Kentucky will be the 21st state to expand Medicaid eligibility under the Affordable Care Act, Governor Steve Beshear announced Thursday.
Beshear, a Democrat, called Medicaid expansion to an estimated 308,000 Kentuckians "the single-most important decision in our lifetime for improving the health of Kentuckians."
About 640,000 of Kentucky's 4.3 million residents currently lack health insurance, and combined with premium support for low- and moderate-income residents buying insurance in the state-based exchange, Beshear sees Medicaid expansion as a way to largely reduce, if not eliminate, the problem.
"I believe it is in the best interest of the Commonwealth and its citizens to provide better access to health care for our people. My only concern was the cost," Beshear said in a press release. "We have now done the exhaustive research -- and our conclusion matched what most other states have found: by expanding Medicaid, Kentucky will come out ahead in terms of both health outcomes and finances."
By not expanding Medicaid, "we will lose money," Beshear said, referring to the federal funding covering the first three years of expansion costs in full and 90 percent thereafter, as well as fines for employers not offering coverage to low-income workers making up to 138 percent of the federal poverty level, the threshold for expanded Medicaid eligibility.
For the state's finances, Kentucky budget director Jane Driskell said, there is "no question" that the costs of Medicaid expansion would outweigh the benefits. "With the federal government covering the full cost of expansion for the first three years, combined with the ability to shift some of our current cost burden to the federal government, expansion will be a very large net positive to our taxpayers' bottom line -- an estimated $802.4 million."
Following other states in seeking budget certainty in Medicaid, Kentucky has transitioned mostly to Medicaid managed care, with only about 17 percent of the current roughly 826,000 Medicaid members remaining in fee-for-service. The state is set to spend about $1.3 billion on Medicaid this fiscal year, with the federal government covering the rest of the program's cost and contributing about $4.6 billion.
In his remarks Thursday, Beshear also cited Kentucky's "dismal" health rankings as reason for expanding Medicaid. In 2012, according to the United Health Foundation, Kentucky's overall health ranking was 44th and at or near the bottom in other measures: 50th in smoking, 40th in obesity, 41st in diabetes, 50th in cancer deaths, 49th in heart disease, 43rd in high cholesterol, 44th in annual dental visits and 48th in heart attacks.
"I, for one, am tired of being at the bottom," said Beshear, a former attorney general and state legislator.
Beshear also offered some criticism of the so-called Medicaid private option that Arkansas is following -- expanding Medicaid by offering residents making between 100 and 138 percent of the federal poverty level subsidies to purchase insurance on the public exchange.
"If that plan were applied to Kentucky, not only would costs exceed benefits by 2021, but we would likely never make up the loss. Beyond 2021, costs are expected to grow at nearly 4 percent annually, while the combined benefits would only increase at 2 percent, meaning that the gap would continue to expand over time," Beshear said.
Like the last Governor to announce Medicaid expansion, West Virginia Democrat Earl Ray Tomblin, Beshear is doing so via executive decision, rather than seeking legislative approval. Kentucky's Republican-controlled Senate did pass legislation requiring legislative approval for Medicaid expansion, but it failed in the Democratic-controlled House, leaving the decision to Beshear, whose second term ends in 2014.
Beshear was also joined Thursday by several organizations supporting his decision. Michael Karpf, MD, executive VP for health affairs at the University of Kentucky, said: "Expanding Medicaid coverage will create opportunities to improve access to care and improve the ability of organizations such as UK HealthCare to more effectively manage both acute and chronic conditions for our most vulnerable patient populations."