Gov. Matt Bevin announcing a Medicaid overhaul. | Screenshot

Gov. Matt Bevin said on Friday that the federal government had approved Kentucky’s “transformational” Medicaid overhaul, which adds insurance premiums and work requirements for “able-bodied” recipients.

While Bevin said that Kentucky’s new program, called HEALTH (Helping to Engage and Achieve Long Term Health) would improve Kentuckians’ health outcomes, critics, including U.S. Rep. John Yarmuth, D-Ky., said it would kick tens of thousands of people off health insurance.

Bevin said the Medicaid overhaul was “long overdue” because it had devolved into a system that provides the benefit to people for whom it was not intended.

Medicaid, the federal health insurance program for the poor, which is administered by the states, was originally designed to help the medically frail, children, pregnant women and the infirmed, Bevin said, and their access won’t change under Kentucky’s new program.

The governor said the changes are needed for reasons such as fiscal challenges and Kentuckians’ poor health, which includes among the nation’s highest rates in smoking, obesity, physical inactivity, heart attacks and cancer.

“The idea that we should just keep doing what we’re doing is an insult to the people of Kentucky,” Bevin said.

HEALTH will show America how an overhaul of Medicaid can work, Bevin said.

“It will be a model for the nation,” he said.

HEALTH includes:

  • monthly premiums between $1 and $15 for people at 138 percent of the federal poverty level (FPL) and below
  • barring people for six months from enrolling in Medicaid if they are disenrolled for failing to comply with eligibility requirements
  • requiring “able-bodied” recipients to perform 20 hours a week of “community engagement or employment activities.”

Bevin said that requiring able-bodied recipients to work, to give something in return for the insurance they’re receiving, gives them dignity, respect and an opportunity to escape from a “dead-end entitlement trap.”

Medicaid expansion

Under the Affordable Care Act, informally known as Obamacare, some states, including Kentucky, expanded their Medicaid programs, because the expansions, at least initially, were paid mostly with federal dollars.

The expansion allowed people to get covered if they earned 138 percent of FPL or less. That works out to be about $16,000 in annual earnings for an individual or about $32,000 for a family of four.

In Kentucky, under then-Gov. Steve Beshear, the expansion allowed 475,000 Kentuckians to gain Medicaid. Louisville-based Passport Health covers about 25 percent of those. In total, Medicaid covers about 1.4 million people in the commonwealth.

A recent Harvard University study indicated that the ACA’s health coverage expansions “have produced major improvements in medical care and health for low-income adults, including reduced out-of-pocket spending, better access to primary care and preventive services, improved self-reported health, and improved care for those with chronic conditions.”

Bevin last summer asked the Centers for Medicare & Medicaid Service, the federal agency that oversees those programs, to allow Kentucky to opt out of the expansion, saying that it would cost the state $1.2 billion between 2017 and 2021 and that the additional expenditures would jeopardize funding for pension obligations, education and public safety.

Bevin has said that the system cannot continue as it has because it costs too much, ignores private market dynamics and fails to prepare Kentuckians for self-sufficiency.

CMS told Bevin’s office Friday that the agency had approved Kentucky’s request and appreciated “the spirit of partnership” between the state and the agency.

Yarmuth in a press release called the move “an unconscionable attack on our state’s health.”

“By approving Governor Bevin’s dangerous and irresponsible Medicaid waiver, the Trump administration has agreed to end health coverage for 95,000 Kentuckians,” Yarmuth said.

“During the campaign, Bevin pledged to end Kentucky’s highly successful Medicaid expansion, but as governor, he did not have the courage to do it,” the congressman said.

“Instead, he is sabotaging it by raising premiums for families who can’t afford them and creating new barriers to coverage that will — by the Governor’s own admission — force tens of thousands of Kentuckians to lose access to life-saving health care.”

“Make no mistake: people will die because of this,” Yarmuth said.

Bevin brushed off the criticism in a news conference Friday, saying that the Medicaid overhaul is “dangerous to no one” and that Yarmuth for years has failed to take action to improve the health outcomes of Kentuckians.

Impact on chronic illnesses

The Kentucky Center for Economic Policy, too, sharply criticized Bevin’s actions.

“With the approval of the Medicaid waiver, the historic progress Kentucky has achieved in health care in recent years comes to a halt,” said Dustin Pugel, a policy analyst with the Kentucky Center for Economic Policy. “New barriers to getting covered and new ways of getting kicked off coverage will hurt working Kentuckians, health care providers and our economy.

“Rather than saving monies, the waiver creates new costs in expensive bureaucratic systems and reductions in the health of our workforce,” Pugel added. “These radical and counterproductive changes will result in nearly 100,000 Kentuckians losing coverage.”

Pugel previously had told Insider that many people who will lose coverage have chronic illnesses that will go untreated until the severity of their conditions brings them to local emergency rooms, where they will receive expensive care that will be paid either by the hospitals through charity care — or by people with insurance who pay higher rates than they normally would.

However, Kristi Putnam, program manager for Kentucky’s Medicaid overhaul request, has told Insider that people with chronic diseases — mental illness, chronic substance use disorder, blood clotting disorders — will remain eligible for Medicaid as they are exempt from the work requirements.

Pugel also said that while the state expects its overhaul to cut its Medicaid bill over the next five years by $358 million, the state would lose matching federal dollars during that period of about $2.1 billion.

That money pays for salaries of doctors, nurses, home health aides, who spend the money in Kentucky communities on homes, cars and groceries, he said.

Putnam said the federal match would be replaced in part by higher spending from private insurers because of a greater number of people on employer-sponsored plans.

In addition, she said, the governor’s plan includes incentives for preventive services, such as smoking cessation, which would reduce the need for health care expenditures.

Pugel said that sounds good in theory, but the reality would be different.
“The truth is, people are going to lose Medicaid coverage,” he said.

Centerstone Kentucky President and CEO Anthony Zipple said in a statement Friday that the Bevin administration’s decision “to focus on social determinants of health, such as community engagement and employment, which are closely linked to both positive physical and mental health outcomes … is smart policy.”

“However,” he said, “we are concerned that the reporting system will become a burden on consumers and providers. Implementing co-pay and employment hurdles will increase administration costs and will inadvertently reduce access to health care for consumers in great need.”

“In turn,” Zipple said, “these new requirements will reduce preventive care and shift costs to safety net providers like emergency rooms who will be tasked with helping consumers navigate complicated and potentially confusing reporting systems.”

CMS has asked that the state submit, within the next six months, a draft evaluation design and implementation timeline. Bevin said he expects the program to be fully implemented at the beginning of next year.

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