Medicaid expansion could change Kentucky's course, big time

NEWS ANALYSIS

By Al Cross

Kentucky Health News

"Today we change the course of Kentucky's history."

It is not often that a public official can say such a thing with a large measure of credibility, but Gov. Steve Beshear legitimately raised that hope Thursday, as he announced that he would expand Kentucky's Medicaid program under federal health reform.

Beshear with graph predicting positive impact on budget

If Beshear's vision is fulfilled, Kentucky will no longer have one of the unhealthiest populations of any state, a change that will make it more attractive to employers, and any Kentuckian who wants health insurance will be able to get it.

It is in large measure the realization, in the state where all President Harry Truman's grandparents were born, of his 68-year-old dream of national health insurance. The statue of Truman's vice president, Alben Barkley of Paducah, seemed to shine a little more brightly than usual in the Capitol rotunda as the press-conference crowd dispersed.

But this is a project with many moving parts -- billions of dollars, thousands of health-care providers, hundreds of thousands of Medicaid beneficiaries, and scores of political and bureaucratic decisions -- and much could go wrong.

Skeptics point to the problems with the managed-care Medicaid system that Beshear implemented too hurriedly, apparently to avoid complicating his November 2011 re-election, and argue that the program needs fixing before adding 300,000 new enrollees to the 825,000 already on the rolls. Beshear says he's tackling the problems, the program is "working pretty well" and the managed-care companies can handle the influx.

The skeptics also question whether the state can afford the match for the federal funds. "Broad and vague anxieties," Beshear called them, and he came armed with two studies concluding that expansion would actually gain the state money -- mainly because of the billions it will send to the state's health-care providers, creating more jobs, but also because many of the 300,000 or so newly eligible people are not expected to enroll, based on a Price Waterhouse Coopers study drawing on research by the Congressional Budget Office.

University of Louisville research

Preliminary estimates were that expansion would add 400,000 Kentuckians to the Medicaid rolls. However, the study estimated that only 308,000 will become eligible and that only 188,000 will enroll, thus costing the state much less than some expected when it has to match federal funds beginning in January 2017. The initial match will be 5 percent, rising to 10 percent in 2020. The estimated cost for the newly eligible in fiscal 2020-21 is $151 million, in a state budget that is likely to exceed $10 billion. (The state's current share of Medicaid costs, 29.5 percent, is about $1.5 billion a year.)

Those are just estimates. "I believe reality will dwarf those numbers on the spending side," Tea Party activist David Adams, who says he plans to challenge the plan in court, told reporters. But for the time being at least, Beshear has the numbers on his side, and he said they are "very conservative."

The governor said opponents of the plan "fall back on national politics" and say expansion means that Kentucky, a state that President Obama lost big both times, will be "supporting Obamacare. To them I say, 'Get over it.' . . . I'm going to do what's best for Kentucky's people, period." Asked why so many governors have rejected expansion, he said it was mostly "partisan politics."

Conservative columnist John David Dyche cites an Oregon study saying Medicaid is ineffective, but a Harvard School of Public Health study in three other states showed that expansion of Medicaid improves health and saves lives.

Beshear said the expansion, along with health insurance and subsidies available through a state-run exchange that is also part of health reform, would give the state a healthier workforce because studies show that people with health insurance are less likely to skip exams and let health conditions worsen and become costlier and more difficult to treat. "The lack of early care is one reason that Kentucky's health picture is so horrendous," he said.

Kentucky's workforce is one of the nation's least healthy, and the state has a disproportionate number of working-age people who are not in the workforce because of health problems. The state ranks first in smoking, cancer deaths and preventable hospitalizations; second in heart disease and poor physical-health days; third in heart attacks and poor mental-health days; and in the top 10 in diabetes,  cholesterol and sedentary lifestyles. That hurts the state's image as well as its economy, Beshear said. "There will be a huge economic effect for a healthier Kentucky."

He said most of the newly eligible people are not "freeloaders asking for a handout," but people who are working at jobs without health insurance. He said another 332,000 Kentuckians will get insurance through the state exchange, 276,000 of them with subsidies available to people with incomes up to 400 percent of the poverty level. Without Medicaid expansion, he said, 206,000 would not be eligible for Medicaid or a subsidy, and "We cannot leave those people stranded."

The health-reform law tried to force states into expanding Medicaid, but the U.S. Supreme Court ruled that the states should make the choice without fear of financial penalties. The law calls for expansion to cover people under 65 in households up to 138 percent of the federal poverty level -- currently $15,856 for an individual or $32,499 for a family of four.

Republicans can do little to stop the expansion. They control the state Senate, but Medicaid eligibility and benefit decisions belong to the executive branch, and even if a bipartisan legislative committee were to block the implementing regulations, Beshear could override it.

Or perhaps we should say he would override it. Emotional at times, Beshear called the move "the single most important decision of our lifetime for improving the health of Kentuckians" but said it was easy to make. As a governor who has failed to win his main campaign promise, expanded gambling, and has had relatively little money to spend because of the Great Recession, this is likely to be his largest legacy.

For details and background from the governor's office, click here. For Beshear's YouTube commentary on the issue, click here.

28% of Ky. adults 18-64 say they lack health coverage; 41% lacked it sometime in last year; employer coverage down since '08

Nearly three in 10 working-age adults in Kentucky are not covered by any form of health insurance, and the number who get health insurance from their employer, or their spouse’s employer, has plummeted since 2008, the first year of the Great Recession, according to the latest Kentucky Health Issues Poll. The decline accelerated in the last year, and was accompanied by a big jump in the percentage on public insurance.

The poll, taken Sept. 20 through Oct. 14, found that 28 percent of adults aged 18 to 64 said they had no health insurance at the time they were interviewed, and 41 percent said they had been uninsured at some point in the previous year.

The survey found that 37 percent get their insurance from an employer or spouse’s employer, well below the 55 percent figure in a similar poll in 2008. Conversely, 27 percent are now covered by some form of public insurance, way up from the 10 percent in 2008.

Medicaid in Kentucky covers households with incomes up to 70 percent of the federal poverty threshold; 43 percent of working-age adults living at or below that level reported being uninsured last fall. Among those with incomes more than double the poverty level for their size household, 15 percent said they were uninsured.

The poll was conducted for the Foundation for a Healthy Kentucky and the Health Foundation of Greater Cincinnati by the Institute for Policy Research at the University of Cincinnati. Pollsters contacted a random sample of 1,680 adults throughout Kentucky by telephone, including landlines and cell phones. The poll questioned only working-age adults about insurance because 98 percent of seniors have some form of health coverage. The poll has a margin of error of plus or minus 2.5 percentage points.

Health agencies in Rockcastle, Jackson, Clay, Harlan to lose 14 employees, some environmental and food-safety inspections

In the latest example of Medicaid changes' impact on local health departments, environmental and food-safety inspections will be reduced by layoffs in four counties served by the Cumberland Valley District Health Department, Nola Sizemore of the Harlan Daily Enterprise reports. Health departments in Harlan, Rockcastle, Clay and Jackson counties will lose a total of 14 employees later this month. (Enterprise photo: Harlan County Health Department)

Health Department Interim Director Lynett Renner told Sizemore said the layoffs, along with furlough days, are a result of decreased funding and the "advent of managed care organizations" in November 2011. The agency has almost $1 million in outstanding accounts because payments from those organizations have been slow to come in. "Also, one of the things that affected the health departments tremendously is we’re the only provider in the state required to pay a Medicaid match, which means for every service we provide for a client who has Medicaid, we have to pay the state back 20 percent and that recently increased to 28 percent," Renner said.

Renner told Sizemore that environmental services and restaurant health inspections would be most affected, adding that public health is often taken for granted by the local community. "So much is done behind the scenes to ensure the health and safety of every citizens," she told Sizemore. "My fear is they're reducing the ability of the public health infrastructure to be able to maintain that level of service that provides protection." (Read more)

State's hospitals see impressive growth spurt from nearly $1 billion in capital investment

Kentucky’s major hospital systems are going big, making high-profile, technology-forward capital investments across the commonwealth. Josh Shepherd of The Lane Report writes that every sector of the state is part of the hospital boom. The state's cumulative total of investment since 2010 is roughly a billion dollars, notes Shepherd, and has meant hundreds of construction and, soon, medical and other hospital-related jobs. Here's the list of the most notable construction projects now under way:

Owensboro Medical Health System,  $385 million, a new complex (pictured, above) that will allow expansion for the next 50 years, completion date: summer 2013.

Norton Healthcare System, Louisville, converting Suburban Hospital into Norton Women's Hospital and Kosair Children's Hospital, $120 million, completion date: 2013.

Pikeville Medical Center, new office building and parking facility, $130 million, completion soon.

Baptist Health, Lexington, expansion of Central Baptist Hospital medical services complex with parking structure, $200 million.

University of Kentucky Healthcare, Chandler Medical Center, $750 million, includes new plans for Shriners Hospital for Children.

Frankfort Regional Hospital,  $8 million expansion, emergency department.

Trigg County Hospital, $7 million, surgery and rehabilitation unit.

Lifepoint Hospitals-owned Clark Regional Medical Center, $60 million, 79-bed hospital. (Read more)

Appalachian Regional Healthcare asks federal judge to make managed-care firm keep it under contract

Appalachian Regional Healthcare, a hospital chain in Eastern Kentucky and southern West Virginia, is seeking an emergency injunction by a federal judge ordering Coventry Cares to let its Kentucky members continue receiving services from the hospitals, and to avoid widespread layoffs the chain says will happen if the judge doesn't intervene, reports Bill Estep of the Lexington Herald-Leader. Coventry Cares is one of three state-approved companies to provide managed care services through Medicaid. It said it would cancel its ARH contract after Friday, which would affect about 25,000 Medicaid recipients.

With a few exceptions, Coventry members would lose access to treatment or have to travel long distances to get to other facilities approved by the company, which ARH and officials in affected counties say would be difficult for most because they don't have money or reliable transportation to make the trip. Coventry spokesman Matthew Eyles said the company would continue paying for some services at ARH hospitals, including ob-gyn services to women who are more than 12 weeks pregnant and have a relationship with an ARH doctor.

The state switched to managed-care last year as a way to save money, but as Estep reports, the move has been "rocky." Providers have complained about delayed payments from the companies and their cumbersome pre-approval processes for treatments. ARH sued Coventry and Kentucky Spirit, another provider, claiming the companies owed more than $18 million for services ARH had provided.  Estep notes, "The state allowed another managed care provider not to include ARH in its network, which meant a lot of higher-risk, higher-cost patients ended up covered by Coventry, the company said." The company also said the state failed to implement a method to assess risks that would adequately compensate managed-care providers who have more high-risk patients."

ARH and its Coventry patients think the company is trying to get more money out of the state. Many of ARH's patients are covered by Coventry, and ARH spokeswoman said about 300 to 400 jobs would be cut if Coventry cancels its contract. State officials are encouraging continues negotiation between ARH and Coventry. (Read more)

Meanwhile, Bardstown pediatrician and Passport Health Plan board member James Hendrick wrote a letter to the editor of The Courier-Journal offering Passport's services to "help the state get Medicaid back on track." He said he's been very impressed with the nonprofit's "strong and engaged provider network, and an intense focus on delivering services at a cost that doesn’t diminish quality," adding that because Passport is a nonprofit, it's not concerned with appeasing shareholders. Passport has been managing Medicaid in the Louisville region for several years.

Jobs increasing in health services industry

Though Kentucky has been hit hard by the recession, certain industries, including health care, are hiring. State unemployment trends show educational and health services have grown 20.5 percent since 2001.

"With the population maturing — not just in Kentucky and in Fayette County but elsewhere — you're going to continue to see health care as a growing industry," said Ron Crouch, director of research and statistics for the state Office of Employment and Training.

The Lexington Herald-Leader's Scott Sloan reports all of Lexington's hospitals are expanding and large, flourishing companies like ACS and Pacific Pulmonary "are capitalizing on service related to health care."

Professional and business services also grew — up 15.2 percent between 2001 and the second quarter of 2010. Toyota has resumed hiring, Cincinnati-based grocery Kroger is growing and technology companies are creating more jobs. (Read more)