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Kentucky Gov. Matt Bevin (left) and President Trump. Photo: Mark Wilson/Getty Images

Republican governors and the Trump administration both suffered a serious setback on Friday when a federal judge blocked Kentucky's version of Medicaid work requirements from taking effect.

Why it matters: Work requirements are among the most significant changes the Trump administration has made so far in health policy. The new rules are also a critical part of conservatives' effort to frame Medicaid as a welfare program.

The catch: That's exactly why the policy ran into trouble in court.

Driving the news: U.S. District Judge James Boasberg ruled Friday that the Health and Human Services Department had not sufficiently demonstrated that work requirements would further Medicaid's goals as a health care program.

  • That's a requirement of the waiver process under which HHS has been approving work requirements.
  • "The Secretary never once mentions the estimated 95,000 people who would lose coverage, which gives the Court little reason to think that he seriously grappled with the bottomline impact on healthcare," Boasberg wrote.

What to watch: Boasberg's ruling only applies to Kentucky, not the other states where HHS has approved work requirements. But this will not be the last legal challenge, and if more judges follow Boasberg's lead, the administration's effort to redefine Medicaid could end up backfiring.

  • In Kentucky, Gov. Matt Bevin has said he will back out of the Medicaid expansion entirely if he ultimately loses this litigation.
  • In the meantime, Boasberg gave HHS another chance to come back with a stronger justification for the new rules.

Meanwhile:

  • Maine Gov. Paul LePage has, unsurprisingly, vetoed the latest effort to implement the state's expansion, which voters approved last year.
  • Republicans in Idaho are hoping to formally cement the party's opposition to an upcoming ballot initiative on Medicaid expansion.
  • The Tennesseean asks why Tennessee has not joined the expansion ranks.

Go deeper

Why the Fed might want to jolt the markets

Fed chair Jerome Powell at a hearing earlier this month. Photo: Brendan Smialowski-Pool/Getty Images

So far, financial markets are cooperating nicely with the Federal Reserve's efforts to restrain inflation. They're doing the Fed's work for it by creating tighter financial conditions, in a distinctly non-panicky way.

  • But as the central bank's policymakers meet this week, an underlying question they face is whether the adjustment is happening too slowly.
Kate Marino, author of Markets
2 hours ago - Economy & Business

Omicron outbreaks were bad for business in January

Data: New York Federal Reserve Bank; Chart: Axios Visuals

Emerging anecdotal evidence shows just how hard the recent rise in COVID-19 cases hit businesses in early January — but that hasn't hurt some business leaders’ longer-term views of their companies' prospects.

Why it matters: Increasingly, the economic recovery has come in fits and starts that move in tandem with new peaks in cases. Look no further than the thousands of canceled flights and shuttered Broadway theaters in the wake of the Omicron variant's spread over the last few months.

Tina Reed, author of Vitals
3 hours ago - Health

The shifting definition of fully vaccinated

Illustration: Sarah Grillo/Axios

The definition of what it means to be "fully vaccinated" is evolving even as the CDC has remained careful not to change it officially.

Why it matters: CDC officials have been balancing the job of convincing Americans who've already gotten two doses of the importance of boosters with getting many Americans who still need their first doses to get their shots at all.

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