GOP primary offers early litmus test for Medicaid expansion’s future

02/22/2015 10:01 AM

Kentucky’s next governor will have a significant role in defending, dismantling or tinkering with Gov. Steve Beshear’s moves to expand Medicaid eligibility and create the state-based health exchange kynect under the Affordable Care Act.

The state won’t be alone as a handful of others have taken a renewed interest in the federal government’s offer of free Medicaid coverage for the working poor until 2017, when its share of covering the newly eligible begins gradually dropping to 90 percent.

While Jack Conway, the attorney general and likely Democratic nominee for governor, has applauded his fellow Democrat’s implementation of the politically polarizing health law, the four Republicans vying to replace Beshear have offered varying criticisms of Medicaid expansion and kynect. Beshear laid the groundwork for both through executive orders two years ago.

Matt Bevin, a Louisville investor and one-time U.S. Senate candidate, and former Kentucky Supreme Court Justice Will T. Scott said they would dismantle kynect. Agriculture Commissioner James Comer’s campaign manager, Edwin King, said the candidate would not have expanded Medicaid eligibility for low-income workers. The four campaigns also dispute rosy economic projections in a recently-released report on Medicaid expansion commissioned by the Cabinet for Health and Family Services.

But none of the GOP contenders would say directly how they would manage a Medicaid population that ballooned by 310,887 under the expansion in its first year, more than doubling initial estimates of 147,643 newly-eligible enrollees in year one, according to an analysis released by Beshear Feb. 12.

“He (Beshear) certainly put Kentucky and the next administration in a bad position because we’re going to be faced with, I mean, he basically blew a hole in the budget,” King said in a phone interview with Pure Politics this week. “So we’re faced with that hole, and how do we get out of that? All options have to be on the table.”

On that point, the Comer and Heiner camps agree.

“Governor Beshear knows he will be out of office before the bills start coming due for Medicaid,” Doug Alexander, spokesman for Louisville real estate developer Hal Heiner, said in an email. “Kentucky is not prepared to absorb those costs when the state has to start picking them up in 2017.”

Bevin called Beshear’s glowing economic estimates on offering Medicaid to Kentucky adults earning at or below 138 percent of the federal poverty level “absolute foolishness.”

“To use the flawed logic offered by Governor Beshear, if in fact the expansion of Medicaid is a job creating, revenue generating boon for Kentucky, then why not put everyone in Kentucky on Medicaid?” he said in a statement. “The idea that there is a free ride for this or any other government run program is disingenuous at best. Shame on our state’s chief executive for pushing such financial falsehoods.”

Scott’s campaign manager, Nicholasville tea party activist David Adams, is suing Beshear’s administration for bypassing the legislature in creating kynect and expanding Medicaid.

The former justice said he shares his manager’s anti-Obamacare zeal and has pledged to shutter the state’s health exchange in his first act as governor. But he was less specific about how to walk back the expansion of Medicaid that Beshear authorized.

Beshear, for his part, has challenged his potential successors to look beyond the “Obamacare” label and instead at benefits of expanding Medicaid, which is fully funded by the federal government until fiscal year 2017. At that point, the state begins gradually ratcheting up its coverage of the newly-eligible enrollees to 10 percent by 2020.

The review, conducted by Deloitte Consulting and the University of Louisville Urban Studies Institute, estimated that the state will spend $1.4 billion more on expanded Medicaid coverage, new enrollees in traditional Medicaid, and new mandates in the Affordable Care Act between fiscal years 2017 and 2021. But those obligations would be offset by $1.8 billion in healthcare spending reductions, tax revenues and federal aid.

Overall, the study predicted Medicaid expansion will have a $30 billion economic impact on Kentucky through 2021. And Beshear said at the press conference announcing the results of the report that the candidates must answer key questions such as: “Do you want to take affordable health care away from 500,000 Kentuckians?”

And, he added, “If you do that, what’re you going to replace it with?”

Debate among themselves

Kentucky’s gubernatorial election is one of three in the country this year, and the campaign will likely keep the spotlight on Beshear’s decision to make Kentucky one of 28 states to expand Medicaid eligibility, an optional provision of the Affordable Care Act he enacted without going through the politically divided General Assembly.

Scott, who hails from Pike County in one of the poorest regions of Kentucky, seems to embody the nuances of that debate.

“I am against Obamacare today, I’m against Obamacare tomorrow, I’m against Obamacare forever,” Scott said in a phone interview with Pure Politics, noting his support for the Patient CARE Act, a Republican-sponsored bill in the U.S. Senate that would repeal and replace the federal health law.

But he was not as enthusiastic when asked about expanded Medicaid, saying he would keep an open mind about whether Kentucky should cut off from Medicaid those making between 100 percent and 138 percent of the poverty rate.

“I’m saying that the bill that’s going to be presented is going to be owed,” he said. “I operate now on what I learn and what advisors I have helping me in these areas, but when I step in that office I’m going to have 10 to 15 advisors on everything. I mean, the governor has that and you look at that then, but I’m telling you, kynect is gone.”

The mixed signals underscore the complexities of campaigning against a law many conservatives see as an example of government overreach yet hundreds of thousands of Kentuckians have benefitted from, particularly low-income residents in Appalachia.

Talk of Medicaid has picked up in statehouses elsewhere as Republican governors broker deals with the Obama administration on specially-tailored expansion plans. Lawmakers in Tennessee and Wyoming this month rejected such proposals, citing concerns with the federal government’s ability to cover 90 percent of the expansion’s costs, while GOP governors in Indiana and Utah prepare to guide their plans through legislative gauntlets there.

King said the Comer campaign is still reviewing Deloitte’s economic analysis and “reserving the right to consider all options” regarding Medicaid expansion and kynect. But he said the report is “built on the same fallacies contained in his 2013 study” and “false on its face.”

“Basically Gov. Beshear has maxed out the credit card and we have to find the smartest way to pay for it,” King said. “Now what is that smartest way? Well there are a lot of options on the table, and so we have to be very, very diligent in finding the best solutions for Kentucky taxpayers.

“Commissioner Comer would not ever have expanded Medicaid, but now that we’re down this road, we have to be very careful when considering options on how to pay for this.”

‘Against their best interests’

For Republican gubernatorial candidates, it’s a fine line between railing against the federal health law and pledging to repeal Medicaid expansion in Kentucky.

Owsley County, one of the poorest counties in America, is one of a contiguous block of four eastern Kentucky counties where more than 60 percent of its residents receive Medicaid since the expansion, according to Deloitte’s report.

But Judge-Executive Cale Turner, a Democrat and a staunch supporter of the Affordable Care Act’s impact in his community, laments that some simply vote by party affiliation or based on negative 30-second television ads. Still, he conceded that politicians might score points with the electorate in Owsley County and elsewhere by campaigning against Obamacare.

“A lot of people go in and truly vote against their best interests without even realizing it,” Turner said in a phone interview. “If you was going to sit down and analyze it, if you’re working basically a minimum-wage-type job or you’re unemployed how could you oppose the Affordable Care Act? How could you go vote for these politicians that tell you they’re going to do everything they can to get rid of it?

“But yet people do that over and over because, in my opinion, on those issues they’re not informed and then there’s a lot of demagoguery about it taking place.”

Other parts of the state have smaller, yet still sizable, shares of their residents on Medicaid. Only three counties — Boone, Oldham and Spencer — have enrollments at less than 20 percent of their populations.

Simpson County Judge-Executive Jim Henderson, a Republican who has endorsed Comer and served as president of the Kentucky County Judge-Executive Association last year, said it would be tough for a candidate to take a hard-line stance like repealing Medicaid expansion.

“That would be a very difficult decision for any governor regardless of their political persuasion to have to deal with that,” said Henderson, whose county has 30 to 40 percent of its population enrolled in Medicaid.

Henderson, speaking as a political observer, said he respectfully disagreed with Beshear’s decision to implement Medicaid expansion without identifying a sustainable plan to pay for new enrollees. The governor relied on a similar analysis by the Price Waterhouse Coopers and U of L two years ago that showed the state would more than make up increased Medicaid costs.

From a judge-executive’s standpoint, “it’s more a question of what is the next governor’s position on that going to mean for statewide funding for counties, cities, other state programs,” Henderson said.

A wash out?

The state must pay a 5 percent share of expanded Medicaid costs in 2017, and that will grow to 10 percent by 2020. The newly eligible will cost the state an estimated $362.7 million by fiscal year 2021, according to Beshear’s updated report.

“There’s only so many dollars in the state budget,” Henderson said.

Steve Voss, a University of Kentucky political science professor, said voters typically do not respond to “dire predictions” and “focus on the here and now,” regardless of whether Republican warnings of the healthcare law come true down the road.

The healthcare law trailed other important issues like the economy in last year’s election cycle, he said.

“The numbers of people who’ve gotten insurance who didn’t have it, they’re not small, and there’s the larger number of voters who maybe didn’t get insurance but they’re either connected to somebody who did or they’re just kind of motivated by this issue, you have an electorate there,” Voss said.

“And certainly that’s not inconsequential if you end up with a close race, but then there are the other people who have been following the news on Obamacare and who’ve heard the rebuttals against it and all the problems with the healthcare exchange set up federally, but it kind of washes out.”

Kevin Wheatley

Kevin Wheatley is a reporter for Pure Politics. He joined cn|2 in September 2014 after five years at The State Journal in Frankfort, where he covered Kentucky government and politics. You can reach him at kevin.wheatley@charter.com or 502-792-1135 and follow him on Twitter at @KWheatley_cn2.

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