AutoInsuranceMM.Info – What is the Insurance – Kentucky and the ACA’s Medicaid expansion
Kentucky has been one of the most successful states in reducing its uninsured rate through the Affordable Care Act (ACA) — both by expanding Medicaid and adopting a state-run health insurance marketplace (Kentucky still technically has a state-run marketplace, but they began using HealthCare.gov’s enrollment platform in 2017).
The Centers for Medicare and Medicaid report that Kentucky’s Medicaid/CHIP enrollment increased by 111 percent from 2013 to March 2018 — by far the largest percentage increase of any state, and more than three times as much as the national average increase of 29 percent. And according to US Census data, Kentucky’s uninsured rate dropped 9.2 percentage points from 2013 to 2016, reaching a low of 5.1 percent.
As of the third quarter of 2016, there were 650,867 adults enrolled in Kentucky’s Medicaid program, and three-quarters of them were eligible due to the ACA’s expansion of Medicaid. Total Medicaid enrollment in Kentucky, including children and the elderly, stood at nearly 1.3 million as of March 2018.
CMS approved Bevin’s 1115 waiver proposal to change Kentucky’s Medicaid, but a judge has blocked it
Kentucky residents elected Matt Bevin in November 2015 (incumbent Steve Beshear was term-limited and could not run). Bevin, a Tea Party Republican, had expressed his desire to pull back from the current Medicaid expansion in Kentucky. Early in 2015, Bevin said he would eliminate Medicaid expansion entirely, but his position softened towards the end of the campaign. By 2016, Bevin no longer planned to eliminate coverage for the nearly half a million people who have obtained Medicaid under Kentucky’s expansion. Instead, he proposed that the state seek a Section 1115 waiver from the federal government to allow Kentucky to design its own version of Medicaid expansion.
In August 2016, Bevin did just that, submitting his Kentucky HEALTH Section 1115 demonstration waiver proposal to HHS for review. Bevin’s administration initially anticipated federal approval by summer 2017, and enactment of the waiver provisions as of January, 2018. Ultimately, that time frame was pushed back a bit, with federal approval coming in January 2018, with the bulk of the waiver set to be implemented in July 2018.
The Kentucky HEALTH waiver applies to non-disabled Medicaid enrollees ages 19-64, and most of the provision in the waiver constitute benefit cuts in an effort to control costs. Note that Kentucky HEALTH does not apply to disabled Medicaid enrollees, or to those younger than 19 or older than 64.
Kentucky’s waiver was the first time that CMS approved a work requirement for Medicaid (Arkansas was able to implement their work requirement first, in June 2018, but Kentucky’s was approved first). Other states had suggested work requirements in the past, but the Obama Administration drew a hard line in the sand, rejecting work requirements altogether. Bevin and other advocates of Medicaid work requirements view Kentucky’s waiver as a model that the rest of the country could adopt, while opponents note that Medicaid was never intended to be a jobs program, and that its purpose should simply be providing health coverage to the neediest among us, without strings attached.
A lawsuit was filed by consumer advocacy groups on behalf of several Kentucky residents who have Medicaid coverage, challenging the legality of the work requirement waiver. On June 29, just two days before Kentucky’s work requirement was scheduled to take effect, U.S. District Judge James E. Boasberg ruled that HHS should never have approved Kentucky’s waiver, as it conflicts with Medicaid’s mission. Boasberg wrote that the Secretary of HHS “never adequately considered whether Kentucky HEALTH would, in fact, help the state furnish medical assistance to its citizens, a central objective of Medicaid. This signal omission renders his determination arbitrary and capricious. The Court, consequently, will vacate the approval of Kentucky’s project and remand the matter to HHS for further review.”
Kentucky posted a series of FAQs on the state Medicaid website shortly after Boasberg’s ruling, clarifying that the new rules would not take effect on July 1, as previously scheduled. The state also noted that until if and when the state prevails in the legal challenge, Medicaid expansion enrollees would no longer be able to earn dental and vision coverage through the My Rewards Account program that was part of the Kentucky HEALTH waiver (and people who had already earned points in their My Rewards accounts cannot use them for dental and vision coverage for the time being, since the waiver that included that program has been blocked, at least temporarily).
Kentucky Medicaid already covered limited dental and vision services, but the Kentucky HEALTH waiver was going to make those benefits optional for the non-disabled population ages 19 – 64. In order to have access to dental and vision care, that population (most of whom have coverage as a result of the ACA’s expansion of Medicaid) was going to have to earn “points” in the My Rewards program. That has now been suspended, resulting in an estimated 500,000 people in Kentucky losing access to dental and vision benefits (and some of those people had already been earning points in their My Rewards accounts since April).
But questions remain as to whether the existing limited dental and vision benefits will continue. The judge’s rejection of the Kentucky HEALTH waiver means that the My Rewards system can’t be used for the time being, since it’s part of the waiver. But experts question whether Governor Bevin could eliminate the existing Medicaid dental benefits without submitting a state plan amendment to CMS for approval. Any move to reduce dental benefits, however, is likely to be counterproductive, especially given that Kentucky already has fairly poor overall dental health.
What is Kentucky trying to do with the Kentucky HEALTH waiver?
The Kentucky HEALTH Medicaid waiver is back under review at HHS following the judge’s ruling, and the state is working with the federal government to address Judge Boasberg’s concerns (the work requirement could be adjusted, but the Trump Administration is also likely to appeal the judge’s ruling). Here’s a summary of what the state was trying to implement with the waiver (Kaiser Family Foundation has a more detailed summary here):
- Dental and vision services (limited coverage was already provided under Kentucky Medicaid), over the counter medications, and partial reimbursement for gym memberships would be available via a new system called My Rewards Account. Although the Kentucky HEALTH waiver demonstration was scheduled to take effect in July 2018, Kentucky residents were able to start earning points in their My Rewards Accounts as of April 1, 2018. To earn credit in a My Rewards Account (which can then be used for the aforementioned services), Medicaid enrollees would need to complete various actions such as smoking cessation programs, job training, taking the GED, completing a financial literacy course, or a course on managing chronic health conditions. Although the stated intent is to lift people out of poverty and reduce spending on Medicaid, the proposal has been widely panned by public health experts, and dentists question the wisdom of reducing dental benefits in an area where dental disease is widespread.
- A “community engagement” requirement (ie, a work requirement) applicable to non-disabled Medicaid enrollees aged 19-64, although some populations would be exempt. Each month, enrollees would have to complete 80 hours of “community engagement activities,” which can be a job, job training, education, or community service. Bevin’s administration projected that about 350,000 Medicaid enrollees would be subject to the community engagement requirement.
- The community engagement requirement would not apply to former foster care youth, full-time students, pregnant women, primary caregivers of a dependent child or dependent disabled adult (this exemption is limited to one caregiver per household), medically frail Medicaid enrollees, and beneficiaries who have been diagnosed with “an acute medical condition that would prevent them from complying with the requirements.”
- Enrollees would have to pay premiums in order to remain enrolled in Kentucky HEALTH. The premiums would vary based on income, and would range from $1/month to $15/month. Those with income above the poverty level (100 – 138 percent of the poverty level) who don’t pay premiums for 60 days would be locked out of the program for six months.
- Bevin’s administration projected that Medicaid enrollment in the state would drop by about 90,000 to 100,000 people as a result of the Kentucky HEALTH program (due in part to the community engagement requirement, but also the new premiums that would be charged to some enrollees, and the various hoops that enrollees would have to jump through in order to maintain coverage). Consumer advocates worry that some (many?) of the people who ultimately lose coverage as a result of the community engagement requirement would actually be eligible for Medicaid under the new rules, but would be stymied by the reporting requirements and other hoops through which they have to jump in order to prove their eligibility.
- Able-bodied, non-pregnant adults enrolled in Kentucky Medicaid would have a $1,000 “deductible” but it wouldn’t work like regular health insurance deductibles (some media outlets have reported this as if members will have to pay for their first $1,000 in medical costs, but that is not the case). Essentially, non-preventive services used would be tracked against a $1,000 balance in each member’s “Deductible Account.” At the end of the year, up to 50 percent of the remaining balance of the “deductible” would be transferred to the member’s My Rewards Account. It’s an incentive intended to get enrollees to avoid unnecessary care, in order to keep the credit in the deductible account and then transfer some of it over to the My Rewards Account. The waiver approval described the Deductible Account as “an educational tool to encourage appropriate health care utilization” and noted that “the Deductible Account is also likely to prepare beneficiaries to manage their coverage in the commercial market, where plans often impose deductibles.” But enrollees who use up the virtual money in their Deductible Accounts (ie, by receiving non-preventive care during the year) would still be able to access medical care for the remainder of the year, and no money comes out of the enrollees’ pockets for this program.
- Retroactive eligibility would no longer be available for Kentucky HEALTH enrollees, except for pregnant women and former foster care youth. Retroactive eligibility allows people to sign up for Medicaid with an effective date up to three months earlier. This program is particularly useful for hospitals, as it allows them to help uninsured (but Medicaid-eligible) patients to enroll in Medicaid and be covered for the care that they receive as soon as they enter the hospital, rather than having to wait for enrollment to take effect.
- In granting approval for Kentucky’s waiver, CMS noted that “The approval of the waiver of retroactive eligibility encourages beneficiaries to obtain and maintain health coverage, even when healthy. This is intended to increase continuity of care by reducing gaps in coverage when beneficiaries churn on and off Medicaid or sign up for Medicaid only when sick.” However, the new premium requirements and community engagement requirements would result in some people losing access to Medicaid, and hospitals would likely see more uninsured patients. Since they won’t be able to enroll people in Kentucky HEALTH retroactively, the result could just be more uncompensated care for Kentucky hospitals.
While the language of Kentucky’s waiver and the CMS approval letter is couched in positivity (ie, empowering patients, encouraging community engagement, etc.), Bevin’s underlying position all along has been that the state can’t afford to have half a million new enrollees in its Medicaid program under the ACA, and his objective has been to trim the Medicaid roles in Kentucky.
Although Medicaid expansion waivers are certainly better than rejecting expansion altogether, they tend to limit enrollment more than straight expansion. That’s because waivers typically include some way for enrollees to have “skin in the game,” including premiums for some enrollees. But numerous studies have shown that imposing premiums on very low-income people tends to result in fewer people obtaining coverage. And although Kentucky will be the first state to implement a work requirement for Medicaid, there is no doubt that provision will also result in fewer people obtaining and maintaining Medicaid coverage.
Bevin’s opponents in 2015 — Democrat Jack Conway and Independent Drew Curtis — both supported keeping the current Medicaid expansion system intact in Kentucky. They and Beshear pointed out that Bevin’s plan — which has evolved with time — would result in a loss of coverage for at least some of the half million people in Kentucky who are newly-insured under Medicaid expansion.
Although there will be some significant changes to Kentucky’s Medicaid program in 2018, a bill that would have implemented drug testing for adult Medicaid enrollees failed to pass. HB35, introduced by Republican Rep. Wesley Morgan, would have required residents to pass drug screening before being eligible to enroll, and would have subjected them to annual drug screening, conducted in a random month of the year. Enrollees who tested positive for a Schedule I controlled substance, or for a Schedule II to IV controlled substance for which they did not have a prescription, would have lost their eligibility for Medicaid, along with other public assistance programs, such as food stamps. But HB35 did not advance in the 2018 legislative session.
See if you qualify for Medicaid
Use this chart to see if you may qualify for Medicaid. Kentucky’s eligibility levels are as follows:
- Children up to age 1 with family income up to 195 percent of the federal poverty level (FPL)
- Children ages 1 to 18 with family income up to 159 percent of FPL
- Children with family income too high to qualify for Medicaid are eligible for the Kentucky Children’s Health Insurance Program (KCHIP); KCHIP is available to kids with family income up to 213 percent of FPL
- Pregnant women with family income up to 195 percent of FPL
- Parents and other adults are covered with incomes up to 138 percent of FPL
Kentucky Medicaid is available to a number of other populations, such as individuals who are elderly or disabled. See the Programs and Services page for more information.
Apply for Medicaid
You can do any of the following to apply for Medicaid.
- Enroll online using HealthCare.gov or Benefind.ky.gov.
- Apply by telephone (HealthCare.gov) by calling 1-800-318-2596 or TTY 1-855-889-4325, or Benefind at 1-855-306-8959.
- Download a paper application. Mail your application to the DCBS Family Support P.O. Box 2104 Frankfort KY 40602. You may also fax your application to: 1-502-573-2007.
- Apply in person at a local office of the Department for Community Based Services (DCBS).
Big benefits through Medicaid expansion
Despite the political unpopularity of the Affordable Care Act, Former Gov. Steve Beshear strongly advocated for Medicaid expansion and a state-run marketplace (Kynect). Beshear’s administration touted both the public health and economic benefits of Medicaid expansion, including improved health outcomes through access to health insurance, the creation of nearly new 17,000 jobs, and a $15.6 billion impact on the state economy over seven years.
A study by Deloitte concluded that through 2020, Kentucky’s Medicaid expansion would be a net financial positive for the state, although supporters of Medicaid expansion note that the improvements in the economy under Medicaid expansion would likely result in the program remaining financially sustainable long-term.
Medicaid expansion was effective as of Jan. 1, 2014. In the fall of 2013 — before the first open enrollment period under the Affordable Care Act — 606,805 people were enrolled in Kentucky’s Medicaid program. As of December 2017, total enrollment had increased by 110 percent, to 1,272,976.
According to Families USA, 55 percent of the newly-eligible Medicaid population in Kentucky is working adults – people who work in industries that are vital to the economy of the state, but who survive on household incomes under 138 percent of the poverty level.
Data collected by the Kentucky Cabinet for Health and Family Services shows that the new Medicaid beneficiaries are taking advantage of preventive screenings, with the following increases from 2013 to 2014:
- 30 percent increase in breast cancer screenings
- 3 percent increase in cervical cancer screenings
- 16 percent increase in colorectal cancer screening
- 37 percent increase in adult dental visits
The lead up to Medicaid expansion
Despite Former Gov. Beshear’s conviction about the benefits of expanding Medicaid, Kentucky did not announce the decision until May of 2013. Beshear cited concerns about the cost in explaining why the state’s decision came slower than in other states that adopted expansion.
The Kentucky legislature did not authorize Medicaid expansion, which was a concern for Senate President Robert Stivers. However, Kentucky’s Medicaid eligibility rules are defined in state regulations, which can be changed by executive order. Accordingly, legislative approval was not needed.
While Medicaid expansion was secure during its first couple years, analysis by the Rockefeller Institute indicated that the lack of legislative approval could leave the program in jeopardy after Beshear left office. That is exactly the scenario the state encountered when Governor Bevin’s administration took over.
Bevin would be able to roll back Medicaid expansion without legislative action, although he backed off from that tactic very early on, favoring an 1115 waiver to make changes to the existing program instead. Now that HHS has approved Kentucky HEALTH, Kentucky is poised be the first state to eliminate straight Medicaid expansion (as called for in the ACA, with no state-based variations) and replace it with a state-specific waiver.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.