Beshear says Kentucky will join Obamacare plan to expand Medicaid

By Beth Musgrave — bmusgrave@herald-leader.com

FRANKFORT — Gov. Steve Beshear announced Thursday that Kentucky will expand the federal and state Medicaid program to provide coverage to an estimated 308,000 Kentuckians currently without health insurance.

At a news conference at the Capitol, Beshear called the decision to expand Medicaid for the poor and disabled “the single most important decision in our lifetime” to improve the health of Kentuckians — who traditionally rank near the bottom nationally in nearly every health indicator.

Expanding Medicaid could add 17,000 jobs and pump more than $15.6 billion into the state’s economy in the next six years by putting more money into the state’s medical infrastructure, Beshear said.

That data came from analysis conducted by University of Louisville and Price Waterhouse Coopers on the potential financial impact of expanding the program that accounts for roughly 14.8 percent of the state’s current two-year budget.

With Beshear’s announcement, Kentucky becomes the 21st state to expand Medicaid, a key provision of the Patient Protection and Affordable Care Act, commonly referred to as Obamacare.

A 2012 U.S. Supreme Court decision left the expansion of Medicaid up to states.Twenty states — mostly with Democratic governors — and the District of Columbia had already opted to expand.

The expansion of Medicaid will now include people whose income is at or below 138 percent of the poverty level. That means someone who makes $15,415 a year or less, or a couple making $20,879 a year or less, would be eligible for Medicaid beginning Jan. 1.

Health care advocates, many hospitals and medical associations have pushed for the expansion, saying it will help the state’s finances and its overall health rankings.

But Kentucky Republicans have repeatedly tried to block key portions of the Affordable Care Act, including the creation of a health benefits exchange, an online insurance marketplace for people who don’t have health insurance.

The Republican-controlled Senate also passed legislation in the most recent legislative session that would have required Beshear to get legislative approval before an expansion could occur. That bill died in the Democratic-controlled House.

Kentucky Republicans have questioned how much the Affordable Care Act will eventually cost the state, which already spends $6 billion in federal and state money on the program.

But Beshear said Thursday that after months of study, he thinks state coffers and Kentucky businesses and hospitals would be hurt if the state does not expand Medicaid.

“We have now done the exhaustive research, and our conclusion matched what most other states have found: By expanding Medicaid, Kentucky will come out ahead in terms of both health outcomes and finances. In fact, if we don’t expand Medicaid, we will lose money.”

Without expansion, the cost to the state could be an estimated $40 million by full implementation in 2021, Beshear said.

Under the Affordable Care Act, the federal government will pick up 100 percent of the tab for the additional 300,000 people for three years beginning in 2014.

The federal contribution rate will be reduced gradually beginning in 2017, eventually dropping to 90 percent in 2020. The state then will pick up the remaining 10 percent.

Currently, the federal government picks up 70 percent of the Medicaid costs, and the state pays for 30 percent.

Beshear said that if Kentucky did not expand Medicaid so more people would have coverage, there would be more than 206,000 people in Kentucky who would not be eligible for subsides to buy health insurance on the health benefit exchanges. That means many people — mostly the working poor, who work minimum-wage jobs but have no insurance benefits — would continue to be without health insurance.

Kentucky companies also could face fines totaling between $32 million and $48 million a year if they employ people who qualify for the Medicaid expansion but don’t offer health insurance, Beshear said Thursday. Kentucky hospitals could lose substantial amounts of money if Medicaid is not expanded, Beshear said.

Hospitals receive payments under the current Medicaid system to care for the uninsured. Those payments will gradually decrease as more people are insured.

If some of Kentucky’s 604,000 uninsured seek treatment at the state’s hospitals, those hospitals will not be able to recover that cost, Beshear said.

“With the federal government covering the full cost of expansion for the first three years, combined with the ability to shift some of our current cost burden to the federal government, expansion will be a very large net positive to our taxpayers’ bottom line — an estimated $606 million,” said Jane Driskell, the state budget director.

To control spiraling costs in the Medicaid program, Kentucky moved roughly 500,000 people to three private managed-care companies in November 2011. Those contracts will have to be amended to include the additional 300,000 people on the state’s Medicaid rolls.

Beshear said that if the cost becomes a burden, the state can opt out of the expansion at any time.

Many social justice groups and health care advocates applauded Beshear’s decision.

“Expanding Medicaid for adults without health insurance is a smart investment for Kentucky,” said Terry Brooks, executive director of Kentucky Youth Advocates. “It creates an opportunity to address the health needs of Kentucky citizens without adding too great a burden on the state budget.”

Dr. Michael Karpf, executive vice president of health affairs at the University of Kentucky, said uninsured patients delay treatment or use emergency rooms for primary care. Expanding Medicaid will improve treatment and decrease costs, he said.

“Uninsured individuals often utilize emergency rooms for conditions which could be more appropriately and inexpensively treated by a primary care provider,” Karpf said. “Expanding Medicaid coverage will create opportunities to improve access to care and improve the ability of organizations such as UK Health Care to more effectively manage both acute and chronic conditions of our most vulnerable patient populations.”

Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: ­Bluegrasspolitics.bloginky.com