Gov. Beshear: Kentucky Can Afford Kynect, Medicaid Expansion

FRANKFORT, Ky. (Nov. 13, 2015) – Making an evidence-based case that Kentucky needs to continue its transformative and nation-leading health reform efforts, Gov. Steve Beshear joined health-care advocates today to talk about steady improvements in noted health measures as well as the hugely positive economic impact for the medical industry.

Among other things, Gov. Beshear cited progress on health statistics under the kyhealthnow initiative as well as the addition of almost $3 billion in direct revenue to Kentucky providers as reasons to continue the two programs through which over half a million Kentuckians have accessed health coverage – what’s known as “Medicaid expansion” and kynect, the Commonwealth’s state-based Health Benefit Exchange.

“There are only two factors on which to judge the health-care solutions we’ve employed in the last eight years,” Gov. Beshear said. “One, are they working? And two, can we afford them? Today we give a clear, definitive and undisputed answer to both of those questions – yes, they’re working, and yes, we can afford them.”

Noting that Governor-elect Matt Bevin has promised to roll back various parts of Kentucky’s nation-leading health reform efforts, Gov. Beshear encouraged him not to rush into the decision but instead to study financial and health data and to talk to the people who have been fighting the health-care fight for the last eight years – families, providers, businesses, advocates and policy-makers.

Citing the latest information from the Cabinet for Health and Family Services and the Office of the State Budget Director, Gov. Beshear said that it would cost $300.2 million more in the next two-year budget cycle to roll back Medicaid expansion than it would to keep it.

He also described two new sources of revenue that are currently unbudgeted and thus commonly ignored by critics: A 1 percent assessment on managed care organizations and insurance companies that is projected to bring in about $140 million in the two years, and a new, aggressive push to verify eligibility of Medicaid members to ensure they all meet all qualifications, which is expected to create savings of about $38 million over the biennium.

Gov. Beshear also evoked financial arguments and customer service concerns in making the case for keeping kynect, which has been a model for other states, instead of moving to the most costly and less efficient federal exchange.

Moving to the federal exchange would:

• Waste the $283 million in federal grants used to create kynect.

• Cost at least $23 million in Kentucky tax funds to dismantle kynect and transition to the federal exchange.

• Increase the assessment per premium on providers from 1 percent to 3.5 percent.

• Give up Kentucky’s oversight capability, access to data and knowledge about the operation of the exchange.

• Get rid of the locally responsive and knowledgeable customer service teams and replacing them with teams hundreds of miles away who aren’t knowledgeable about state-specific policy and procedures and the Kentucky insurance market.

• And adding months of delay and duplication to the process of signing up for a qualified health plan.

“When I made the decision to create our own exchange, I did so partly at the urging of both Kentucky’s provider community and business organizations,” Gov. Beshear said. “Today, their recommendation is even more solid.

“It’s inconceivable to me why – just to make a partisan political statement – Kentucky would want to go backward and become the first state to decommission a successful exchange.”

The Governor made his push for continued access to health care while receiving the final progress report from members of his kyhealthnow initiative. The Governor created kyhealthnow in 2014 to track the progress of health care reforms and advance the well-being of Kentucky’s citizens.

The report, presented by Lt. Gov. Crit Luallen, its chair, found significant advancements toward achieving the initiative’s seven major goals:

• More access to health care coverage: Ninety percent of Kentuckians now have access to health care coverage;
• Reduce the rate of cancer, cardiovascular deaths: Incidences of cancer and cardiovascular deaths, and smoking rates decreased;
• More screenings and prevention: The newly insured are using their coverage for preventive treatment and screenings;
• Smoking and tobacco use: There are fewer executive branch state employees who are smoking since campuses have gone tobacco-free; and
• Increasing Physical Activity/Obesity Prevention: The number of adult Kentuckians who are obese has declined.
“We now have the evidence that Kentucky is finally moving the needle on some of our most debilitating health problems,” said Lt. Gov. Luallen. “We have demonstrated this is affordable. It’s time to move the discussion from saving money to saving lives.”

“Kentucky has made real progress in reducing youth and adult smoking, adult obesity, and cancer and cardiovascular disease deaths, and in increasing access to health care,” said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention. “Even more progress is possible with teamwork between public health and health care systems, and these efforts should protect the health of people in Kentucky for years to come.”

Gov. Beshear’s creation of kynect and the expansion of Medicaid eligibility in 2013 helped Kentucky bring health coverage to over half a million Kentuckians, many of whom didn’t have it at the time.

A recent report by Georgetown University’s Center for Children and Families and Kentucky Youth Advocates found that because of those decisions, the number of uninsured children in the Commonwealth fell 27 percent in the first year of expansion – moving Kentucky from 28th in the nation to 15th in state rankings on children’s health care coverage.

Gov. Beshear said critics of health care reform should read independent studies by health providers and health policy experts.

One study, by Deloitte Consulting and the University of Louisville Urban Studies Institute, of Kentucky’s first year under Medicaid expansion showed “clearly what a good financial deal this is for our budget and our economy, both now and for the long term.”

The Deloitte report was supported by a similar study commissioned in 2013 before the Governor made the decision to expand Medicaid.

• For example, because of Medicaid expansion, more than 12,000 health care-related jobs were created in the first year alone.

• Furthermore, health-care providers in Kentucky directly received almost $3 billion in new Medicaid revenues from the start of 2014 through July 2015. That’s not to mention they had to provide less uncompensated care.
• Using first-year figures, the updated study predicted a $30 billion positive impact on Kentucky’s economy over eight years because of that expansion.
• And speaking directly to “affordability,” the report predicted a positive net impact of $819.6 million over eight years on state and local governments – even after the state match for Medicaid costs is phased in.
“Contrary to what the people without the facts say, we can afford it,” Gov. Beshear said.

The economic impact numbers don’t address the societal impact of improved health on quality of life or economic capacity, or tangible things like worker productivity, school attendance and public image, the Governor said.

“Furthermore, the more we improve our health and the more we improve our economy, the less we will need to rely on programs like Medicaid. This is a long-term plan for improving Kentucky. But you don’t see it if you’re blinded by short-term political concerns.”

Medicaid Expansion Pays For Itself
FY 17 – 18

Medicaid Expansion State Match $257.3


General Fund Savings (Federal Funds now paying for services previously paid by the General Fund) $265.0

Additional Revenue (economic activity creating state income & sales taxes) $246.8

New Restricted Fund Revenue $45.7

Total Sources to Pay for Expansion $557.5

Net Financial Impact of Expansion $300.2

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