Governor Takes Aim at Kentucky’s Medicaid Expansion Program
Policy + Politics

Governor Takes Aim at Kentucky’s Medicaid Expansion Program

REUTERS/John Sommers II

Kentucky Gov. Matt Bevin promised after taking office in January that he would not dismantle his state’s highly successful Medicaid expansion program, despite the Tea Party conservative’s many reservations.

However, that hasn’t stopped him from pressing for dramatic changes that would toughen eligibility, reduce benefits, impose new fees and force tens of thousands of low-income adults off the rolls.

Related: New Governor Moves Quickly to Dismantle Obamacare in Kentucky

On Wednesday Bevin unveiled a comprehensive waiver request he is submitting to the Department of Health and Human Services to alter the program – one that startled some health care advocates for the poor.

Bevin’s plan, for sure, would temporarily preserve the rolls of 428,000 poor people who were granted Medicaid coverage under a special provision of the Affordable Care Act now in place in three fifths of the states.

Kentucky’s program was begun under the administration of former Democratic governor Steve Beshear and has cut Kentucky’s uninsured rate by more than half since 2013.  For the first time, low-income adults without children and without disabilities can qualify for Medicaid coverage under the expanded program.

Bevin’s alterations to the program, however, would discourage future enrollments with new premiums, work requirements and penalties, as well as mounting pressure to leave the program and seek employer-provided or private health insurance.

Related: Nearly Half of Obamacare Co-Ops Are Closing

The plan would also reduce benefits, including dental and eye care, and would create a complicated new system dubbed Kentucky HEALTH (Helping to Engage and Achieve Long Term Health) that seeks to encourage the poor to take greater responsibility for their own health and to move as quickly as possible from Medicaid to private coverage.

Bevin says his new approach would save the state $2.2 billion over five years and enhance the quality of health among residents. But critics note that most of those savings would be achieved by forcing many people currently living under 138 percent of the federal poverty level off the rolls.

Jason Bailey, executive director of the Kentucky Center for Economic Policy, warned Wednesday that 17,833 people would be removed from the expanded Medicaid rolls in the first full year of Bevin’s proposed demonstration project. That total would climb to 85,917 within five years, he predicted.

“The administration suggests coverage reduction will happen because they will move people to private insurance plans,” Bailey wrote. “But big claims around that are not realistic, and reflect a lack of understanding of the realities facing low-income Kentuckians and changes in health insurance markets.”

Related: GOP Fires a Warning Shot in Kentucky in the War Against Obamacare

Bevin told reporters Wednesday he was confident that HHS’s Centers for Medicare and Medicaid Services would approve his waiver proposal, which is similar to changes devised by Indiana officials to toughen eligibility for expanded Medicaid coverage, according to media reports.

But Bevin warned that without federal approval of his changes, the current expanded Medicaid program would be in jeopardy. “The commonwealth’s expansion of Medicaid is now going to lie in the hands of CMS,” Bevin said, according to Morning Consult.

The governor said that state officials and federal health officials have been in regular communication over the proposal, but that there were still plenty of negotiations to come. Ben Wakana, an HHS spokesman, said Wednesday that the department is prepared to “continue our dialogue for as long as it takes to find a solution that continues progress for the people of Kentucky.”

“We are hopeful that Kentucky will ultimately choose to build on its historic improvements in health coverage and health care, rather than go backwards,” Wakana said in a statement. “Kentucky is only beginning the Medicaid waiver process and has not yet submitted a waiver to CMS. When it does, we will evaluate the waiver based on our longstanding principles.”

Related: Get Ready for Huge Obamacare Premium Hikes in 2017

Federal officials say they have repeatedly stressed to Kentucky and other states the Obama administration’s long-standing principles of access to coverage and affordability of care. Those principles hold that states may not limit access to coverage or benefits “by conditioning Medicaid eligibility on work or other activities.”

But contrary to that policy, Bevin is seeking to have adults without disabilities or children begin to work or undertake community activities after three months in the program or face a temporary loss of health care benefits.

Among his other provisions:

  • Medicaid beneficiaries would have to pay up to $15 a month in premiums based on their income. After a year, premiums would rise to $37.50 a month for those with incomes above the federal poverty level. Those earning more than poverty wages who don’t pay their premiums would be locked out of the plan for six months.
  • Dental and vision coverage would be dropped from the regular Medicaid benefits package, as well as assistance in transporting patients for non-emergency medical visits. Beneficiaries would have a $1,000 deductible each year but would receive assistance in defraying those costs through new health savings accounts.
  • Beneficiaries with access to employer-provided insurance would be encouraged – and finally required – to enroll in those health insurance plans. They would receive state funds to defray the cost of their premiums, although it is unclear whether those payments would be adequate to allow beneficiaries to keep up with their premiums.