New Kentucky governor faces reality of dumping PPACA exchange

(Bloomberg) — Blair Wilson walked into a storefront at a Louisville mall. An hour later, she walked out with Medicaid coverage for herself and her father, who lost his insurance this year after two strokes.

Kentucky’s Republican governor-elect, Matt Bevin, won this week promising to scrap the state’s Kynect insurance exchange created under the Patient Protection and Affordable Care Act (PPACA) — Obamacare — while repealing and replacing its Medicaid expansion.

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Yet Kynect, which Bevin has called part of a “financially ill-advised program,” in two years has enrolled 521,000 people in Medicaid or federally subsidized private plans. Joining is as easy as going to Mall St. Matthews for people such as Wilson, an 18-year-old nursing student who makes $300 a month, and it doesn’t cost tax dollars to run.

Bevin’s rise to power will test the ability of Republican politicians to take away what in Kentucky is a popular program that has helped one in 10 residents to get insurance. All of the Republican presidential candidates have promised to repeal or replace PPACA. The House of Representatives has voted more than 50 times to scrap or restrict the program despite the certainty of the president’s vote. In order to make those gestures reality, the new governor will have to confront residents like Wilson.

“I can go home and sleep and wake up in the morning and know that I don’t have to worry about not having insurance,” Wilson said in an interview at the Kynect store after enrolling. If Bevin ends Kynect as promised, “they’re going to have a lot of angry people on their hands,” she said.

Kentucky under Democrat Steve Beshear was one of 12 states and the District of Columbia that created a state-based insurance exchange rather than allowing the federal government run it or partner with the state, according to the Kaiser Family Foundation. The commonwealth is also among 30 states that expanded Medicaid, the joint state-federal insurance plan for the poor.

Handing over

Bevin, 48, a Louisville businessman and investment manager who has never held office, defeated the Democratic attorney general by linking him to Obama and vowing smaller government. He said in a policy paper that he would repeal the “unaffordable” Medicaid expansion and close Kynect, helping enrollees transition into the federal health care exchange to “leave Obamacare management in the hands of the federal government.”

The governor-elect also said Medicaid expansion should be repealed, and he would seek a waiver of federal rules for eligibility and coverage with a “Kentucky-specific” version that’s more sustainable.

It’s a talking point that may be difficult to accomplish, said Drew Altman, chief executive of the Kaiser Foundation, a Menlo Park, Calif., nonprofit that studies health care.

“It’s easier to campaign on than it’s going to prove to be to change,” he said.

Kynect is embedded in Kentucky, said Joel Ario, the first director of the U.S. Department of Health and Human Services (HHS) Office of Health Insurance Exchanges.

Federal regulations for relinquishing control require 12 months’ notice and state participation in a transition plan, Ario said. Also, he said, it’s inconsistent for Bevin to demand more control over Medicaid expansion while relinquishing the state exchange that provides coverage.

“That doesn’t fit together very well,” Ario said.