Gov. Bevin unveils federal Medicaid waiver proposal that maintains expanded population eligibility but requires premiums

Photo by Joe Sonka

Gov. Matt Bevin unveiling proposed Medicaid waiver on Wednesday | Photo by Joe Sonka

Gov. Matt Bevin on Wednesday unveiled his Medicaid waiver proposal, which would not change the current eligibility requirements that have expanded coverage to those making income up to 138 percent of the federal poverty level, but would require all “able-bodied adults” to pay a premium for their coverage.

Bevin said his plan — called Kentucky HEALTH — would be “transformative” to health care in the state by ensuring better health outcomes, incentivizing individuals to buy private insurance, and offering long-term financial sustainability for the state budget in advance of Kentucky having to kick in up to 10 percent of the costs for the expanded population in a few years.

“Above all else, it creates better health outcomes,” said Bevin. “We can provide all the lip gloss we want and all of the encouragement to do something without actually doing anything and make ourselves falsely feel good. I wasn’t looking for that in any way shape or form… I don’t want to simply provide people with a Medicaid card and feel like we’ve done our part. We owe them better health outcomes.”

The governor said he has had many “good faith” discussions with U.S. Department of Health and Human Services Secretary Sylvia Burwell over the last six month about aspects of his Medicaid section 1115  waiver application that her federal agency would have to approve, expressing confidence that it will be approved before November.

However, Bevin said that if the Centers for Medicaid and Medicare Services — part of HHS — does not approve the waiver, “there will not be expanded Medicaid in the state of Kentucky,” a clear indication he would repeal the executive order of former Gov. Steve Beshear that allowed over 400,000 to gain access to Medicaid.

“Whether or not this is accepted is entirely at the discretion of CMS,” said Bevin. “The federal government, through (HHS), CMS specifically, and Sec. Burwell and her team will decide whether there will be expanded Medicaid in the state of Kentucky. It’s as simple as that.”

Asked what would happen if HHS agreed to approve only 90 percent of Bevin’s waiver application, Bevin said there is still a “negotiating process” going forward. That process will include three public comment hearings over the next two weeks, during which aspects of the application could change before its final submission to CMS. However, Bevin said there is no part of the application that should surprise the federal agencies, as “there’s nothing we’re asking them to do that has not been done or is not a stated goal of theirs in other programs.”

Mark Birdwhistell — a former secretary of the Kentucky Cabinet for Health and Family Services who advised the Bevin administration on the waiver application — said their plan will require all “able-bodied adults” covered by Medicaid to pay a monthly premium, which would range from $1 to $15 a month depending on income. Such individuals could be locked out of such coverage if payments are missed, but could be restored if they take classes and pay what is owed in full.

The plan also includes an incentive program to individuals to earn credits by having health risk assessments, volunteering, taking smoking cessation classes and having a job or being in school, which can be used to add benefits such as dental and vision that are covered.

Asked if the administrative costs of collecting premiums and monitoring the incentive program would exceed the amount of premiums collected, Bevin suggested it probably would, but “it’s not about dollars and cents.”

“The savings come from having people who are healthier, who are more engaged… as it relates to health care needs; [people] who are becoming mainstreamed into the commercial world because they’re working and engaged,” said Bevin. “That’s were the savings is. It is the opportunity cost of not providing people the dignity and the respect that come from being able to do for themselves. The opportunity costs far exceeds the costs of implementing this program.”

Bevin also noted that Medicaid managed care organizations make more profit in Kentucky than any other state, and their contracts with the state would be renegotiated to less preferable terms for those companies to save taxpayer dollars.

Sheila Schuster of the advocacy groups Kentucky Voices for Health and the Kentucky Mental Health Coalition appreciated that Bevin’s plan included a new pilot program to offer more detox beds for those struggling with opioid addiction, but said that the requirement of premium payments will ultimately be a barrier for those seeking access to health care insurance coverage.

“All the research that has been done over the years by the RAND Corporation, every study that’s been out there shows that when you increase people’s out of pocket expenses, they have a harder time getting the care that they need,” said Schuster. “What seems like a such tiny bit of money is actually a lot of money for some people.”

Save Kentucky Healthcare — a group created this year by Beshear — issued a statement blasting Bevin’s proposal as jeopardizing Kentuckians’ health benefits and increasing their costs, adding that “if the federal government refuses to accept these draconian changes, (Bevin) threatened to kick hundreds of thousands of working Kentuckians off of health care.”

“Gov. Bevin still cannot and will not explain how any of these changes will lead to better health, and he ignores a mountain of third-party evidence demonstrating that the system he inherited is not only effective but also sustainable,” read the statement from Save Kentucky Healthcare. “And contrary to his statement, it is up to Gov. Bevin himself to decide whether to terminate expansion, not the federal government – and the accountability for that decision will lie on his shoulders. Our families deserve better than these petty threats.”

In response to Bevin’s announcement, HHS spokesman Ben Wakana issued a statement praising Kentucky’s Medicaid expansion as one of the most successful in America, along with his hope that Kentucky chooses to build on that success.

“We are hopeful that Kentucky will ultimately choose to build on its historic improvements in health coverage and health care, rather than go backwards,” said Wakana. “Kentucky is only beginning the Medicaid waiver process and has not yet submitted a waiver to CMS. When it does, we will evaluate the waiver based on our longstanding principles of access to coverage and affordability of care, principles that we have repeatedly shared with the state. As in other states, we are prepared to continue our dialogue for as long as it takes to find a solution that continues progress for the people of Kentucky.”

An HHS official also noted to IL that the agency has been clear that states may not limit access to coverage or benefits by conditioning Medicaid eligibility on work or other activities, nor may they impose premiums or cost sharing at levels that prevent low-income individuals from accessing coverage and care. Additionally, states may not penalize people for needing Medicaid coverage for multiple years.

The same official also added that the negotiation timeframes of other states who sought and received a Medicaid waiver from HSS were significantly longer that the one that Bevin was proposing for Kentucky — along with the governor’s warning that he will repeal Medicaid expansion if HHS does not accept the waiver by this fall. In some states there have been up to seven months of negotiations after the state submitted its waiver application to CMS.

From Bevin’s Medicaid plan released today, their enrollment projections for the expanded Medicaid population would significantly decrease under the waiver — by nearly 18,000 individuals in the first year and by 86,000 through the first five years.