Critics of the law welcomed the change, but said it does not go far enough to roll back the requirement which is already making it more difficult for many U.S. citizens to gain access to Medicaid healthcare coverage.

Exempting foster children "is the right thing to do, but the overall provision makes no sense whatsoever," Ron Pollack, executive director of Families USA, a healthcare consumer advocacy group, told United Press International. "Ironically the people who will be most hurt are U.S. citizens who lack official documents."

The requirement, part of the 2005 Deficit Reduction Act, required for the first time that all individuals applying for Medicaid as citizens produce documents like a passport or official birth certificate.

A subsequent reinterpretation exempted 8 million elderly and disabled beneficiaries, but left another 30 million at risk of losing their coverage.

Among those: half a million foster children.

Foster children were at risk because they could be lacking documents entirely, or simply not have access to anything in the possession of their absent or uncooperative biological families, Pollack said. "Foster children could be denied the care they need at a vulnerable stage in their lives.

"It's unfortunate (the requirement) was not corrected earlier, it means probably a number of people got hurt in the meantime."

But states are already moving ahead with implementing the requirement for Medicaid's remaining beneficiaries, and early evidence suggests it is having a profound impact.

States like Kansas and Utah have already reported significant drops in Medicaid enrollment. California -- the state with one of the highest documentation burdens -- has opted to delay the start of verification while it searches for ways to ensure coverage is not wrongfully denied.

A consortium of advocacy groups have vowed to press forward with a lawsuit filed in June that seeks to repeal the documentation requirement for all remaining Medicaid beneficiaries.

The list of legal documents accepted is too restrictive, the suit argues, and would illegally arbitrarily deny benefits to citizens.

On Dec. 8, U.S. Magistrate Judge Michael Mason agreed that foster children should be exempted, but declined to issue an emergency injunction, saying he did not feel foster children were being harmed.

Mason questioned the standing of the rest of the beneficiaries in the preliminary ruling, but the plaintiffs' attorneys have said they feel the issue can be resolved with small changes to the complaint.

"We are very pleased that Congress has now affirmed what we said all along -- the citizenship rule does not apply to foster and adopted children. A half million very vulnerable children are now spared from the government's unnecessary threat to their healthcare," said John Boustany, one of the plaintiffs' attorneys. "We still believe that the citizenship documentation rule also unconstitutionally threatens the health care of every Medicaid recipient. That issue remains before Judge Guzman, and we are awaiting his ruling on whether the case can proceed."

Calls to the Centers for Medicare and Medicaid Services were unreturned by press time.

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