‘Kynect’ the dots, Bevin

Nov 11, 2015 at 3:16 pm
‘Kynect’ the dots, Bevin

In recent years, Democrats have widely embraced the attack on the Grand Ol’ Party for wanting to take us back in time — specific era to be determined by particular issue. If newly-elected governor Matt Bevin delivers on his health care promises, he will indeed become the living embodiment of that backward-facing accusation, and Kentucky will find out just what decade, or century, it just voted for.

Ultimately, the foremost question surrounding Bevin’s administration is if he will disband Kynect and roll back Medicaid expansion. Should he be successful in his rollback efforts, he truly will take Kentucky back into the past — when the state’s uninsured rate was over 20 percent (currently under 10 as a result of state efforts and Obamacare) and half a million Kentucky families fell into the Medicaid coverage gap.

Thus far, all indications are that he intends to pursue the repeal. Bevin, claiming a mandate from  a mere 16 percent of registered voters, said, “It is the type of thing that rarely happens politically where we have a clear mandate from people.” And while I would dispute his self-aggrandizing perspective of a “mandate” — one based on apathy — we all have to live with the result.

So what does it mean for Kentucky?

First, there is no reasonable rational for rolling back Medicaid expansion. Obamacare expands Medicaid coverage to insure families of four making up to $33,000 per year. Bevin and Republicans like to talk about motivating people to bring themselves out of poverty. I hereby challenge anyone to show me two parents with two or more children, who are not striving to make more money because they are afriad of losing their Medicaid.

The truth is that if you roll back Medicaid, you recreate “coverage gap,” a situation where families make too much money to qualify for Medicaid but still can’t afford to buy insurance.

Approximately 400,000 Kentuckians now have Medicaid coverage as a result of the Affordable Care Act. As well, according to the Kaiser Family Foundation, 43 percent of the remaining 285,000 uninsured Kentuckians are, or have been, eligible for Medicaid. And the truly gruesome truth is that roughly half of the newly-covered 400,000 Kentuckians are children (about 500,000 of the 1.2 million Kentuckians on Medicaid are children).

Bevin has advocated for modeling the system after the Indiana model, where “everyone has some skin in the game.” Well, Governor Bevin, there are a half million Kentucky children who have a lot of skin on the line. Are you going to tell those lazy takers to get out there and earn an honest wage?

And Bevin has repeatedly disregarded the independent analysis of the Medicaid expansion by Deloitte Consulting, an enormously reputable consulting firm. Ultimately, they  report that, by 2021, Medicaid expansion will have a net positive economic impact of almost $820 million on the state. He is correct that when the federal subsidies are up that final year, the state is projected to lose about $40 million. Compare that to the impact without Medicaid expansion, when by 2021 Kentucky will have lost $100 million (new debt) but will break even that last year. Now I may be a liberal Democrat, but I know I could find some very conservative Republicans who would like to look at 2022 faced with a $40 million deficit, while sitting on $820 million more in cash, as opposed to no deficit and $100 million of debt.

While presumptuous of me, I would also imagine that an innovative, business-minded governor, with all the real-world experience of Matt Bevin, could utilize that $820 million surplus to find some phenomenally innovative investments over the next several years that should more than account for the $40 million deficit in 2022 and every year thereafter — while also creating a healthier Kentucky.

And if your skepticism prohibits you from believing that a government program can create jobs, remember that 80 percent of Humana’s overall business is administering government programs, and they employ over 12,000 people in the Louisville area and 50,000 nationally.

So, while Bevin likes to rail against the 10 percent of expanded Medicaid cost, Kentucky will eventually have to account for, he is going to have some serious soul-searching to do before he rips the security blanket from beneath hundreds of thousands of Kentuckians.

Finally, Bevin will have to hear from the providers themselves. In 2014 alone, Kentucky providers realized an economic infusion of $1.16 billion as result of Medicaid expansion. That is $1.16 billion in all new money to Kentucky hospitals and healthcare providers as a result of Medicaid expansion alone! It gets better. Additionally, hospitals saw a reduction of another $1.15 billion in uncompensated care charges, and that was in the first three quarters of 2014 (versus 2013).

Oh, and the economic cherry on top: Overall, Medicaid expansion is forecasted to create $20 billion in new payments to healthcare providers between 2014 and 2021. It will be fascinating to see how Bevin will tell providers that they’re not going to get that $20 billion they were expecting.

Second, the more complicated issue is what he intends to do with Kynect.

Under the original healthcare reform, Obamacare tied the adoption of a state exchange, like Kynect, with the opportunity for citizens of those states to be able to utilize federal subsidies to help pay for private health insurance. This past summer the Supreme Court ruled that federal subsidies must be made available to all citizens, even those finding insurance from the federal exchange. This ruling somewhat undermined the need for Kynect, and the opinions on whether we need a state exchange are becoming more mixed.

One thing is clear though: Bevin continues to prove he fundamentally does not understand the system. His primary basis for wanting to eliminate the immensely popular exchange is because, he asks, “As the subsidies wind down, why maintain a system that adds no additional value to the participants?” Once again, Bevin  conflates the federal subsidies for Medicaid with Kynect. The two are completely unrelated, and Kentucky’s governor-elect still does not know that!

Further, in his first interview since the election he sent a blatantly wrong message to those who are currently in open enrollment looking for insurance, saying: “They would be wise to open-enroll on the federal level if they want one less bump in their road.” Personally, I would hope the governor of Kentucky would know that Kentuckians can not enroll in the federal exchange because we have a state exchange in place.

The truth is that there are several advantages to keeping Kynect. First, millions of dollars have been spent to build the hugely successful exchange, one that has been lauded across the country as a model for other states. Similarly, while terminating Kynect would waste the millions already invested, it has been estimated that over $20 million more would have to be spent transitioning to a federal exchange.

Furthermore, running your own state exchange allows you to customize the interface and how the support centers are operated, essentially providing a more direct, customized line of support for consumer services. Also, by folding Kentucky into the federal exchange, Kentucky would forego the opportunity to work with insurance companies to be part of the exchange. In other words, as part of the federal exchange, we would not be guaranteed to have, nor would we have direct authority to negotiate with, any specific insurance companies included in our marketplace. So not only would ending Kynect waste money already spent, we would be forced to spend more money on a worse product. 

Also ironic is that a small-government conservative, like Bevin, is giving up state control over its health exchange for the bureaucracy of the federal government.

Another important instance in which a state exchange would be more user-friendly and efficient is when marrying the state’s existing welfare programs with private health insurance plans. For instance, as it stands, Kynect is the one-stop shop for anyone looking for coverage through the Kentucky Children’s Health Insurance Program (KCHIP), Medicaid, other payment support or private health plans. To dismantle Kynect would mean that you would have to navigate the federal exchange for private health insurance, another site for KCHIP coverage and eligibility, and another for Medicaid coverage.

So for those who need a lot of help understanding their options, support eligibility, or simply comparing plans to see what works best for them — someone utterly confused like, say … Governor Bevin — a one-stop shop can be invaluable.

One final advantage to keeping the state-run exchange is that, starting in 2017, states with their own exchanges may apply for “1332 State Innovation Waivers.” These are waivers states can access allowing them to test pilot programs that will maintain coverage, as well as reduce cost and the federal deficit. One would imagine that Bevin, as a businessman, would be interested in the opportunity to waive a section of the IRS code that relates to employers’ shared responsibility. Then he could put that real-world business experience he’s been touting across the state to good use, and engineer some innovative ways to lighten the burden on employers, while reducing the deficit and maintaining coverage for Kentuckians. But not if he trashes Kynect.

If Bevin wants to be a true outsider, a real reformer, he should work on improving the healthcare system for all Kentuckians going forward; build on a tremendously successful foundation; refrain from burning the whole house down and setting the Commonwealth back a decade. Look forward, Governor Bevin. Make Medicaid expansion irrelevant by lifting people out of poverty with your economic development policies. The children and future of this state are depending on you.