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Why Kentucky couldn’t kill Obamacare: A lesson for Congress

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(Bloomberg) — As congressional Republicans meet this week to gut Barack Obama’s signature health care law, they can look for guidance to Kentucky, where a big political promise met with reality to force the type of compromise national lawmakers might face.

The result: a taxpayer-funded insurance program that looks a lot like Obamacare.

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President Donald Trump, who vowed to kill the Affordable Care Act as one of his first moves, signed an executive order Friday declaring that his administration will seek the “prompt repeal” of the law and that the government should prepare to “afford the states more flexibility and control to create a more free and open healthcare market.” No specifics were provided.

Kentucky Republican Matt Bevin ran for governor on a platform devoted almost exclusively to killing Obamacare, including its expansion of Medicaid insurance to the poor. He didn’t do it. Following in the steps of eight Republican governors who sought to expand Medicaid without appearing to do so, he applied for federal permission to add Republican-friendly tweaks to the program instead.

The decision was a nod to reality. By the time Bevin took office at the beginning of 2016, almost one in three Kentuckians had Medicaid or insurance through a federally subsidized Affordable Care Act plan. Many of them didn’t know it when they elected the new anti-Obamacare governor, a side effect of how Kentucky marketed the plans.

State branding

Kentucky pushed Obamacare as anything but Obamacare in order to sidestep political hostility to the president, whose position on coal made him unpopular in a state with roughly half the coal jobs it had in 2010. Enrollees signed up for Kynect, the state’s brand of the health-law insurance, not Obamacare. Medicaid recipients enrolled through managed-care companies that handle the program, including Louisville, Kentucky-based Passport Health Plan.

“A lot of people, they just know they have insurance but they don’t know it’s Obamacare,” said Amber Lewis, 34, who sells guns, Kennedy half dollars, baseball cards and knives every day at a booth at the Bull Creek Trade Center in Prestonburg, Kentucky.

“They say they have Kynect insurance, or Passport insurance, I hear it both ways,” said Lewis, who has insurance for the first time, pays nothing for it and knows what it is. “I know what I have. I have Obamacare.”

Starting in 2013 when Kentucky’s then-Democratic governor embraced Obamacare, Cara Stewart, a health law fellow at the Kentucky Equal Justice Center, along with the state’s Primary Care Association and others, enrolled hundreds of people in the program without mentioning Obamacare, the Affordable Care Act or the federal government.

Uninsured rate plummets

Within two years, the state’s uninsured rate had fallen to 6 percent of the population from 20 percent. More than 420,000 people had been insured through Medicaid expansion, dropping the number of uninsured in some low-income jobs — at restaurants, construction sites, gas stations and discount stores, among others — by between 35 percent and 52 percent, according to data from the Kentucky Center for Economic Policy, which studies impacts on the poor.

It had been easy for Bevin to run against Obamacare. Once in office, his promise meant killing the subsidized insurance much of the state depended on but didn’t know they had.

He turned to a consulting company then led by Seema Verma, now the head of the U.S. Centers for Medicare & Medicaid under Trump.

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Verma was also a health policy adviser to Vice President Mike Pence when he was governor of Indiana.

Premiums and punishments

Instead of scrapping Kentucky’s expanded Medicaid, Bevin applied for the same kind of federal waiver won by other Republican governors, led by Pence. The waiver programs include Republican-looking add-ons — premiums, punishments, so-called skin in the game for the poor — that allowed the governors to expand Medicaid under Obamacare, while saying they were doing something else.

Bevin’s compromise may foreshadow where national Republicans end up on Obamacare. His still pending Medicaid waiver request puts the poor through more hoops to get insurance, adds complication and bureaucracy, could drive up administration expense and would inevitably cost some recipients coverage. It also keeps the expansion of Medicaid.

Depending on what happens in Congress, Bevin’s waiver has a good chance for approval from the agency Verma now heads. Bevin’s spokeswoman, Amanda Stamper, didn’t return three calls for comment on Bevin’s waiver decision.

Michael Rabkin, spokesman for Passport, the Medicaid managed-care company, said he didn’t know why Bevin changed his approach, “but I know a lot of people were talking to him, including my boss.

“There were a number of important people in the health care field — hospitals, doctors, Passport — working to make sure that from the governor’s office on down, everybody knows what it means, how many people were affected and what would happen if it goes away,” he said.

Paul’s warning

They also talked to U.S. Sens. Mitch McConnell and Rand Paul, both Kentucky Republicans. Paul warned this month against efforts to repeal Obamacare without replacing it, a move that could cost 32 million Americans their health insurance in coming years.

“In general, they don’t like it, but do like the fact that their constituents are healthier than they were last year,” Rabkin said.

McConnell declined to comment. Paul told MSNBC on Friday that he plans to unveil his Obamacare replacement bill next week.

Others also are calling for caution. Republican governors, while remaining publicly committed to ending Obamacare, are telling their congressional delegations that repealing the health care law without an adequate replacement would ravage budgets and swamp hospitals with the uninsured.

Pioneered by Pence

Bevin’s waiver approach was pioneered in Pence’s Indiana with help from Verma. It became the new Medicare administrator’s consulting firm’s trademark, circulating widely among gubernatorial Republicans wanting to get expansion dollars without appearing to coddle the poor.

Kentucky’s version, still funded by taxpayers, imposes monthly premiums of $1 to $15, depending on income, which then would be allowed to rise annually. Beneficiaries would have a $1,000 per year deductible funded by the state. Most would have to work or volunteer for 20 hours a month to get their coverage.

The requirements, according to the state’s application, will teach the poor how the private insurance market works in preparation for the day when they get good jobs with benefits, which the work or volunteering mandate will help them do.

Bevin had no choice, said Jim Waters, president of the Bluegrass Institute for Public Policy Solutions, a free-market think tank in Lexington, Kentucky, that opposes Obamacare and cheered Bevin’s campaign promise to end expanded Medicaid.

“He is ending Medicaid expansion by reforming it,” he said. Ending it by actually ending it “would have caused a lot of unsettlement. There were people involved. It’s hard to unscramble an egg.”


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