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What Happens If Bevin Repeals Kentucky’s Medicaid Expansion?

J. Tyler Franklin/WFPL News

Gov. Matt Bevin says he’ll do away with Kentucky’s expanded Medicaid system if the federal government doesn’t approve a waiver he’s seeking to change the expansion.

So what would happen to the 440,000 Kentuckians who have taken advantage of the expansion since it was implemented in 2014?

That depends on each of those individuals’ incomes.

Marybeth Musumeci, associate director of the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, says those who earn more than 100 percent of the federal poverty level — $11,770 for an individual — would be eligible for subsidized private insurance through the federal marketplace.

“They would likely experience higher out-of-pocket costs compared to what they experience under Medicaid, and there may be some differences in the benefit package,” she says.

Meanwhile, many below 100 percent of the federal poverty level would fall into a coverage gap experienced in states that didn’t expand Medicaid: they neither qualify for subsidies nor Medicaid benefits.

“You could purchase a plan but you would have to do so at full cost, and it’s highly unlikely someone would be able to afford that at that income level,” Musumeci says.

Former Gov. Steve Beshear enacted Kentucky’s Medicaid expansion by executive order. The program enlarged the eligibility pool for Medicaid by authorizing people with incomes up to 138 percent of the federal poverty level — $16,242 for a childless adult.

Previously, childless adults did not qualify for Medicaid unless they had a disability.

If the expansion were rescinded and eligibility reverted to levels from before the Affordable Care Act, that would mean only disabled people, unemployed parents earning below 33 percent of the federal poverty level and employed parents earning below 57 percent of the federal poverty level would qualify.

Bevin campaigned on scaling back the Medicaid expansion, saying it would grow to be unaffordable as the federal government rolls back its assistance of the program.

Until now, the federal government has subsidized 100 percent of the cost of the Medicaid expansion. That subsidy drops to 95 percent starting in the 2017 fiscal year and to 90 percent in the 2020 fiscal year.

Bevin’s administration has put together a proposal that they estimate would save the state $331 million over the next five years. But during his announcement of the program, Bevin said the proposal — officially called an 1115 waiver — isn’t just “about trying to save money.”

“The money will come by doing the right thing,” Bevin said. “Better, healthier outcomes result in cost savings on health expenditures, that’s the reality.”

Bevin’s proposal, which would require federal approval, is to start charging monthly premiums for Medicaid recipients, eliminate vision and dental coverage and create incentives for healthy behavior and volunteer work.

Officials estimate about 86,000 fewer people would be enrolled in the program by July 2021 if approved.

Bevin’s office says if the Medicaid expansion isn’t changed, the state will pay about $1.2 billion over the next five years on the program.

Jason Bailey, executive director of the liberal-leaning Kentucky Center for Economic Policy, says eliminating the expansion won’t save the state money.

“Those costs will go up — they’ll go up in people’s insurance bills, they’ll go up in what the state spends on uncompensated care, so it’s not a net savings,” Bailey says. “And in the long-term, it’s definitely not a net savings when we see our health deteriorate because fewer people are getting the treatment they need to get healthy and stay healthy.”

State officials say they plan to submit Bevin’s proposal for changes to the Medicaid system on Aug. 1 with hopes of receiving approval by September.

Musumeci with Kaiser Family Foundation says it’s unlikely the proposal would be approved that quickly — similar negotiations with the federal government have taken years.

“Typically when they’re approved, they don’t end up looking exactly like the proposals, there’s a lot of negotiations that goes on back and forth between CMS and the states,” she says.

Bevin has suggested that he would repeal the expanded Medicaid program if the waiver is not approved, though he says the onus would be on the federal government.

“If they do not approve this, there will not be expanded Medicaid in the state of Kentucky,” he says.

No other state has expanded and then repealed a Medicaid expansion since it became possible to do so under the Affordable Care Act.

Ryland Barton is the Managing Editor for Collaboratives for Kentucky Public Radio, a group of public radio stations including WKMS, WFPL in Louisville, WEKU in Richmond and WKYU in Bowling Green. A native of Lexington, Ryland most recently served as the Capitol Reporter for Kentucky Public Radio. He has covered politics and state government for NPR member stations KWBU in Waco and KUT in Austin.
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