Kentucky's Bevin Tells Feds He's Dismantling Exchange

There’ll be no change of heart for new Kentucky Governor Matt Bevin. The Republican is following through on his campaign promise to dismantle Kynect, the home-grown health exchange that has been credited with giving the commonwealth one of the nation’s sharpest drops in uninsured residents.

Bevin sent a letter December 30, 2015, to HHS Secretary Sylvia Mathews Burwell saying that Kynect would be cease operation “as soon as practicable,” and that his administration would coordinate a transition plan to put Kentucky on the federal exchange. Most observers believe the process will take about a year.

While not unexpected, Bevin’s move is a blow to healthcare advocates, who championed reform generally and Kynect specifically under former Democratic Governor Steve Beshear. (The former governor was barred from running again due to term limits.)

Beshear, mindful of Kentucky’s desperate need for health services but savvy to the dislike toward President Obama, purposely marketed Kynect in a way that many users had no idea it was part of the Affordable Care Act (ACA). In doing so—and by expanding Medicaid through executive action—he brought down the uninsured rate from 20.4% to 9%, according to Gallup polls. Some 500,000 residents have obtained healthcare through Kynect, including 400,000 through Medicaid expansion.

Bevin’s proposed dismantling of Kynect will not only push all seek health coverage under the ACA to the federal exchange, it will put the financing on their shoulders. Kynect’s financing was shared by all who paid for healthcare in the commonwealth through a 1% premium assessment. Now, Kentucky’s share of the federal exchange will be borne by exchange users only, costing 3.5% of premium.

The 1% charge for Kynect funded not only the exchange itself, but also marketing programs aimed at hard-to-reach populations such as veterans and the rural poor. Eastern Kentucky’s counties has some poorest, sickest residents anywhere in America, plagued by high rates of smoking and lung cancer. Generations who survived through tobacco farming and coal mining drive the culture, and a fatalistic attitude toward healthcare lingers.

The region has also been hit hard by opioid addiction, and Purdue Pharma recently agreed to pay Kentucky $24 million to settle a lawsuit over its marketing of OxyContin.

Beshear’s support for healthcare reform stemmed from his belief that Kentucky’s long record of high cancer rates and general poor health contributed to its high poverty. Over time, a healthier population would be more attractive to businesses that would bring jobs to the region, and in the short run, Beshear touted Medicaid expansion as a boon to job creation. Bevin says that has not worked.

As he left office, Beshear issued a final report on the success of his health initiatives—citing national data that showed Kentucky dropped from the 5^th to 12^th in obesity rates, that use of tobacco products was falling, and that all state workers had access to the Diabetes Prevention Program. Among participants, there was an average weight loss of 7.86 pounds and an average physical activity of 98.48 minutes per week. Cancer deaths dropped from 207.4 per 100,000 in 2010 to 201.2 per 100,000 in 2012.

If business is on board with Bevin’s plan to get rid of Kynect, they aren’t saying so. Ashli Watts, a spokeswoman for the Kentucky Chamber of Commerce, said, “The Chamber favored the creation of Kynect, in that it allowed for more input at the state level and was clearly better run initially than the federal exchange. As the Governor moves forward with the transition, we will remain engaged to try to prevent any negative consequences for our business members.”

Susan Zepeda, president and CEO of the Foundation for a Healthy Kentucky, issued a statement that said Bevin’s proposal raises many questions: what will be done to sustain the gains made in reaching hard-to-target populations? What will the process be for “dismantling” the portals that are also used for Medicaid, nutrition programs, and other government benefits? As a practical matter, will Kentucky have to repay the $250 million in federal grants that were used to set up Kynect?

One thing is certain: Kentucky residents do not want to give up Medicaid expansion. Bevin has discussed seeking a waiver similar to that in Indiana, but a poll by the Kaiser Family Foundation taken in December shows support for extending benefits to those up to 138% of the federal poverty level. While 49% had an unfavorable view of Obamacare, 63% support Medicaid expansion, and 42% support Kynect, with 28% saying they don’t support it, and 29% saying they don’t have enough information to have an opinion.

The poll also found that 72% favored keeping Medicaid expansion intact. As Beshear sensed early on, the name Obama was a bigger problem than what the ACA actually delivered.