Bevin administration will still have state health-insurance exchange but use federal exchange for enrollment; cost debated

By Melissa Patrick and Al Cross
Kentucky Health News

Republican Gov. Matt Bevin appears to have found a way to abolish the Kynect health-insurance exchange without chasing away insurance companies or causing them to limit their offerings – and at just over 1 percent of the cost estimate used by his Democratic predecessor. But he isn’t eliminating the insurance fee that funds Kynect.

Bevin and Health Secretary Vickie Yates Brown Glisson emphasized the much lower costs – which they said would be a net $240,000 for information-technology changes, compared to the $23 million estimated last summer by Deloitte Consulting, the state contractor who built the exchange.

Democrats voiced skepticism about the numbers. But regardless of the cost, the greater impact for Kentuckians who buy federally subsidized health insurance is likely to be greater choice of coverage.

Since federal health reform was fully implemented in 2014, more insurance companies have joined the exchange and offered policies across wider areas. Kynect Director Carrie Banahan warned last summer that if the exchange were closed, some of its insurers might not use the federal exchange.

Glisson told a legislative committee that the federal exchange will be used for insurance enrollment, but as part of a “supported state-based marketplace,” which will still be run by the state. That will please insurance companies, which are state-regulated and have always wanted a state-based exchange.

“It’s kind of like the best of both worlds. I think our issuers are going to like this; I think our consumers are going to like this,” Glisson told the House Budget Review Subcommittee on Human Resources.

For the new marketplace, the federal government will handle consumers’ eligibility appeals but the state will handle insurance-company grievances and still review insurance plans. Certification of the plans will move to the federal government, but it will “strongly rely” on state recommendations, Glisson told the panel. Consumer grievances will be handled by a state-federal partnership.

The fee for using the federal exchange will be 1.5 percent, plus a proposed 0.5 percent state fee to cover outreach and plan-management functions. The state will have a “hotline” to provide basic information to consumers, and a call center for people on the federal-state Medicaid program.

Kynect advocates argue that one of its benefits is that Kentuckians can sign up for both Medicaid and subsidized private insurance on one system, instead of the two that will be required with the changes Bevin is making. Glisson said the new marketplace will be linked with Benefind, the new portal for enrolling in Medicaid and other public assistance.

Kynect has been funded by a 1 percent fee on all health-insurance policies sold in the state. Bevin has said it isn’t fair for all insurance customers to pay for an exchange that fewer than 100,000 people use.

However. his office said the fee will remain in place to help pay transition costs, fund the Kentucky Health Information Exchange and fund “legacy costs” of Kentucky Access, the high-risk insurance pool for which the fee was established – and transformed into Kynect funding by an executive order from then-Gov. Steve Beshear.

Bevin spokeswoman Jessica Ditto told Kentucky Health News in an email that the administration will ask for language in the state budget bill to allow the fee to be reduced for insurers offering federally subsidized plans on the exchange.

Beshear, who recently started a lobbying campaign to fight Bevin’s plan to close Kynect and scale back Medicaid expansion, said in a press release, “His math doesn’t add up.”

Glisson told the budget subcommittee, “For less than $250,000 to decommission Kynect, the commonwealth will be able to save at least $20 million. I would actually maintain somewhere between $20 million and $40 million this year.”

Ditto said the state would save the taxpayers $15 million to $25 million less under Bevin’s plan.

Beshear said all those claims are false because Kynect has never used any state tax dollars. “There are no savings to use elsewhere,” he said.

Beshear also said that the changeover will have additional costs that Bevin is not outlining. He called the governor’s numbers “illusionary.”

Glisson told the subcommittee, “We believe there will be additional cost-saving opportunities,” including a “significant savings” on the Kynect call center, which has cost $23 million a year.

Rep. Joni Jenkins, D-Shively, told Ronnie Ellis of CNHI News Service that she is trying to identify an independent source who can lend credence to one set of numbers or the other. House Speaker Greg Stumbo agreed, saying, “Surely to goodness, someone somewhere can verify what those costs are.”

Glisson told the budget subcommittee that the new marketplace would cost $5.3 million, but the state would only be responsible for $1.6 million of that amount. She said $4.1 million would pay for the cost of transferring data from the state exchange to the federal exchange and tying the data to Benefind. But she said this is likely eligible for a 90 percent match from the federal government, reducing taxpayer costs to $413,000.

Glisson said the rest of the cost comes from the $1.2 million to dismantle Kynect’s information technology, but once it was shut down the state would save $1.3 million in maintenance and operations costs. Subtracting the estimated savings from the state’s share of the costs equals $236,000, she said.

One unanswered question is how many Kynectors, or health-insurance navigators, that the state will have under the new system. Glisson said she believed there would be funding for some, and for some advertising, but she wasn’t specific. She said county-based employees of her Cabinet for Health and Family Services could help people get to the federal exchange if they don’t qualify for Medicaid. Here’s a video of her presentation, via Kentucky Educational Television:

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