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Fight Imminent Over Kentucky Medicaid Overhaul

By Marissa Evans, CQ Roll Call

August 29, 2016 -- Kentucky Gov. Matt Bevin submitted his plan to overhaul coverage for the 400,000 low-income residents who qualified under Medicaid expansion, but it's unclear if the Obama administration will approve it or how strong the political blowback would be for ending the program.

On Aug. 24, Bevin, a Republican, turned in a long-awaited waiver application to the federal Department of Health and Human Services. The plan would provide stricter rules for beneficiaries who qualify but many of the proposed items are likely to be met with skepticism from the Obama administration. If the federal government does not budge on major conservative priorities such as work requirements and lock-out periods, Bevin has threatened to pull the plug on expansion altogether.

"The submission of this waiver is the result of many months of extensive research, planning, and time spent traveling the state," Bevin said in a news release. The revised waiver "will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner."

The proposal comes after the state collected public comments over the summer about plans that would change the nationally recognized and arguably successful program. After federal officials determine whether the state has properly submitted all of the required documents and a 30-day federal comment period ends, the Centers for Medicare and Medicaid Services will decide whether to approve the proposal.

Under an executive order in 2014, the Bluegrass State expanded eligibility for the joint federal–state health insurance program for the poor and disabled. The federal health law allows states to expand Medicaid to individuals with incomes up to 138 percent of the poverty level. Starting in 2017, states will have to start chipping in 5 percent of the costs and by 2020, 10 percent of costs. Thirty-one states and the District of Columbia have taken up expansion.

But after inheriting the expansion program from Democratic Gov. Steve Beshear, Bevin has been keen to overhaul the program with a more conservative edge. His proposed changes include requiring beneficiaries to work or volunteer, a request that the Obama administration has denied for multiple states with similar wishes. Advocates have been troubled by the Bevin administration's call for six-month lockout periods for beneficiaries who fail to make on-time payments or fill out Medicaid paperwork correctly. The plan also would allow consumers to use health savings accounts and receive dental and vision care if they practice specific healthy habits.

Advocates were pleased that the plan would improve access to substance abuse and mental health treatment.

Adam Searing, a senior research fellow with the Georgetown University Center for Children and Families, said in an interview that Bevin's plan could be precarious since the state has become a national example of a successful Medicaid expansion.

"I don't think I've ever seen a political leader propose eliminating health care for this high of a number of people," Searing said. "At least not without saying 'here's the great thing you're going to have instead of this' say we're going to take this and eliminate it is somewhat unprecedented at the state level."

Christopher Holt, director of health care policy for the American Action Forum, said in an interview that Bevin's more conservative stance on the health law and Medicaid expansion while on the campaign trail could give him protection should he end health coverage for 400,000 Kentuckians. It could also give him a boost among his base of support.

"He's in a position to probably handle this better than most other governors," Holt said. "It seems to me that his brand is built on a somewhat more combative approach to overall health reform efforts. I would think he's insulated in that sense from the political backlash."

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