Kentucky Gov. Bevin Will Dismantle State Exchange, Reform Medicaid

Published April 4, 2016

Republican lawmakers are following Kentucky Gov. Matt Bevin’s (R) lead as he delivers on campaign promises to dismantle Kynect, the state health insurance exchange created under the Affordable Care Act, and to reform the state’s Medicaid program by applying for waivers from the federal Centers for Medicare and Medicaid Services.

Democrats on the Kentucky House Standing Committee on Health and Welfare approved House Bill 5, which would require Bevin’s administration to maintain a health insurance exchange “substantially similar to kynect,” and House Bill 6, which would continue the state’s Medicaid expansion initiated by former Gov. Steve Beshear’s (D) 2013 executive order.

State Rep. Darryl Owens (D-Jefferson County), the bills’ sponsor, conceded on March 17 neither bill is likely to pass the Republican-controlled Senate, the Louisville-based Courier-Journal reported.

Fiscal Dis-Kynect

Although Beshear has said dismantling Kynect will cost the state $23 million, Bevin has said it will cost only $236,000 to move the 109,000 Kentuckians who currently use Kynect to the federal health insurance exchange.

State Sen. Jimmy Higdon (R-Casey County) says using the federal exchange will save Kentucky money in the long run.

“We can get the same services with the federal government as the state exchange, which will save ourselves $26 million,” Higdon said. “This was brought in by executive order, and the governor can get rid of it by executive order. He has 26 million reasons to do that.”

Jim Waters, president of the Bluegrass Institute, says the transition from Kynect to will cost about $240,000 and save the state between $15 million and $25 million per year.

“Since Obamacare offers no flexibility to Kentucky to decide who and what procedures are covered, we’ve actually been paying the feds to tell us what to do,” Waters said. “The commonwealth has had all the responsibility but none of the authority.”

Waters says the federal exchange would probably lend stability to consumers, because “Kentucky Health Cooperative, the largest insurer of Kynect, went out of business last year, after losing $50 million the previous year.”

Righting Constitutional Wrongs

Michael Maharrey, communications director of the Tenth Amendment Center, says Beshear’s implementation of Kynect violated the state constitution.

“Dismantling the exchange is a wise decision,” Maharrey said. “Kentucky state statutes permit the governor to create a new government entity by proposing it to the legislature for approval. Gov. Beshear never got state approval. He implemented the exchange unilaterally. If you care about the rule of law, that is significant.”

Medicaid Maxed Out

Waters says Kentucky’s Medicaid expansion program, also created by Beshear’s executive order, grew by more than double the state’s projections in 2014, forcing Kentucky to raise its Medicaid cost estimate from $33 million to $74 million for 2017. If this trend continues, Kentucky’s Medicaid cost could be as high as $363 million by 2021, the Associated Press reports.

Bevin has repeatedly called Kentucky’s current Medicaid program “unsustainable,” with 1.3 million Kentuckians, or almost 30 percent of the state, participating in the state’s traditional and expanded programs.

Maharrey says Medicaid is too expensive for a state that “anybody with two ounces of common sense can see … is basically bankrupt.”

“We have created a problem for ourselves that is deep and painful,” Maharrey said. “Ultimately, we have addicted people to Medicaid, which will collapse under its own weight.”

Jordan Finney ([email protected]) writes from Hillsdale, Michigan.

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