Kentucky Governor’s Health Care Legacy at Risk in 2015 Election

Steve Beshear’s signature achievement was expanding health-insurance coverage after Obamacare. But he did it via executive action, making the state’s health care setup vulnerable if Republican Matt Bevin wins the governor’s race.

Kentucky Democratic gubernatorial candidate Jack Conway shakes hands with current Kentucky Gov. Steve Beshear, Frankfort, Kentucky, May 19, 2015.
Karyn Bruggeman
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Karyn Bruggeman
Oct. 21, 2015, 4:41 p.m.

Ken­tucky is con­sidered one of the great suc­cesses of Obama­care, with its share of res­id­ents without health in­sur­ance fall­ing more than any state since the Af­ford­able Care Act was im­ple­men­ted in 2013. But be­cause Demo­crat­ic Gov. Steve Be­s­hear ac­com­plished much of that by ex­ec­ut­ive or­der, his sig­na­ture achieve­ment faces a unique threat as Ken­tucky elects his suc­cessor next month.

The fu­ture of Ken­tucky’s Medi­caid ex­pan­sion and health-in­sur­ance ex­change pro­grams could fall in­to the hands of Re­pub­lic­an Matt Bev­in, who has been one of the most staunchly anti-Obama­care gubernat­ori­al can­did­ates in the na­tion over the past few years. He has trailed Demo­crat­ic At­tor­ney Gen­er­al Jack Con­way in pub­lic polls, but the gov­ernor­ship is still well with­in Bev­in’s reach in a GOP-trend­ing state and a low-turnout elec­tion.

And if Bev­in wins, it would mean ma­jor changes to the state’s health care land­scape. Con­way, mean­while, has said he would keep things in­tact and has been at­tack­ing Bev­in for want­ing to dis­mantle the cur­rent sys­tem.

“All of this was able to be ac­com­plished without le­gis­la­tion, which was good news for Ken­tucky,” Be­s­hear said in an in­ter­view. He was one of just three gov­ernors, along with ones in Alaska and West Vir­gin­ia, to pur­sue Medi­caid ex­pan­sion through ex­ec­ut­ive ac­tion; Kynect, the state health-in­sur­ance ex­change, was es­tab­lished the same way.

“And at the same time, a gov­ernor who wanted to ab­ol­ish the pro­gram could very eas­ily do it,” Be­s­hear con­tin­ued.

Since 2013, Ken­tucky saw the largest drop in the num­ber of un­in­sured of any state. More than half a mil­lion Ken­tucki­ans gained health-in­sur­ance cov­er­age, mostly through Medi­caid, and the state’s un­in­sured rate is down to roughly 9 per­cent from over 20 per­cent in 2013.

Bev­in says he in­tends to dis­mantle the state’s health-in­sur­ance ex­change and switch people over to the fed­er­al ex­change, which would re­quire people to re-en­roll. Be­s­hear noted any such trans­ition would take at least a year to com­plete, be­cause “you’d have to give at least 12 months’ no­tice un­der the law be­fore you re­lin­quish con­trol of your loc­al ex­change.”

There would also be costs in­volved. “If you were to ab­ol­ish the ex­change and go to the fed­er­al ex­change, the pro­jec­tions we have at this point is that the IT work alone, that would take about nine months to com­plete, would cost over $23 mil­lion, and the Com­mon­wealth would be re­spons­ible for the cost of de­com­mis­sion­ing our loc­al ex­change,” Be­s­hear said.

Bev­in’s cam­paign points to un­cer­tainty around how the state will pay for Kynect and Medi­caid ex­pan­sion over the long run as jus­ti­fic­a­tion for im­me­di­ate change. Bev­in cam­paign spokes­wo­man Jes­sica Ditto said, if he’s elec­ted, “Matt would start the pro­cess of trans­ition­ing Kynect im­me­di­ately, with the goal of hav­ing the trans­ition com­plete by the 2017 open-[en­roll­ment] sea­son.”

Even with the early tech­no­lo­gic­al is­sues ex­per­i­enced by many state-run in­sur­ance ex­changes, like the one in Ore­gon, no state has yet de­com­mis­sioned an op­er­a­tion­al ex­change. “As far as the ex­pan­sion, we haven’t ac­tu­ally seen any­body ne­ces­sar­ily roll back the cov­er­age,” said Laura Snyder, a seni­or policy ana­lyst for the Kais­er Fam­ily Found­a­tion.

On the top­ic of Medi­caid ex­pan­sion, in Feb­ru­ary (in the midst of the Re­pub­lic­an primary), Bev­in said he “would re­verse that im­me­di­ately,” but he has since backed away from that com­ment—per­haps real­iz­ing the polit­ic­al and prac­tic­al dif­fi­culties in­volved. And des­pite Demo­crat’s hand-wringing over that spe­cif­ic com­ment, Bev­in wouldn’t be able to achieve the changes he seeks quickly. Any changes would take months, not days to ac­com­plish.

“It would be much more dif­fi­cult than he an­ti­cip­ates, but un­for­tu­nately, he has no ex­per­i­ence in gov­ern­ment. He has no ex­per­i­ence in these kinds of pro­grams, and he ac­tu­ally be­lieves what he’s say­ing, and that’s the scar­i­est part of all this,” said Be­s­hear.

Bev­in’s cam­paign ac­know­ledges the chal­lenges in­volved and that it may not be pos­sible to get a new Medi­caid plan in place be­fore 2017.

Start­ing in Septem­ber, Bev­in has said he’d re-eval­u­ate Medi­caid ex­pan­sion and ex­plore an al­tern­at­ive com­prom­ise plan through what’s known as a fed­er­al 1115 waiver. States have to seek 1115 waivers any time they want per­mis­sion from the fed­er­al gov­ern­ment to waive cer­tain pro­vi­sions writ­ten in­to fed­er­al stat­utes de­fin­ing Medi­caid be­ne­fits and how they’re de­livered. Six states, in­clud­ing Arkan­sas, In­di­ana, Iowa, Michigan, New Hamp­shire, and Pennsylvania ex­pan­ded Medi­caid un­der Obama­care us­ing waivers, al­low­ing them to in­clude pro­vi­sions for things like health sav­ings ac­counts or to re­quire that re­cip­i­ents pay small premi­ums. Bev­in most of­ten points to In­di­ana’s plan as an ex­ample.  

Ac­cord­ing to Snyder, with a waiver plan, “It’s not like a blank check, and they usu­ally take quite a bit of ne­go­ti­at­ing between the states and the fed­er­al level.”

“The goal would be to get a waiver ap­proved pri­or to 2017, when the state starts to pick up our share of the Medi­caid ex­pan­sion,” Ditto said. “However, that is a lofty goal, giv­en all the mov­ing parts and the need for in­sur­ance com­pan­ies to de­vel­op new plans based on new stand­ards.”

Bev­in’s cam­paign stands by state­ments that they would re­peal Medi­caid ex­pan­sion, but con­trary to charges that they would kick 440,000 people off Medi­caid im­me­di­ately, Ditto said it should be noted that un­til that fed­er­al ap­prov­al is gran­ted for a waiver plan, the de­tails of which they would hope to craft with the le­gis­lature and vari­ous stake­hold­ers, “We would con­tin­ue to op­er­ate un­der the cur­rent Medi­caid con­struct so that people could stay covered.”

Ditto said the goal is that when those covered un­der Medi­caid ex­pan­sion go to re-en­roll, they would be offered a new plan un­der a waiver agree­ment “that will re­quire more skin in the game and that cer­tain re­quire­ments are met to con­tin­ue eli­gib­il­ity.” 

Both Con­way and the Be­s­hear ad­min­is­tra­tion point to re­ports show­ing waiver plans like the ones Bev­in’s pro­pos­ing would res­ult in high­er costs and less ex­tens­ive cov­er­age, and Be­s­hear him­self says it’s one reas­on why he has been cam­paign­ing so hard to elect a Demo­crat­ic suc­cessor.

“I’ve been in the race with both feet be­cause not only do I think Jack is the best can­did­ate,” Be­s­hear said, “but I don’t want to see the work of eight years thrown out the win­dow in six months.”

The year­long time line in­volved in any po­ten­tial change would also give groups that ad­voc­ated for Ken­tucky’s cur­rent pro­grams—in­clud­ing busi­nesses, hos­pit­als, and in­sur­ance com­pan­ies—to build res­ist­ance to any changes Bev­in might try to make.

“We were very sup­port­ive and en­cour­aged by the state-based ex­change,” said Ashli Watts, the pub­lic-af­fairs dir­ect­or for the Ken­tucky Cham­ber of Com­merce. “So as long as it’s run more ef­fi­ciently than the fed­er­al ex­change and hope­fully cheap­er, then we would en­cour­age the gov­ernor to con­tin­ue it.”

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