Kentucky Continues to Inform Health Policy

By Matt Ryan

Following the Supreme Court’s decision in NFIB v. Sebelius, states have had the option whether to expand Medicaid or not. As of this writing, 30 states and the District of Columbia have expanded Medicaid. Kentucky was the only Southern state that decided to expand Medicaid and run their own exchange. The decision brought great success. Under Democratic Governor Steve Beshear, Kentucky saw their uninsured population drop by 10.6% from 2013 to 2014. As Governor Beshear put it, Kentucky was the “poster-child for the implementation of the ACA.”

Last month, Kentucky elected Matt Bevin governor. Mr. Bevin, a Republican, had promised to dismantle Medicaid and the insurance exchange. When asked about Medicaid early in his campaign, Mr. Bevin responded, “No question about it. I would reverse that immediately.” Many feared that Mr. Bevin’s election put Medicaid in critical condition. But since his election, Mr. Bevin has shifted his position.

Two weeks ago, Mr. Bevin said he wants a solution that does not upset people’s lives. To do this, he will apply for a federal waiver. Mr. Bevin has not laid out a more complete vision, but it is assumed he was referencing a Section 1115 waiver, which allow states flexibility to implement their respective Medicaid program. Seven states have received Section 1115 waivers during the ACA implementation.

Mr. Bevin’s pivot may signal that the politics of Medicaid expansion are changing. Intransigence to Obamacare has led many states, primarily in the South and Midwest, to resist Medicaid Expansion. This decision is looking worse and worse with each passing day. A recent Kaiser Family Foundation study found that states that have expanded Medicaid have seen an increase in Medicaid enrollment by 18.0%. States that did not expand only saw an increase of 5.1%. Most enlightening, however, is that states that did not expand spent more on Medicaid spending (6.9%) compared to states that did expand (3.4%). In other words, states that have not expanded Medicaid have covered fewer people and spent more state dollars. This is not just bad politics; it is bad economics.

Mr. Bevin’s pivot is also significant for health policy-makers to more closely follow Section 1115 waivers. The waivers offer flexibility to the states, and this can allow for innovation with cost-sharing policies. As CMS puts it, Section 1115 waivers allow states to expand eligibility to different populations, provide different services, and improve delivery systems. To meet the waiver, states must demonstrate the changes are budget neutral, increase coverage of low-income individuals, and improve health outcomes. As governors like Mr. Bevin try to shift to a Medicaid system that drives more “personal responsibility,” it will be critically important to compare these health outcomes with states that did not seek Section 1115 waivers. In other words, Section 1115 waivers can be illuminating to understand the pros and cons of different health policies.

Kentucky has been the gold standard for the ACA implementation the last few years. Even though Mr. Bevin’s election looked to stall progress, Kentucky may still be a beacon for the ACA implementation as it informs us about changing Medicaid politics and Section 1115 waivers.