Legislature funds health insurance for Kentuckians who make too much to qualify for Medicaid but too little to buy private coverage

Kaiser Health News graphic

Kentucky Health News

Kentucky is taking advantage of a little-used provision of the 2010 Patient Protection and Affordable Care Act to create a health-insurance plan for Kentuckians who make too much to qualify for free Medicaid coverage but not enough to pay for private insurance. 

The policy, known as the basic health program, was included in the ACA, but only Minnesota and New York took advantage of it. Kentucky and Oregon are now pursuing this option, Megan Messerly reports for Politico. 

The move comes "amid growing concern that the looming end of the Covid-19 public health emergency could result in millions of people being kicked off Medicaid and fear that Obamacare subsidies that helped millions of people buy coverage will expire at the end of 2022," Messerly writes. 

The Kentucky General Assembly, led by supermajorities Republicans, approved $4.5 million in state funds and $4.5 million in federal funds in the 2022-24 state budget to set up the program.

Messerly reports that at least 37,000 Kentuckians will be eligible to enroll in the program's plans as soon as next year. 

A basic health program offers low-cost insurance for people who make up to twice the federal poverty level – about $55,000 for a family of four – and do not qualify for Medicaid. New York and Minnesota offer plans with little or no premiums, co-pays or deductibles.

While the expansion of Medicaid under the ACA to Kentuckians making up to 138% of the federal poverty line has been criticized by some Republican legislators, this program offers more appeal to them because it is seen a a way for low-wage workers to work more without fear of losing their health insurance because they would no longer qualify for Medicaid. 

“Kentucky is not known for our great health metrics, and we’re doing our best to really address some of the gaps and the barriers in the system,” Rep. Kim Moser, R-Taylor Mill, told Messerly. “We know that this is the group of people who churn in and out of health coverage.”

Kentucky health advocates have pushed for a basic health plan for years and it's finally gaining some traction. 

The plan came form a work group the legislature created to explore establishing a "bridge" insurance plan. The group said a basic plan would “allow individuals who would otherwise lose their health care coverage through Medicaid to be able to accept work and pay raises and take away the disincentive to accept increased pay or work.”

Emily Beauregard, executive director of Kentucky Voices for Health, told Messerly, “It’s clear to see where the gaps lie, and which populations technically have coverage options, but not coverage options that work for them.” 

A spokesperson for the Cabinet for Health and Family Services told Messerly that  the goal is to enroll people this fall for coverage starting in January.

Critics of the plan say states should focus on making coverage in federally subsidized plans ("Obamacare") more affordable. Kaiser Permanente told the federal Centers for Medicare and Medicaid Services that the basic plans could undermine the Obamacare program, and hospitals are worried about the plans' reimbursement rates.

The legislature also recently passed House Bill 708, sponsored by Rep. Jonathan Dixon, R-Corydon, that requires the health cabinet to develop a proposal for the establishment of a "benefits cliff" calculator and an online job posting database to help Kentuckians who want to explore the impact on their health insurance benefits of taking a job that offers more money.

A benefit cliff is the loss of eligibility for public assistance due to a wage increase. The law also creates the Benefits Cliff Task Force to examine the impacts of the cliff on workforce participation, employment, wages and other employment issues.