It has been a long couple of months for kynect, the state-based insurance exchange that is Kentucky’s flavor of Obamacare. First the Kentucky Health Cooperative, one of the largest insurance providers on the exchange, announced it would shutter its doors in 2016 after becoming financially insolvent. This was followed in November by the landslide election of Matt Bevin, the Republican candidate for governor in Kentucky.
While it’s not exactly clear what Gov.-elect Bevin plans to do to kynect when he takes office Tuesday, throughout the campaign and since he has promised to close the Kentucky Health Benefit Exchange and intends to process the necessary paperwork to transition Kentucky onto the federal Healthcare.gov site. Once done the feds would take responsibility for handling Kentucky’s enrollments.
The Commonwealth spent $283 million in federal funds to staff and build the infrastructure for the kynect web portal, where it employs about 30 people, plus more than 200 contract workers between its Frankfort headquarters and its call center staff.
Being that the exchange and its infrastructure are already paid for and transferring the state-based exchange over to the feds will cost an additional estimated $23 million, this seems an unnecessary and harmful action. But Bevin ran on dismantling the exchange, and when 106 of 120 counties support your candidacy the right is earned to sit in the big chair and make a call such as this one.
Over the last two years kynect has enrolled 521,000 people in Medicaid or federally subsidized private plans. These enrollees helped kynect achieve the biggest decline across the nation in a state’s uninsured population, going from 20.4 percent in 2013 to 8.5 percent in 2015, according to the U.S. Census.
The vast majority of these enrollments are through Medicaid qualification, not private plans. Thus far the federal government has picked up the tab for Medicaid, but starting in 2017 and increasing through 2020, Kentucky will have to start sharing the load, up to a maximum of 10 percent of its Medicaid tab.
In 2017, estimates place Kentucky’s end of the bill at $74 million, and that amount will continue to rise over the following four years to $300 million or higher it is reported.
For private health plans in 2016, the average rate increase on kynect is 3 percent, but some plans went up as much as 12 percent, while others remained steady.
For a 27-year-old, the average monthly premium on a Silver Plan in 2015 was $137 with a $3,500 deductible, according to the Foundation For A Healthy Kentucky; while a 30-year-old couple with two children would cost $462 a month for coverage with a $7,000 deductible.
That second rate quote is case in point why the Affordable Care Act (ACA) needs fine-tuning. The expanded Medicaid plan in Kentucky offers free or heavily discounted coverage to those who earn up to 138 percent of the federal poverty level. That equates to around $16,105 yearly for a single individual or $33,465 for a family of four.
Those qualifying receive a tremendous value, as these plans provide comprehensive care and dental coverage. It also is rather affordable if you earn just above the Medicaid qualification level, as special discounts bring costs and deductibles way down on private plans.
But for the middle class – those earning $30,000 to $50,000 with a family to feed – the exchange plans are less than affordable. These potential enrollees qualify for limited subsidies or none, are stuck with a ridiculously large deductible, along with a hefty monthly premium.
Who has an extra $462 a month sitting around, especially with a $7,000 deductible?
A family could end up paying their entire yearly healthcare bills out-of-pocket trying to meet this deductible, plus the enrollee is out an additional $5,544 in premium payments. That is a yearly healthcare tab approaching $13,000.
The penalty in 2016 for not having insurance is $695 for adults and $347.50 for kids under 18, or 2.5 percent of annual household income, whichever is greater.
What originated as a supposed deterrent is becoming an easy financial necessity. People are paying the fine and visiting alternative providers like the Little Clinic in Kroger for their healthcare needs. There remains the “what if” question, cancer, heart disease, car accident, any of those could present themselves without notice, but budgets are tight.
Most of the middle class, or what’s left of it, hasn’t remotely recovered from the financial collapse of 2009. They cannot afford premiums and deductibles of $13,000. That is an insult to this struggling segment of society, and a joke to title it “Affordable Care.”
Interestingly, a recent Bluegrass Poll found that 54 percent wanted to keep the Medicaid expansion, while 24 percent said they wanted the next governor to reverse it.
That runs counter to how the governor’s election turned out. Perhaps it is not surprising considering going into the final days of the election Democratic candidate Jack Conway was considered a 5 point favorite. Bevin ultimately won the election by 9 points.
The reality of the Bevin victory has caused no shortage of anxiety for those employed at the Kentucky Health Benefit Exchange. As with any new administration there will be an exodus of non-merit employees, but with a shift in party affiliation you can expect swifter and deeper staffing changes.
Those contractors working at the exchange on the kynect project are generally not political animals and haven’t witnessed an administration change previously. The thought was the Affordable Care Act was made law; it survived two significant Supreme Court challenges, and 50-plus frivolous votes to defund it in the U.S. House. It was inferred that the program had passed its final hurdle and would continue moving forward without much change regardless of this election.
That doesn’t appear to be the case in retrospect. The law stands, but the exchange and its policy of expanded Medicaid are built upon executive orders by Gov. Steve Beshear. He is term limited from running again for office.
It wasn’t possible to get legislation for the establishment of the exchange through the KY General Assembly in such a charged partisan atmosphere, so the choice was made to move forward by executive order. Bevin can rescind that provision. All enrollees would be shifted to Healthcare.gov and the exchange, kynect, would be closed. There remains the possibility that Bevin will attempt to decrease the maximum income allowed for individuals to qualify for Medicaid as well.
kynect has an annual budget of about $28 million that is funded by a 1 percent assessment on health plans purchased through the exchange. That charge would increase to 3.5 percent if kynect were dismantled and Kentuckians had to purchase coverage through Healthcare.gov.
Even though the loss of the Kentucky Health Cooperative (KYHC) as a healthcare option on the exchange is distressing to those currently holding its policies, to those who facilitate enrollments in kynect, the removal of KYHC was seen more as a blessing in disguise.
Coming into the 2014 Open Enrollment Period, the KYHC positioned itself to be available in all 120 Kentucky counties, with wide provider networks, more reasonable deductibles and a price point that made it the most affordable choice on kynect for those not qualifying for Medicaid coverage.
This positioning ensured it received the lion’s share of the private enrollments, currently more than 50,000 Kentuckians. It also made sure KYHC had many of the sickest individuals as its clients.
From the start there were staffing and technical issues that prevented KYHC from efficiently managing its enrollments. Thousands of change requests from the exchange to KYHC were bottlenecked, some for more than a year, as its staff became bogged down in a quagmire of enrollment and billing issues.
It became necessary for the exchange to set up special weekly, and later daily calls, between themselves and KYHC to assist in navigating the worst cases through the necessary channels to correct the insurance coverage for individuals needing immediate access to care or medications.
In 2015, as the second open enrollment commenced, a new kynect mobile app for smart phones was introduced, a retail store opened in Lexington’s Fayette Mall, and KYHC drastically increased its premiums and took federal loans to help it stay afloat. Now that its doors are closing there is a certain sigh of relief from exchange staff and from kynectors and insurance agents in the field.
Yet, before the non-profit KYHC closes its doors there remain thousands of unresolved problem cases that need to be worked. Some clients who believe they have coverage may find it is not binding, while others have billing issues relating to inappropriately terminated enrollments that need to be traced back in time to untangle the mess.
This is requiring exchange staff to visit the KYHC office in shifts to work the cases and get them straightened out.
In the midst of all this turmoil and uncertainty, kynect’s 2016 Open Enrollment Period began on Nov. 1 and runs through Jan. 31, 2016. Gov-elect Bevin will be inaugurated on Dec. 8.
Even with the KYHC no longer offering plans on kynect, there remain seven companies providing policies in 2016, up from five in 2015 and three in 2014.
On the insurer-horizon darkness continues to brew as Humana and UnitedHealth have signaled they may cease offering plans on the exchanges. The United Health Group is one of the largest insurers nationally for Obamacare and one of the primary low-cost options shoppers have available, raising questions of viability for the president’s signature health law.
It’s unknown for sure how this will all play out for the individuals in Kentucky who are benefiting from the Affordable Care Act. Bevin feels the voters of Kentucky have given him a mandate. In reality less than 31 percent of registered voters cast ballots in the election and fewer than 16 percent of all registered voters backed Bevin.
Regardless, that is how the electoral process works. Democrats hold a vast advantage in terms of registered voters over Republicans in Kentucky, but when turnout is low that advantage is mitigated.
If folks decline to exercise their right to vote, then the few become the majority.
Particularly odd is seeing that residents in counties with high Medicaid enrollments voted against the Democrat that would have allowed them to keep their coverage.
Since the exchange went out of its way to maintain political neutrality, it isn’t associated with either party.
Neither Alison Lundergan Grimes in her 2014 Senate election nor Conway this year chose to embrace kynect and adequately explain to voters how access to this state-based exchange is tied to Democrats remaining in office.
Much of this murkiness has to do with the Obama brand. Regardless of the economy showing steady improvement, the president remains hugely unpopular in Kentucky. Social issues like gay marriage, a purported war on coal and what is generally perceived as a liberal agenda, dramatically impact Obama’s approval ratings in the Commonwealth.
It doesn’t help that KY Democrats have chosen to shade themselves as Republican-lite instead of supporting the president and making an argument for the many popular initiatives that have come to pass under his administration.
This has led to the misconception that kynect is some local healthcare option designed by Gov. Beshear and not what it is in reality – – Obamacare.
Residents chose to voice their dissent against social issues on a federal level by casting local ballots for Bevin, not realizing this could cost them their healthcare benefits.
Welcome to Civics 101. Bevin ran on dismantling kynect, that was no secret, and now he has the authority to deliver on that promise.
This is the dilemma kynect and its organizers are realizing. It doesn’t have to make sense, it doesn’t have to function better – it can just be torn down. It might not be torn out root and branch, but finding quality, affordable healthcare coverage is about to get harder to locate.
There is no doubt that embracing expanded Medicaid and developing a readily accessible sign-up portal such as kynect has improved the health of Kentucky’s residents. Key indicators including access to healthcare, utilization of preventive care screenings and badly needed dental visits are all up. Meanwhile, the number of uninsured Kentuckians is way down. This means healthcare providers are seeing a drastic decrease in the number of people showing up for services and having no way to pay.
Keeping kynect also means there would remain local customer service reps tied to the community who appreciate the specific problems presented in Kentucky. There is something to be said for representatives knowing an agent or kynector that can assist clients in their home zip codes.
Turning the system over to the feds would certainly complicate matters and in no way improve the quality of the product.
The question is at what cost?
Gov.-elect Bevin believes the price tag is too high. While he has no power to disallow the Affordable Care Act, he can make finding it more challenging.
Instead of providing a climate for growth and nurturing, the Bevin administration likely will offer kynect something akin to a dark cold corner where it may sit and shiver. We’ll see if the program can adjust to growth absent sunlight. But it’s the 521,000 Kentuckians currently in these plans that will suffer through uncertainty and pay the ultimate cost, as it’s not a political game on the line, it’s their health and the health of their children.
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[For additional perspective on the 2015 KY gubernatorial election see:
Help Wanted: Governor Needed To Run Kentucky | August 11, 2015.]