Court Upholds Easing of State Medicaid Rule

A move by California to increase the amount of income a medically needy couple can keep for non-medical needs and remain eligible for Medicaid has been upheld by the U.S. 9th Circuit Court of Appeals, which overruled the federal government.

Although about 22,000 people are nominally affected by the decision, state Medicaid eligibility policy chief Gary M. Pettigrew said the net result is simply to maintain the medically needy income level increase that has been in place since the Legislature acted in 1983.

The U.S. Department of Health and Human Services has threatened to withdraw its reimbursement to California for those cases, Pettigrew said, but the state has not been penalized to date. It is not known whether federal officials plan to appeal the 9th Circuit Court’s decision to the U.S. Supreme Court.

Income Level Raises

Under the state’s 1983 amendment to its Medicaid plan, the medically needy income level for couples considered needy but not eligible for welfare was raised from $544 to $709 a month. It has since been increased twice and is now $784 a month, Pettigrew said.

The federal administrator of health care financing and then-Secretary of Health and Human Services Margaret Heckler disapproved of the California change on grounds that it violated a provision of the Social Security Act that limits the amount the medically need income level can be raised.

But the 9th Circuit Court, noting that the Legislature acted in response to findings that elderly and disabled adults incur greater living expenses than families with dependent children, concluded that the law afforded some leeway and thus found that the federal disapproval was “arbitrary and capricious,” as well as not being in accordance with the law.