Can Kentucky's New Governor Undo Obamacare?

Matt Bevin campaigned on reversing the work of his Democratic predecessor. He’s discovering things are a little more complicated than that.

Timothy D. Easley / Reuters

Matt Bevin campaigned on a health-care pledge that would undo the work of his predecessor: to dismantle Kentucky’s popular insurance exchange and change up the even more popular Medicaid expansion.

But as the Republican governor’s campaigning morphs into actual governing, he could find that pledge hard to stick to: not only because hundreds of thousands of Kentuckians now have insurance but also because his plans could be costly—and no one seems to know who would pay for all of it.

“I don’t understand how this would save us money,” said the health-care advocate Emily Beauregard, pushing back on Bevin’s claim that his plans would help taxpayers. “I think all evidence points to it costing Kentucky more money.”

Throughout his self-funded, outsider campaign, Bevin—who just began his second week in office—had pledged to kill the state exchange, Kynect, and to alter Medicaid expansion. But he has already walked back some of his earlier, hard-line rhetoric: Where he once promised on the trail to entirely roll back the expansion, more recently he has said he would modify it. This leaves health officials and other stakeholders in Kentucky still unsure of what happens next, or whether Bevin will further shift his stance as he plots his agenda for the state.

“I’m waiting with bated breath,” said Audrey Tayse Haynes, the former cabinet secretary who spearheaded Kentucky’s health-care changes under the previous governor, “like others are as well.”

Kynect and the Medicaid expansion are linked: Kynect provides the infrastructure and outreach through which Kentuckians can sign up for qualified health plans or Medicaid. Bevin’s beef with both programs certainly isn’t founded in their unpopularity. To the contrary, the state’s drop in the number of uninsured residents from 2013 to 2014 was the biggest in the country—a credit, health-care researchers say, to the grassroots, in-person network established through Kynect that helped Kentuckians learn about their health-care options.

Bevin’s concerns, rather, focus on what he sees as the two programs’ cost. When asked for specifics about the governor’s plans, his spokeswoman said in a statement that he’s aiming to “improve health outcomes” and “take deliberate and prudent steps to develop a health-care plan that Kentucky can afford.”

But if Bevin’s aim is to save taxpayers money, health-care advocates in Kentucky say he’s going about it all wrong. In terms of its setup, Kynect is already paid for, and dismantling it comes with its own costs. According to a presentation Kynect’s executive director gave in August, the IT work alone to get rid of its website would take nine months and cost roughly $23 million. The state’s coffers could be on the hook for that cost.

Beauregard, executive director of the consumer-advocacy group Kentucky Voices for Health, said even if Kynect is dismantled, the state would still be responsible for managing more than 1 million people on Medicaid, and it would still need the infrastructure in place—including an online enrollment system and employees to help sign up Kentuckians—to do so.

And then there’s the Obama administration variable. In her first interview since leaving her post as secretary of Kentucky’s Cabinet for Health and Family Services, Haynes said she’s “not sure” what the Bevin administration would replace the current system with. She doesn’t anticipate the federal government agreeing to foot the bill after it has already shelled out roughly $280 million to build Kynect.

Kentucky’s rollout of the Affordable Care Act was seen as a victory for President Obama’s signature law. Both were implemented by executive order by the Democratic Governor Steve Beshear. As Jason Bailey, the executive director of the Kentucky Center for Economic Policy, noted in an interview, Kentucky’s reforms were a national model. “And it’s not often that Kentucky is seen as a national leader,” Bailey said.

Kentucky’s model status is rooted in Kentuckians’ swift, close-to-seamless enrollment in Medicaid. After the expansion—which allowed Kentuckians making up to 138 percent of the federal poverty line to enroll—about 400,000 people signed up. That’s twice as many as state officials had estimated, and it brought the total number of Kentuckians on Medicaid to a quarter of the state’s population. Though the federal government is paying for the expansion through 2016, Kentucky does have to kick in funds after that. But according to a Deloitte study commissioned by Beshear’s administration earlier this year, the expansion will pay off. The New York Times has the details:

Kentucky’s cost of covering the new Medicaid enrollees will start at $74 million in 2017 and grow to $363 million by 2021. Like most states, Kentucky already spends more of its budget on Medicaid—about $1.9 billion in the 2014 fiscal year—than almost anything else. But the report found that the expense of covering the new enrollees would be more than offset by the positive economic effects of expanding the program. They include new Medicaid revenue to health care providers—totaling more than $1 billion in 2014 alone, according to the report—and the resulting creation of jobs in health care and other professions.

It’s worth noting that Bevin disputes the findings of that study. But to the former Beshear administration, the financials look even more promising when one considers the total amount the state has made from the expansion: According to a report in The Courier-Journal, that’s roughly $3 billion since 2014.

Bevin’s stance on Medicaid has shifted considerably since the early campaign. Where he initially said he would totally roll it back, he later said he would simply freeze enrollment. And in recent months, he has suggested he’d like to follow Indiana’s model: asking the federal Centers for Medicare and Medicaid Services for waivers to charge enrollees premiums and modify eligibility. He has even anticipated more Kentuckians signing up for Medicaid if cost-sharing is implemented.

“I don’t care if it’s a dollar or two dollars,” Bevin said at the last debate before the election. “If I’m governor, people should have skin in the game.”

Bevin has been clearer on his plans for Kynect: He wants it dismantled by the end of next year. And he could do so by executive order, though it’ll take some time: The federal government requires states to give them one year’s notice before dismantling an exchange, so Bevin would have to tell them by January 1, 2016—less than three weeks from now.* Kynect would be the first functioning state exchange to be dismantled.

In Bevin’s view, Kynect doesn’t offer anything extra to Kentuckians that they can’t get from the federal government—an unusual stance from a conservative politician, who would typically favor the state’s jurisdiction. It’s also unusual because Bevin campaigned explicitly on the idea that Obamacare doesn’t work in his state, yet he now wants to shift Kentuckians to

Benjamin Sommers, a Harvard University health economist who studies the Affordable Care Act, sees the proposed changes to Medicaid, which includes moving non-Medicaid Kynect enrollees to the federal exchange, as the more consequential of the two shifts Bevin has discussed. Sommers thinks that although the more than 100,000 people who’d transition to the federal exchange could experience some very real problems—their coverage could be disrupted, for example, or they could lose the kind of in-person assistance they’re used to— has been “pretty effective” at signing people up. Rolling back Medicaid, however, would be much more damaging, Sommers said—a notion Bevin himself may have already grasped, given the recent adjustments to his position. Doing so, said Sommers, would “depriv[e] … hundreds of thousands” from coverage.

“They are going to become uninsured, and [it’s] gonna be the people who have the lowest income and the least ability for medical care that are essentially now having that coverage taken away from them,” Sommers said.

Health-care advocates worry about Kentuckians’ access to care and how potential cost-sharing through Medicaid could affect enrollment. Indiana’s implementation of cost-sharing, Bevin’s potential model for Kentucky, has been “fairly moderate,” said Glen Mays, a health-care researcher at the University of Kentucky. But it could go too far, pushing people off Medicaid and back into emergency rooms, resulting in uncompensated care. Bevin’s goal may be to impart the values of personal responsibility, but the Medicaid population just has “less skin available to put in the game,” Mays said.

Haynes characterized Bevin’s position as making a “political statement” in a place where—although many have benefited from programs created under Obamacare—the president remains unpopular.

“The health of our citizens is more than about a bill and a policy named after the president of the United States,” Haynes said, citing, for example, the drug-treatment coverage Kentuckians now get under the Affordable Care Act’s implementation. She cited two recent victories for the Beshear administration in our interview: A poll last week from the Kaiser Family Foundation showed Kentuckians’ positive reviews of the health-care changes, and Kentucky gained three spots in a recent national health ranking. (The state’s previous ranking was a dismal 47th.)

Bailey said his organization isn’t treating Bevin’s proposed changes as inevitable. He hopes the new governor will talk with stakeholders and those intimately involved in building Kynect to better understand it. Even if Bevin plans to take executive action to get rid of Kynect, the Kentucky General Assembly may try to put in their own two cents. (The state’s Republican senators have already weighed in on the $250 million Kentucky will need to start paying for the Medicaid expansion; they don’t plan to stop it.) According to a WFPL report out of Louisville, Greg Stumbo, the Democratic House speaker, anticipates a “big battle” over Kynect in the state Capitol.

Haynes, for her part, wants the new administration to consult the cost and access-to-care stats before implementing any significant changes.

“I’ve been waiting my entire professional career to make the kind of difference that we have been able to make,” Haynes said. “And it’s not just what our gut tells us—it’s what the data shows us.”

* This article originally stated that Bevin would need to notify the government of his plans to dismantle the exchange by January 1, 2017. We regret the error.