 400,000+ Georgians during the worst medical crisis in a century, instead — file legislation to expand Medicaid & serve low-income Georgians across the entire state,” Abrams tweeted on Christmas Eve.

Proponents of full Medicaid expansion also responded to the federal agency’s decision by urging state leaders to change course.

Without the work requirement, at least 237,000 more Georgians would become eligible for coverage through the governor’s plan — but at much greater cost, according to the Georgia Budget and Policy Institute. The cost to the state would likely soar to $650 million in just the first year, up from the $76 million state officials budgeted for this year.

“The federal government’s rejection of a work reporting requirement blocks what would have been an unnecessary obstacle to obtaining health care coverage for both employed and unemployed Georgians, but the cost of the program will now skyrocket,” said Caitlin Highland, GBPI’s director of strategic communications.

“Full Medicaid expansion is both the morally right and fiscally responsible choice to help Georgians access care while drawing down $1.9 billion in federal funding to cover Medicaid expansion costs as well as other state priorities such as education, rural broadband and workforce development.”

The governor has also defended a second waiver after the Biden administration pushed back on a provision that would bypass healthcare.gov. The federal government has reopened the plan for public comment through Jan. 9. This plan also includes another provision creating a reinsurance program that has been more favorably received.

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