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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. Kentucky became the

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Speaker 1: first state to win approval from the Trump administration to

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Speaker 1: require some Medicaid beneficiaries to work or pursue jobs, the

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Speaker 1: first work mandate for Medicaid. Twelve days later, advocacy groups

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Speaker 1: file the first lawsuit to stop Kentucky's changes, alleging the

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Speaker 1: administration's efforts to overhaul Medicaid are illegal and go beyond

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Speaker 1: the president's authority. A lot of first said, in light

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Speaker 1: of the fact that ten other states have asked Washington

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Speaker 1: to let them make similar changes, the implications of this

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Speaker 1: first legal class are significant. My guest is Sydney Watson,

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Speaker 1: Professor at St. Louis University School of Law. Sydney, please

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Speaker 1: describe Kentucky's changes to Medicaid um well. Governor Blooden's was

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Speaker 1: elected on a platform to repeal the Medicaid expansion, and

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Speaker 1: when that didn't seem to be politically possible he shifted

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Speaker 1: to requesting this waiver, and the waiver really dramatically changes

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Speaker 1: Medicaid for the people who got coverage through the Affordable

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Speaker 1: Care Act Medicaid expansion for low income, working working adults.

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Speaker 1: It would impose work requirements. It imposes high premiums even

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Speaker 1: for those who were without any income. It includes laws

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Speaker 1: of coverage and lockout for six months for failure to

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Speaker 1: file paperwork, and it cuts a lot of critical services

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Speaker 1: like transportation to and from medical services. It's a real

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Speaker 1: transformation of Medicaid. It creates tremendous barriers to care. And

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Speaker 1: it's estimated that about of these working age adults who

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Speaker 1: now have Medicaid coverage in Kentucky would lose coverage over

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Speaker 1: five years. What are the claims in the lawsuit challenging

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Speaker 1: Kentucky's waiver UM. It's a series of claims. Some of

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Speaker 1: them are based on the Administrative Procedure Act that the

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Speaker 1: waiver approval itself was an abusive discretion and not in

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Speaker 1: accordance with law UM. There are other claims that it

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Speaker 1: violates provisions of the Medicaid Act and the Social Security Act,

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Speaker 1: and there's also a constitutional claim that it violates to

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Speaker 1: take care clause that requires the President and the executive

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Speaker 1: branch too, and I quote take care that the laws

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Speaker 1: be faithfully executed. It's a constitutional claim that the Trump

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Speaker 1: administration is explicitly and willfully trying to undermine the Affordable

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Speaker 1: Care Act, trying to undermine the purposes of Medicaid through

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Speaker 1: approving this waiver. Now, the administration has not responded to

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Speaker 1: this lawsuit yet, but there's been so much talk about

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Speaker 1: this Medicaid waiver. What are likely to be some of

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Speaker 1: the legal responses to the lawsuit. Well, of course, the government,

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Speaker 1: you know, has time to file their complaint and then

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Speaker 1: we'll we'll see the briefing. I think one of the

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Speaker 1: key issues is going to be the agency's authority to

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Speaker 1: impose this work requirement, to impose these premiums UH, to

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Speaker 1: impose these paperwork requirements UM. And those claims turn partly

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Speaker 1: on language in the Medicaid Act, but also language about

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Speaker 1: Section eleven fifteen waivers, which are a way for states

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Speaker 1: to have additional flexibility and Medicaid to implement one experimental

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Speaker 1: programs to that promote the objectives of the Medicaid Act.

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Speaker 1: And I think what we're going to hear a lot

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Speaker 1: about is whether these new provisions promote the objectives of

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Speaker 1: the Medicaid Act. Um. The plaintiffs statement is that the

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Speaker 1: purposes of the Medicaid Act is to provide health insurance

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Speaker 1: and health coverage. UM. The vision of Kentucky and of

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Speaker 1: CMS is that Medicaid has suddenly become a program for work,

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Speaker 1: to promote work, to force work. Now, something that I

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Speaker 1: found a little odd is that the governor, Matt Bevans

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Speaker 1: signed an executive order directing state officials to strip Medicaid

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Speaker 1: coverage from nearly half a million Kentuckians if a court

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Speaker 1: strikes down any portion of Kentucky's waiver application. So if

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Speaker 1: the court says his action is illegal, he'll pull healthcare

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Speaker 1: coverage from residents of his state. Is that a not

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Speaker 1: so veiled threat to connect those two? I think you're

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Speaker 1: absolutely correct. It's very interesting political posturing that the threat

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Speaker 1: is if you sew me, I'm going to take away

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Speaker 1: these benefits. And can he do that? Um? I don't know.

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Speaker 1: I mean what was interesting is he did run his

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Speaker 1: gubernatorial campaign saying he was going to repeal this Affordable

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Speaker 1: Care Act expansion. Once he was in office, I think

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Speaker 1: he realized there were political consequences to that, and that

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Speaker 1: you know, and for many Kentuckians is a crucial way

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Speaker 1: to get healthcare coverage. And instead of going through with

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Speaker 1: that threat, we see the waiver. So I don't know.

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Speaker 1: I think it's public and political posturing. We'll see what

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Speaker 1: happens as the lawsuit goes forward. Will this case have

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Speaker 1: any impact beyond Kentucky? Oh? Absolutely. As you mentioned earlier,

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Speaker 1: ten other states have in requests for waivers um that

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Speaker 1: include work requirements. Many of them also include these high

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Speaker 1: premiums and other um, other barriers to care. Uh. So

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Speaker 1: this is I think a fundamental legal issue as we

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Speaker 1: move into the second year of the Trump administration of

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Speaker 1: what the Constitutional Administrative Procedure Act and statutory parameters that

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Speaker 1: define the Medicaid program um, And does c ms and

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Speaker 1: states have the authority to create these barriers to care?

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Speaker 1: Is this in some way asking courts to decide the

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Speaker 1: philosophical divide between conservatives and liberals over medicaid or is

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Speaker 1: it strictly based on the statutes? Um. I think this

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Speaker 1: is both a constitutional challenge and a statutory challenge, but

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Speaker 1: very much this is a legal challenge um, rather than

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Speaker 1: merely a political challenge. UM. The Medicaid Act was passed

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Speaker 1: in nineteen sixty five, and many of the provisions in

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Speaker 1: the Act make it different from traditional private insurance. Medicaid

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Speaker 1: is a safety net program for the poorest Americans and

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Speaker 1: it's structured in a way to meet their needs. UM

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Speaker 1: And over the last fifty years, while medicators had rocky

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Speaker 1: moments and been underfunded at times by states, it has

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Speaker 1: really helped promote health and help care follow income populations.

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Speaker 1: And I think the fundamental statutory constitutional issue here is

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Speaker 1: does the agency do states have the authority to flaunt

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Speaker 1: that protection and create a program that is really designed

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Speaker 1: to set up a sense a wall of baarrier between

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Speaker 1: people and that health insurance program. Sydney, about thirty seconds

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Speaker 1: left here. Who has the better side of the argument

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Speaker 1: in your view? UM always seen as the complaints so far,

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Speaker 1: I don't think anyone who follows Medicaid was surprised that

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Speaker 1: this complaint was going to be filed. There's been a

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Speaker 1: lot of talk about these legal theories. We'll see what

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Speaker 1: happens with the briefings. Thank you for being here. That's

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Speaker 1: Sydney Wattson. She's a professor at St. Louis University's School

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Speaker 1: of Law. A Brazilian appeals court unanimously upheld a graph

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Speaker 1: sentence against former president Louis and Nacio Lula da Silva

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Speaker 1: and added two and a half years to his jail sentence.

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Speaker 1: Hours later, Lula accepted his party's nomination as its presidential candidate.

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Speaker 1: In an act of defiance, his lawyers vowed to take

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Speaker 1: the case to brazil Supreme Court. Learning me from Brazilia

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Speaker 1: is rae call it Bloomberg News Brazilian Bureau chief ray.

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Speaker 1: What did the appeals court find? Well, essentially, they said

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Speaker 1: that contrary to what Lula's defense lawyers said, that this

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Speaker 1: was all fabricated, that it was a you know, a

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Speaker 1: political move, the poem out of the race. There, they

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Speaker 1: said that essentially there was sufficient evidence to conclude that

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Speaker 1: Lula not only participated in the scheme, he helped UH

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Speaker 1: forge it, if you will, by appointing um key personnel

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Speaker 1: and staff to um State companies, who then walked away

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Speaker 1: with millions of dollars in there and their pockets. And

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Speaker 1: he also personally benefited, They argued, he received a beach

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Speaker 1: side apartment, or really at least an upgrade to it.

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Speaker 1: UM in exchange for favors for for a construction company.

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Speaker 1: And of course the verdict was three to zero, which

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Speaker 1: left little doubt that Lula Lula's defence lawyers were hoping

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Speaker 1: for split vote, which would have given them more more

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Speaker 1: chance for an appeal. But but there it is, and

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Speaker 1: and and that's the that's the final verdict. He's been

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Speaker 1: leading the polls for October's presidential election and since the

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Speaker 1: conviction his poll numbers improved a little. Can you explain

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Speaker 1: the loyalty he inspires despite the charges and the conviction. Yes, absolutely,

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Speaker 1: he's somewhere north of thirty three is the voter intention

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Speaker 1: that he has in in the polls. Lula is one

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Speaker 1: of those historic figures. I mean, he's he's larger than life.

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Speaker 1: He's he's pulled millions of people out of poverty. He's

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Speaker 1: probably the first first president that comes from UM, from

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Speaker 1: a rather humble background UM. And people don't don't forget that.

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Speaker 1: And of course we have to remember that when he

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Speaker 1: was in off As, those were the boom days. That's

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Speaker 1: where you know that the commodity boom was going on.

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Speaker 1: Brazilva's exporting soybeans, iron ore, all sorts of things, and

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Speaker 1: things were going well, um, and so there's a bit

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Speaker 1: of reminiscing going on as well. Well, if we had

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Speaker 1: Lula back, things would be good again. Um. But let's

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Speaker 1: not forget there are more people who don't want him

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Speaker 1: president than there are people who do. Um. So that's

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Speaker 1: something to to bear in mind. Not everybody wants him back.

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Speaker 1: The Silva still has several avenues of appeal. Is there

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Speaker 1: likely to be a lot months of uncertainty ahead of

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Speaker 1: the vote. That's absolutely right. It's gonna be a long

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Speaker 1: legal battle, um, finding legal loopholes, and unfortunately that's the

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Speaker 1: worst scenario for investors, for citizens, especially if they're very damaging.

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Speaker 1: Epis shout of years of crisis, of doubts of our

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Speaker 1: democracy the people that actually want dictatorship back has has

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Speaker 1: gone up. And that's the worrying part. You know, people

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Speaker 1: want a clean, fair election. The lasting Brazil needs right

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Speaker 1: now is doubts over who can run, why this person

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Speaker 1: can or cannot run. Hopefully all that will be settled

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Speaker 1: before the election in October seven. And I've read some

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Speaker 1: politicians saying that if he is not in the election,

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Speaker 1: there will be those kinds of doubts about it. Well again,

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Speaker 1: I mean that's what they're alleging, that this is a

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Speaker 1: political move to pull him out of the race. We

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Speaker 1: do have to keep in mind he's not the only

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Speaker 1: one being sentenced. As a matter of fact, this whole

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Speaker 1: car wash operation that's been going on for for years

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Speaker 1: has put dozens of people behind bars from different political parties.

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Speaker 1: Lula is not the only one. And the same court

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Speaker 1: that upheld his conviction yesterday has up up pulled more

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Speaker 1: than two dozen similar convictions. So I think that puts

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Speaker 1: it a bit into into into perspective that this perhaps

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Speaker 1: isn't quite the political persecution that Lula would would have

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Speaker 1: it be. He's seventy two years old. Why did the

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Speaker 1: court add two and a half years to his jail

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Speaker 1: sentence to make a ten Well, look, I'm afraid, my my,

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Speaker 1: my legal expertise there comes to an end. They simply

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Speaker 1: looked at the facts and if he found guilty of

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Speaker 1: certain charges, then they you know, got out the calculator

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Speaker 1: and find you know, found that that that that that

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Speaker 1: deserved more than twelve years. But I think the psychological

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Speaker 1: impact of that is just that it was all the

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Speaker 1: more of a blow. You know, they wanted him to

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Speaker 1: you know, uh, they split vote at least maybe get

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Speaker 1: him off the hook. But no, on the contrary, it

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Speaker 1: got worse. So, you know, a big blow for Lulah

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Speaker 1: that day. And what are the I know you're not

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Speaker 1: legal expert on this, but are there are people saying

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Speaker 1: that they has a chance on appeal? Um, the chances

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Speaker 1: very small. I mean, frankly, there's a there's a law

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Speaker 1: in Brazil that clearly states anybody who's been convicted UM

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Speaker 1: in an appeals court, criminally convicted, cannot run. So they're

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Speaker 1: going to the motion. They're gonna look for all legal loopholes,

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Speaker 1: but frankly, the chances are small. There is a law. Um.

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Speaker 1: What what needs to happen is that justice needs to

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Speaker 1: be done quickly. Again, as I said, so the Brazilians

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Speaker 1: can have a fear fair and clean election. When I

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Speaker 1: was reading about the amount of security yesterday around the courthouse,

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Speaker 1: it was really it's sort of was like a something

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Speaker 1: that you see in a movie because it was just

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Speaker 1: so overpowering. Describe what what the setup was like, Yes,

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Speaker 1: particularly for for Brazilian standards, there were sharpshooters on the roof.

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Speaker 1: There were even Navy patrol ships on a river that's

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Speaker 1: ports in the southern The southern city is close to

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Speaker 1: the ocean, but this was a river. The navy patrol ships.

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Speaker 1: They closed down part of the the airspace above the courthouse,

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Speaker 1: so quite quite you know, tight security measures, um, which

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Speaker 1: are a bit unusual for for Brazil. I think the

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Speaker 1: concern was because tens of thousands of supporters of Lula

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Speaker 1: were busted into the city. UM that the conditions for

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Speaker 1: safe trial we're not given. Hence the the extra security measures.

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Speaker 1: And it's not entirely I mean, we had a couple

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Speaker 1: of months ago last year, um, the agriculture ministry here

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Speaker 1: in Brazilia was set on fire, for example, during during

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Speaker 1: a protest. UM. So I think they were just trying

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Speaker 1: to be on the safe side and ensure that you know,

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Speaker 1: violence and interruption of this trial would have would have

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Speaker 1: been worse yet than than any sort of outcome. UM.

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Speaker 1: So I think it was part of the wise thing

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Speaker 1: to do, all right, And thank you so much for

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Speaker 1: being here. Ray, that's Ray College. He's a Bloomberg News

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Speaker 1: Brazilian bureau chie. Thanks for listening to the Bloomberg Law podcast.

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Speaker 1: As you can subscribe and listen to the show on

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Speaker 1: Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcast.

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Speaker 1: I'm June Brosso. This is Bloomberg h