Obamacare in Kentucky - a shifting landscape

Kentucky's ACA implementation is changing under Governor Bevin

Kentucky Governor Matt Bevin is dismantling Kynect and modifying Medicaid expansion in 2017
Matt Bevin, Kentucky's new Governor, will switch the state to Heatlhcare.gov in 2017, and is working to modify Medicaid expansion under the ACA. Win McNamee/Getty Images News

Kentucky's implementation of the Affordable Care Act has been making headlines for the last few years, and that continues to be the case - although the reasons have changed.

In 2013, when the ACA's exchanges went live, Kentucky was the only state in the southeastern US that had established its own exchange, and was one of only two (the other was Arkansas) where Medicaid was expanded under the ACA.

Not only was Kentucky unique in its geographical area in terms of ACA implementation, the state-run exchange (Kynect) was operational from the start, even when most of the other exchanges were mired in technology glitches.

During the first open enrollment period, Kynect was quickly identified as among the most successful in the nation, and was held up as a model for how a state-run exchange should operate. Their success continued in 2015.

Executive orders can cut both ways

Former Governor Steve Beshear implemented Medicaid expansion by executive order, and he also created (and continued) Kynect with executive orders. His moves were not without controversy: Republicans in Kentucky's Senate passed legislation in 2013 that would have required legislative approve - as opposed to an executive order - to expand Medicaid or create a state-based exchange, but Democrats in the House didn't pass either bill. 

Beshear's use of executive orders to sidestep the legislature enabled Kentucky to be one of the most successful states in terms of ACA implementation. The exchange is considered one of the best in the country, access to healthcare - particularly for low-income residents - is dramatically improved, and according to census data, Kentucky's percentage point reduction in the uninsured rate from 2013 to 2014 was the highest in the country.

But executive orders are only as strong as the next governor's willingness to keep them in place. In November 2015, Kentucky elected Matt Bevin as their new governor (Beshear was term-limited and could not run). Bevin's position on the ACA is the polar opposite of Beshear's. While Beshear embraced the ACA, Bevin campaigned on an anti-ACA platform, promising to roll back Medicaid expansion and eliminate Kynect.

Bevin took office in December 2015. Within the first few weeks, he began outlining his plans for a Section 1115 Medicaid demonstration waiver that would allow the state to craft its own version of Medicaid expansion, and he also notified the US Department of Health and Human Services that Kentucky would dismantle Kynect and switch to Healthcare.gov by the end of 2016.

Bevin's position on Medicaid expansion has softened with time; early in 2015, he was calling for the elimination of Medicaid expansion altogether in the state, but by the end of the year, it appeared much more likely that Medicaid expansion will remain in place in Kentucky, but with modifications starting in 2017 that might include increased cost-sharing or the purchase of subsidized private plans through the exchange for some enrollees.

How will Bevin's changes impact the people of Kentucky?

Because Kentucky's exchange and Medicaid expansion have been so successful, the new governor's plan to eliminate Kynect and modify the state's Medicaid expansion have been creating headlines across the country. 

But while healthcare policy analysts are debating the relative pros and cons of Bevin's changes, the people of Kentucky are wondering whether they're going to lose their health insurance.

In most cases, the answer is probably not. Regardless of whether Kentucky uses Kynect or Healthcare.gov in 2017, the same plans and subsidies will be available for residents who buy their own health insurance (although they might not be the same plans that are available in 2016 - plan availability can change from one year to the next, regardless of whether the exchange is state-run or federally-run).

And it appears that Bevin is planning to continue Medicaid expansion, although he's been clear that he wants to implement changes that require enrollees to pay more for their coverage and care. In other states that have implemented Section 1115 waivers, premiums for enrollees with income above the poverty level is a common feature, and that's likely to be an avenue that Bevin pursues.

Although the premiums tend to be very modest when compared with the cost of private health insurance, evidence gathered from other states indicates that even small premiums in the Medicaid program tend to result in significantly lower enrollment among the population that must pay premiums. 

If Bevin moves ahead with his commitment to modify the state's Medicaid expansion - and assuming HHS approves his proposal - there is no doubt that the total number of people enrolled in expanded Medicaid in Kentucky will be lower going forward than it would have been had the current Medicaid expansion been left intact. But for people willing and able to comply with whatever requirements are put in place under the state's 1115 waiver, expanded Medicaid will still be available for low-income residents in Kentucky.

Interestingly enough - despite the fact that Bevin campaigned on an anti-Obamacare platform, the majority of Kentucky residents would prefer that Bevin keep Kynect and Medicaid expansion without changes. 

It appears that will not be the case, although even with Bevin's proposed changes, health insurance, subsidies, and Medicaid will continue to be available to most of the people for whom they're currently available. But instead of running its own show, Kentucky will be using the federal government's exchange. And instead of simply providing Medicaid to all low-income residents, Kentucky will be making at least some of them jump through some new hoops in order to get coverage.

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