With Supreme Court ruling, GOP lawmakers want another look at state exchange

07/15/2015 07:53 PM

After the U.S. Supreme Court ruled last month federal subsidies could apply to health plans purchased on both state and federal insurance exchanges under the Affordable Care Act, Republicans on the Interim Joint Health and Welfare Committee suggested Wednesday the state may fare better by shuttering kynect in favor of the federal website HealthCare.gov.

But Beth Jurek, executive director of the Cabinet for Health and Family Services’ budget and policy office, said kynect is better suited for Kentucky customers than the federal exchange and insurers would be charged a higher assessment fee on HealthCare.gov if the state exchange closes.

The debate preceded an 11-11 party-line vote to approve this year’s version of Gov. Steve Beshear’s executive order establishing kynect. The tie vote allows the order to remain in effect.

Wednesday may mark the final time lawmakers have such an executive order to review as the Beshear administration leaves office this year. While Democratic Attorney General Jack Conway has said kynect would remain in place if he’s elected governor this year, GOP nominee Matt Bevin has pledged to dismantle the insurance exchange if victorious Nov. 3.

Sen. Ralph Alvarado, R-Winchester, asked whether kynect was necessary in light of the Supreme Court’s June 25 health care ruling.

“While kynect when it was rolled out worked better than the federal exchanges, obviously the glitches for the federal exchanges have been worked out,” he said. “And so I guess my question at this point is whether there’s really a need for the state to run a duplicative system.”

A handful of states – Hawaii, Oregon, Nevada and New Mexico – have abandoned their exchanges after technical or financial struggles doomed their viability. Officials in Vermont are debating closing their troubled exchange in light of the Supreme Court ruling, Vermont Public Radio reports.

But CHFS officials have not explored the option of moving to HealthCare.gov, she said, because kynect functions better than its federal counterpart and is financially self-sustaining through a 1 percent charge on insurers in the marketplace, which generates about $28 million annually for the program.

Cabinet spokeswoman Jill Midkiff said such a transition from a program that has enrolled more than 500,000 Kentuckians in health insurance hasn’t been broached “because there are no plans to do so.”

“However, I can tell you the cost to consumers would be greater, as the assessment on insurers for plans sold on Healthcare.gov is 3.5 percent, which is significantly higher than Kentucky’s 1 percent assessment on insurers that will support the ongoing operations of kynect,” Midkiff said in an email to Pure Politics.

The federal government has already covered costs to launch kynect, leading Jurek to predict that the state would be responsible for any costs associated with closing the exchange and moving to the federal system, such as creating an interface that allows HealthCare.gov to determine applicants’ eligibility for Medicaid.

“To interface with the federal exchange is going to require that you build the interfaces, and that’s going to cost in the millions of dollars to do,” Jurek said.

Democrats on the panel said kynect has drawn national praise for its implementation and the Supreme Court’s ruling has effectively ended the debate on Obamacare’s legality.

“It’s the law,” said Rep. Tom Burch, a Louisville Democrat and chairman of the House Health and Welfare Committee. “It’s been approved by the highest court in this country.”

On top of any misgivings about the exchange itself, Beshear’s decision to circumvent a politically divided General Assembly to enact kynect through executive order in 2012 still has some fuming.

“I think on the most basic premise, the fact that we deal with this as an executive order is very offensive to me because we have completely extracted the legislative component from a program that actually touches the lives of everybody who elects us,” said Sen. Julie Raque Adams, a Louisville Republican and chairwoman of the Senate Health and Welfare Committee.


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