State health official says Ky. is considering cutting nearly 500,000 people off of Medicaid because of a $300 million program shortfall

Health officials said the state is considering eliminating Medicaid coverage to almost 500,000 Kentuckians because the program is facing a nearly $300 million shortfall.

During a review of the 2018 fiscal budget and the outlook for 2019, Health Secretary Adam Meier told members of the legislature’s Budget Review Subcommittee for Human Resources on Aug. 30 that Kentucky will be $296 million short by 2020, Adam Beam reports for The Associated Press. He added that dental, vision and pharmacy benefits are also on the table.

“That’s certainly not anything we would want to do,” Meier said, but “We also have a constitutional obligation to come in under budget. Unlike the federal government, we can’t just print more money. We can’t run a deficit.”

Kentuckians at risk of losing coverage are the ones who gained it through the state’s 2014 expansion of Medicaid, under the 2010 Patient Protection and Affordable Care Act, to those who earn up to 138 percent of the federal poverty level ( about $16,000 for a single person).

Medicaid is a federal-state funded program that covers about 1.4 million people in Kentucky, or about one-third of the state’s population. The program costs about $11 billion a year, with most of it paid by the federal government. In Kentucky, the federal government pays about 70 percent of the cost for “traditional” Medicaid patients and 94 percent of the cost for the expanded population, an amount that will drop to 90 percent in 2020.

Before then-Gov. Steve Beshear, a Democrat, expanded Medicaid, the program was mainly limited to very poor pregnant women and children, disabled people and low-income elderly in nursing homes.

Asked what could be done to avoid the shortfall, Meier said, “The expansion population is an optional population.”

Kentucky Democratic Chairman Ben Self told Beam that Meier “should be ashamed” for using those words. Meier told Beam after the hearing that “it was a technical term” used by the Centers for Medicare and Medicaid Services to describe populations that are not required to be covered.

Beam notes that the state is not required to cover people who qualify for Medicaid through the expansion. So far, 19 states have yet to do so. Virginia has passed an expansion, but it won’t take effect until 2019; Maine voters have approved expansion, but it is in an ongoing legal battle because the governor won’t allow it to be implemented; Nebraska is scheduled to vote on expansion Nov. 6.

The Bevin administration submitted a new  Medicaid plan to the federal government called Kentucky HEALTH (for Helping to Engage and Achieve Long Term Health) that was approved and set to go into effect July 1. The state estimated that the new plan would save the state $300 million over the next five years, with most of that savings a result of covering 95,000 fewer people.

However, a federal judge vacated Kentucky HEALTH just days before it was set to start, saying that federal officials had not sufficiently considered public comments about it, nor had they adequately considered the state’s estimate that in five years its Medicaid rolls would have 95,000 fewer people with the plan than without it, largely for non-compliance with its requirement.

Since it was vacated, a 30-day comment period on Kentucky HEALTH that ended Aug. 18 overwhelmingly found that of the 9,397 unique comments, 8,438 or 96 percent were unsupportive, while only 373 or 4 percent were supportive, a ratio of over 20 to 1 against the waiver, according to an analysis done by the Kentucky Center for Economic Policy.

The new plan would require able-bodied adults who are not primary caregivers to work, attend school, take job training or volunteer 80 hours a month, or enroll in a drug-treatment program if appropriate. It also includes small, income-based premiums and lock-out periods for non-compliance, among other things.

Gov. Matt Bevin has said Kentucky will end the expansion if courts block his new Medicaid plan,  and has issued an executive order putting the termination into effect six months after a final court judgment.

Beam reports that Meier told lawmakers the state had been counting on those savings to help avoid the shortfall. Meier added that the health cabinet will not eliminate the Medicaid expansion without first consulting the Republican-controlled legislature.

A group of hospital executives recently launched a campaign to encouraged lawmakers to expand the  health care tax to more providers, saying their plan would generate an estimated $372 million in 2020, Beam reports.

The group, called Balanced Health Kentucky, is motivated to save Medicaid expansion because it has significantly increased the number of people who are able to pay for their care, especially in rural hospitals, which had high rates of patients with no insurance prior the expansion. Since 2014, Kentucky’s uninsured rate has dropped from about 14 percent to 5 percent, one of the sharpest drops in the nation.

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