Bevin gives feds required one-year advance notice that he will shut Kynect health-insurance exchange, move to federal site

Bevin (Photo: Alton Strupp, C-J)

Republican Gov. Matt Bevin has given federal officials the required one-year notice needed to shut down the Kynect health-insurance exchange that his Democratic predecessor, Steve Beshear, created with federal money under the Patient Protection and Affordable Care Act.

Bevin's Dec. 30 letter to Department of Health and Human Services Secretary Sylvia Burwell follows through on his controversial campaign promise to shut down the exchange, which he says is redundant because there is a federal exchange. Advocates, including some business interests, favor a state-based exchange with local staff. They note its ease of use, its national praise and the estimate by Beshear administration officials that it would take $23 million to dismantle.

The cost might be even more "in a very lean budget year," Bill Wagner, executive director of Family Health Centers in Louisville, told Deborah Yetter of The Courier-Journal. "It's a great disappointment. It's an unwelcome setback in our efforts to reach the number of uninsured people and improve access to health care in Kentucky." Wagner has said that the move would leave the state with one-fourth as many navigators (now called "kynectors") to help people unfamiliar with health insurance use the exchange.

The administration canceled advertising for Kynect, which had become the Kentucky brand for Obamacare, last month. Bevin said in his letter that he wants to transfer Kynect users to the federal exchange "as soon as practicable." Meanwhile, the exchange remains open and will keep accepting enrollments until Jan. 31. "Nor will the changes affect anyone who signed up for Medicaid, the government health plan for low-income citizens," Yetter notes.

Kynect is funded by a 1 percent fee on a health-insurance policies sold in Kentucky, as well as "individual Medicaid plans provided in Kentucky through private managed care insurance companies," Yetter reports. It originally used to finance a high-risk pool, which became unnecessary under the reform law. Beshear used an executive order to repurpose the fee and create the exchange. The federal exchange charges a 3.5 percent fee on policies it sells.

"The vast majority of Kentuckians are paying for a website that only 2 percent of Kentuckians use," Bevin spokeswoman Jessica Ditto said, noting that 85,000 people have bought policies on the exchange for 2016. However, there are other users: those who will buy coverage through Kynect before Jan. 31 and the 425,000 people who have used the exchange to sign up for Medicaid, which enrolls Kentuckians year-round.

Bevin's lettern"raises a lot of questions," said Susan Zepeda, President and CEO of the Foundation for a Healthy Kentucky.

"The state had previously targeted special outreach efforts to hard-to-reach populations -- veterans, people with limited literacy skills, rural residents with limited computer access -- helping to close gaps in insurance coverage and health-care access," Zepeda said in a statement. "What will be done to sustain these access and equity gains under a new approach?"

Among other questions, Zepeda asked, "How will this approach support the Governor's intent to improve Kentuckians' health status, and be a model for the nation? We hope Governor Bevin will engage impacted communities in this process as we anticipate the administration will in the larger issue of Medicaid transformation."

Meanwhile, Medicaid Commissioner Lisa Lee, appointed by Beshear, has resigned. Bevin has hired University of Kentucky health executive and former commissioner and health secretary Mark Birdwhistell to redesign the expansion of Medicaid to people with incomes up to 138 percent of the federal poverty level. Bevin says the expansion, for which the state will have to pay 5 percent next year and 10 percent in 2020, is not sustainable.