By Marissa Evans, CQ Roll Call
January 13, 2016 -- Kentucky Gov. Matt Bevin's plan to eliminate the state's health insurance marketplace will diminish the level of enrollment support for low-income residents, who used it to sign up by the thousands for coverage under the 2010 federal health care law, according to the system's advocates.
Bevin told federal officials in a Dec. 30 letter that the state intends to drop its exchange, Kynect, and have its residents use Healthcare.gov, the federal health exchange, to sign up for insurance. Bevin's office provided no details about the timing of the transition, but said there will be no impact on Kentuckians' ability to obtain or continue health care coverage for the 2016 plan year.
"We'll be taking a big step backward," said Emily Beauregard, executive director of Kentucky Voices for Health.
The announcement is the kind of change health law advocates in Kentucky feared after Bevin, as a Republican candidate for governor last year, pledged to undo the expansion of the state's Medicaid program ordered by his predecessor, Democrat Steve Beshear.
Kentucky has been lauded as a model for successfully implementing the so-called Obamacare law, reducing its portion of uninsured residents from 20.4 percent in 2013 to 9 percent last year, according to a Gallup Healthways Well-Being Index report in August. Rather than drop more than 400,000 newly covered residents by undoing Beshear's expansion, Bevin has said since the election that he would merely seek federal waivers to change the program, for which the federal government pays 100 percent of the cost through 2017, then fall gradually to 90 percent by 2020.
Cost to Taxpayers
But the exchange is financed by Kentucky taxpayers only, though the federal government provided $290 million in grants to support its launch. Bevin's office said the state now spends $27 million a year to run the exchange. Those costs are supposed to be offset by a 1 percent tax on premiums for private health plans, but Bevin's office said the tax generates just $2.5 million to $4 million a year.
"The vast majority of Kentuckians are paying for a website that only 2 percent of the population uses to purchase qualified health plans," said Jessica Ditto, communications director for the governor's office.
That figure does not include the 400,000 Medicaid beneficiaries, only the roughly 87,000 residents who signed up for private insurance through Kynect for the 2016 open enrollment period, according to the U.S. Department of Health and Human Services.
"The open enrollment period is not even closed yet...they're only counting the people who have enrolled right now," said Jason Bailey, executive director of the Kentucky Center for Economic Policy, "That's not all of the people they got in Kynect, it's not even close to the number of people who have enrolled in Medicaid or previously enrolled and cycled off."
Bailey also noted that the tax on premiums will rise to 3.5 percent from 1 percent when the transition is complete.
"They're not saving anyone any money by moving to the exchange," Bailey said.
Dismantling Kynect won't just affect how the state enrolls people but also how it helps consumers understand their coverage, said Beauregard. Medicaid-eligible residents especially, "won't have the assistance that they need to successfully enroll in coverage...we're going to have an access problem."
A Kaiser Family Foundation poll released in December found that while 49 percent of Kentucky residents have an unfavorable view of the federal health care law, they do like Kynect. In one poll question, 52 percent of Kentuckians said they wanted Bevin to keep Kynect, while 26 percent said they'd prefer to switch to the federal marketplace, according to the poll.
But the poll also found that that when Kynect supporters were told that Kentucky could save money by switching to Healthcare.gov, support for keeping the site dropped to 39 percent.
Still, Rich Seckel, director of the Kentucky Equal Justice Center, says he and other exchange advocates are "hoping as a transition plan is evaluated that Kynect will look like the better deal."
Seckel said Kynect was successful at enrolling people for coverage because of its community based approach that encouraged them not only to to sign-up, but also to use their insurance to improve their health. In addition, he said, consumers could easily report problems on the Kynect website and get the help they needed. He said that's not likely to happen with Healthcare.gov.
"It's difficult to imagine that going to the federal exchange will be quite as user-friendly as Kynect," Seckel says. "People might drop off because it's hard to use the system."
"A successful transition from Kynect to the federal marketplace will require strong cooperation and commitment from the state of Kentucky to its residents who have gained health insurance under the Affordable Care Act," said Ben Wakana, press secretary for the U.S. Department of Health and Human Services (HHS). "HHS is committed to work with the state on a seamless transition."