KY Governor-Elect Bevin and Health Care Federalism Post-ACA

This post was originally published on this site

Matt Bevin will soon become Kentucky’s Republican Governor, which has created consternation regarding his plans for discontinuing Kentucky’s successful implementation of the Affordable Care Act (ACA).  While on the campaign trail, Governor-Elect Bevin first promised to end the Medicaid expansion; then he promised to cap new Medicaid enrollment; and then he promised to reject “Obamacare” but keep Medicaid expansion on Kentucky’s terms.  Governor-Elect Bevin also promised to dismantle Kynect, widely considered a model state-run health insurance exchange.  Each of these promises leads to a complex realm of statutory provisions, governance choices, and inter-governmental dynamics.  Each also has real implications for the neediest in our health care system as well as the ongoing negotiations between the federal government and the states in a post-ACA, post-NFIB federalism world.  

First, could Governor-elect Bevin completely end the Medicaid expansion in Kentucky?  Yes, but not instantaneously.  The Medicaid Act creates a right for any person who meets its eligibility requirements to be enrolled upon approval of her application. The Medicaid Act has mandatory eligibility categories and optional eligibility categories, and the federal government must match state funding by at least 50 cents on each Medicaid dollar.  As enacted, the ACA built on this design by expanding eligibility to anyone under age 65 earning less than 133% of the federal poverty level, and the expansion was mandatory.  States would have been required to enroll the newly eligible population and could not alter the expansion without a waiver from the Department of Health and Human Services (HHS).  The ACA funded 100% of the cost for newly eligible beneficiaries until 2017, then decreases the match gradually to 90% over the next several years.

States that complied with the ACA submitted State Plan Amendments to HHS to expand eligibility; Kentucky was one of them.  But, NFIB v. Sebelius made the ACA’s Medicaid expansion unenforceable by HHS, or “optional.”  HHS issued guidance after NFIB explaining that states could opt-in to expansion at any time and that they could subsequently opt-out. Although HHS opined that post-expansion opt-out (my phrase) is consistent with NFIB, it has not clarified how such an opt-out would work.  Because Governor Beshear expanded Medicaid by executive order, Governor-Elect Bevin would be able to reverse expansion at the state level with another executive order.  But, Kentucky would also need to submit a State Plan Amendment to HHS for approval, which can take 2-3 months when non-controversial.  The state would also need to determine whether the newly eligible beneficiaries (approximately 400,000 people) are eligible for Medicaid through another category of eligibility, such as pregnancy or disability.  Some would qualify for tax credits to purchase insurance in the exchange, but many would not qualify for Medicaid or tax credits at that point.  Beneficiaries have a right to appeal dis-enrollment, but for most that appeal will not lead anywhere.  So, post-expansion opt-out would not occur immediately or without cost, but it is possible.

Second, could Bevin cap enrollment?  No.  States cannot limit enrollment of Medicaid beneficiaries under the Medicaid Act; they may only do so if they have a specific waiver granted by the Department of Health and Human Services (HHS).  HHS has explained that capped enrollment will not be approved because it is inconsistent with the universal coverage goals of the ACA.   

Third, could Kentucky amend Medicaid expansion like Indiana, which Bevin has admired in public remarks?  A waiver from HHS is necessary to expand Medicaid differently than the ACA required.  So far, such waivers have been granted to seven states, underlining states’ empowerment after NFIB to negotiate a version of health care reform that Congress never envisioned.  In addition to that vertical cooperative federalism, states are experiencing noticeable horizontal federalism, learning from one another what concessions can be won from HHS. Republican governors of waiver states have touted that they expanded Medicaid their way, spinning the waivers as a win for red state values.  And, many of the concessions granted by HHS have reflected a more typically conservative agenda.  For example, Arkansas, Michigan, Iowa, Indiana, Pennsylvania, New Hampshire, and Montana have negotiated compromises such as placing the newly eligible population in the exchanges with federal Medicaid dollars supporting their purchase of private plans (“premium assistance”); required premiums and co-payments, especially for people earning more than 100% of the federal poverty level; wellness requirements; limiting payment for non-emergency use of ambulances and imposing co-payments for ER use; private third-party administration; and other adjustments.  Notably, HHS rejected work requirements, which reflect “able-bodied” rhetoric that is so politically prevalent.  (In a forthcoming paper with Jessica Roberts, I debunk the myth of self-reliance in health care, which underlies the work linkage proposals.)  

Some of these waiver concessions may improve insurance coverage; for example, a person who earns close to 133% of the federal poverty level is likely to “churn” between Medicaid coverage and private insurance coverage, and the premium assistance model may make that movement smoother and less likely to result in loss of coverage (time will tell).  But, some concessions have harmful effects, such as enforceable premiums that drop coverage for anyone who does not pay, as studies have shown that cost sharing is a barrier to care for low-income Americans. Further, Indiana’s waiver is arguably the most complex, raising questions as to why a complicated system should replace one that is relatively simple and working well (other than ideology).  Bevin says it’s economics, but a Deloitte study performed for Kentucky showed that is not true.

If one thing is clear from states’ negotiations with HHS, the agency is strongly motivated by increasing enrollment and by universal coverage policy entrenchment.  This could cut both ways for Kentucky, which would be in uncharted waters as a waiver-seeking state that could be the first post-expansion opt-out.  Kentucky’s Medicaid expansion covers nearly 10% of the state’s population, and HHS surely would take a very hard look at any waiver application that makes the already-insured lose coverage.  HHS would also be aware that timing is tricky, and Medicaid enrollment could disappear and then reappear for the newly eligible in Kentucky, leaving needy people with gaps in coverage (and thus gaps in care).  

Finally, could Governor-Elect Bevin dismantle Kynect?  Yes, a state-based exchange can be disbanded, but not immediately.  The open enrollment for 2016 that is underway cannot be stopped, and HHS wants a year’s notice before a state moves to the federally-run exchange.  Dismantling Kynect will cost tens of millions of dollars according to current estimates.  And, the state must ensure that privately insured people do not lose coverage in an exchange transition.  

Kentucky has experienced the largest drop in uninsurance in the nation due to Governor Beshear’s implementation of the ACA, and modifications enacted without due care could result in hundreds of thousands of people losing health care coverage.  Change for the sake of change may be an interesting political experiment to some, but it has real world implications for the low income individuals relying on regulatory stability for their health insurance access.  

http://lawprofessors.typepad.com/healthlawprof_blog/2015/11/governor-elect-bevin-state-autonomy-under-the-aca-and-medicaid.html

Be the first to comment on "KY Governor-Elect Bevin and Health Care Federalism Post-ACA"

Leave a comment

Your email address will not be published.


*