Kentucky governor Matt Bevin's plan to close state insurance marketplace won't sting consumers, experts say
Consumers on the federal exchange would still be able to shop and enroll in private plans and apply for federal subsidies to lower their costs.
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The outgoing governor of Kentucky and other supporters of the president's Affordable Care Act have been critical of a pledge made by incoming governor Matt Bevin to abolish the state exchange in favor of switching to the federal marketplace. However, his plan will have little effect on consumers, according to healthcare experts speaking to Kaiser Health News.
"The federal exchange is a perfectly viable alternative," said Jon Kingsdale, a Boston healthcare consultant. Kingsdale formerly led the state agency that started the Massachusetts' exchange in 2006, which became the model for the federal health law.
While state-run exchanges have some advantages, consumers on the federal exchange would still be able to shop and enroll in private plans and apply for federal subsidies to lower their costs, Kingdale said.
[Also: Kentucky's federal exchange switch: no difference for consumers, experts say]
Outgoing governor Steve Beshear, a Democrat, was among the few southern state leaders who supported Obamacare. It was his administration that established Kynect, the Kentucky Health Benefit Exchange.
Bevin, a conservative Republican, said he didn't want the state to be on the hook for costs associated with Kynect should its revenues from premium taxes not keep up with expenses. As federal money has run out, Kynect and other state exchanges must rely mainly on premium taxes to fund operations.
Several states, including Vermont and Minnesota, are struggling to raise enough revenue through premium taxes, according to Kaiser Health News. With less money, some state exchanges including Rhode Island have greatly curtailed marketing intended to attract more enrollees.
Even with the lack of publicity, more than 97 percent of people have coverage in Rhode Island, according to Gallup.
[Also: Matt Bevin elected governor of Kentucky]
Kentucky's exchange is considered one of the best-run because of its extensive marketing to uninsured consumers and its ease of use, according to Kaiser Health News. About 500,000 Kentucky consumers have enrolled since 2013, most of them for Medicaid.
The latest Gallup poll shows state's uninsured rate has dropped from 20 percent to 9 percent in the past two years.
Still, the issue has revived questions about whether the states or the federal government are best positioned to run the marketplaces.
On state exchanges, consumers can connect directly to the state-federal health insurance program for the poor and in general, have access to lower premium taxes than on the federal exchange, according to Kaiser Health News.
Thirteen states run their own insurance exchanges and the rest are run fully or in part by the federal government. If Bevin follows through on his plan, Kentucky would be the first state to close its exchange and push most responsibilities to the federal government.
Bevin takes office Dec. 8. The earliest that he could shut down Kynect would be in 2017 because the health law requires a 12-month notice to the federal government.
Kynect has an annual budget of about $28 million, all funded by its 1 percent assessment on health premiums, according to Kaiser Health news. That charge would increase to 3.5 percent in a federal exchange, and dismantling Kynect would cost the state an estimated $23 million in one-time expenses, according to Audrey Tayse Haynes, head of Kentucky's Cabinet for Health and Family Services.
The technology work for decommissioning would take about nine months, state officials said. State-run exchanges have enrolled higher percentages of their uninsured citizens than states on the federal exchange. That's partly because all but one state with its own exchange also have expanded Medicaid, making millions more people eligible.
Idaho is the only state that has its own exchange and has not broadened Medicaid. Twenty states have not expanded Medicaid.
Dan Schuyler, at health care consulting firm Leavitt Partners, said states that run their own exchanges retain more control over their individual insurance markets and how consumers experience the sign-up process.
California's exchange, for instance, limits which insurers can participate to help it negotiate better rates. Connecticut's exchange requires all insurers to offer standardized plans so it's easier to compare rates and benefits.
"If you take consumers out of Kynect and put them into the federal marketplace, from a product perspective, nothing changes as consumers have access to the same plans," said Schuyler, Leavitt's senior director of exchange technology.
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But executing such a move would cost Kentucky control over which nonprofit groups provide consumer assistance and the state's call center would likely move out.
State exchanges could lower their costs by using healthcare.gov for enrollment while retaining other functions such as consumer assistance and marketing. Starting next year, the federal government will charge state exchanges to use its enrollment system.
The exchanges are a linchpin in the federal law that has brought health coverage to 16 million people since 2010. The law's drafters initially thought all but the smallest states would run their own exchanges, but most Republican governors blocked them in their states, citing opposition to the Affordable Care Act.
Twitter: @SusanJMorse
