Q&A: Kentucky Gov. Steve Beshear on Medicaid, reform

By Modern Healthcare

Posted: October 29, 2014 – 2:00 pm ET
Kentucky Gov. Steve Beshear, a Democrat whose second and last term runs through December 2015, was one of the first Southern governors to expand Medicaid and create a state-operated insurance exchange. This year, Kentucky has seen a 42% drop in its uninsured population. Republicans have suggested they will try to repeal the Medicaid expansion if they win full control of the state Legislature this month. Modern Healthcare reporter Beth Kutscher recently spoke with Beshear about how Medicaid expansion has affected local hospitals, what Democrats need to do to improve public perceptions about the healthcare law and the potential impact of Republicans winning control of the U.S. Senate. This is an edited transcript.
Modern Healthcare: What have been Obamacare’s results on the ground in Kentucky?

Steve Beshear: I knew if we were going to make a major difference in the health of Kentuckians, it would take some transformational tool. And along came the Affordable Care Act. We implemented our own exchange, Kynect, we expanded Medicaid, and the results have been phenomenal. In one year we have had the second largest drop in the uninsured rate in the country, from 20.4% in 2013 to 11.9% halfway through 2014. We’ve signed up more than 521,000 Kentuckians.

From the moment we opened up our exchange last November, Kentuckians just swarmed our website. They had heard all the horror stories by the opponents of the Affordable Care Act. But I’m proud to say that Kentuckians decided to find out for themselves. And they liked what they found. Three out of every four people who purchased a private plan through our exchange got some kind of financial assistance, and about 75% of everybody who signed up had not had coverage before.

MH: Are you concerned that a Republican majority in the U.S. Senate could jeopardize that momentum?

Beshear: I’m hopeful the Democrats will keep control of the Senate. But even if the Republicans take control, it will not be by such a margin that they could override a presidential veto. So the Affordable Care Act is here to stay, and thank God because it’s going to make a huge difference for Kentucky.

MH: How do you reconcile the success you’ve seen in Kentucky with the Obamacare opposition that remains?

Beshear: From the time the law was passed, its opponents spent millions of dollars demonizing the program. They’ve demonized the phrase Obamacare to such an extent that many people who have signed up in Kentucky and really like the coverage at the same time will tell you they don’t like Obamacare. But they sure like what they’re getting through Kynect, and they don’t want to give it up.

MH: Is there a better way to narrow the gap between perception and reality?

Beshear: We put to work a large number of Kynectors, as we call them. They are people all over our state who sit down personally with people and talk to them about the program and what is available to them. The more we do that, the more folks will come to realize they like what they’re getting and the Affordable Care Act is a good thing. I predict in the next four or five years, the Affordable Care Act is going to become similar to Medicare and Social Security in that everybody will want it, because they can get affordable healthcare.

MH: What are you hearing from hospitals in your state?

Beshear: Other than the patients themselves, the hospitals have been the primary beneficiaries, particularly of the Medicaid expansion. They are seeing their uncompensated care drop significantly because they’re starting to get reimbursed through the expanded Medicaid program for previously uninsured people.

The CEO of one of our rural hospitals, Carroll County Memorial Hospital, wrote a newspaper op-ed pointing out that since we implemented the Affordable Care Act, his hospital’s revenues were up 20% while costs were flat. His non-pay patients had dropped by more than half, and his hospital as of a certain month was $810,000 ahead of where it was a year before. I think most hospitals are having the same experience.

MH: Has the Medicaid expansion had an impact on the broader state economy?

Beshear: Before I made the decision to expand Medicaid in our state, I asked PricewaterhouseCoopers and the University of Louisville to do an economic study of the impact. They came back in about six months and said, “Governor, you really can’t afford not to do this. By expanding Medicaid, you’re going to infuse about $15 billion into your economy over the next eight years, you’re going to create 17,000 new jobs over the next eight years, and it will have a positive impact on your budget.” Based on that study, I made the decision. In the next three or four months, we’re going to update that study and see where we are today.

From July 2013 to July 2014, Kentucky has seen an additional 3,000 jobs created in core healthcare services, along with almost 8,000 additional jobs in administrative and support services. So the jobs part seems to be working the way that study indicated. I feel very confident that by the time Kentucky has to start picking up a small share of the expanded Medicaid program in 2017, we will be able to afford it and keep the program in place.

MH: Are you experimenting with new payment models in Medicaid, such as payment for value and payment for outcomes?

Beshear: About three years ago we took almost our entire Medicaid program to the managed-care model because I felt very strongly that it was time to pay for results and not just for the number of procedures performed. I was convinced that if we stayed with a fee-for-service model we would eventually bankrupt the state.

Our Medicaid program has been in place for about 50 years, and during that time our health statistics haven’t improved significantly. It was time to make a drastic change. We did it very quickly and it’s working for us because for the first time we are emphasizing wellness and prevention, educating our population how to manage their diabetes and their heart conditions. We are teaching people how to stay out of the emergency room and out of the hospital.

It is causing our hospitals to revise their business plans and move away from financial reliance on emergency rooms and inpatient days. The fact that many of them are doing so well because they are getting paid for the first time for care that they used to deliver free of charge is going to help them as they change that business model.

MH: Kentucky Sen. Mitch McConnell made recent comments drawing a distinction between the success of Kynect and the ACA. He said Kentucky could have a private exchange for insurance without all the Obamacare mandates and requirements. Do you agree?

Beshear: Quite honestly, that’s political claptrap. Kynect will not exist if the Affordable Care Act is repealed. If Sen. McConnell has his way and repeals the law, he is going to take affordable insurance away from 521,000 Kentuckians. You can’t have it both ways. You can’t be for Kynect and against the Affordable Care Act.

A recent study found that Kentucky’s Medicaid expansion will mean that 26,000 more people will get cholesterol screenings each year, 7,000 more women will get a mammogram, 10,000 more women will get a Pap smear, and 14,000 people will get treatment for depression. This is not about politics. This is making Kentuckians healthier.

Modern Healthcare: What have been Obamacare’s results on the ground in Kentucky?

Steve Beshear: I knew if we were going to make a major difference in the health of Kentuckians, it would take some transformational tool. And along came the Affordable Care Act. We implemented our own exchange, Kynect, we expanded Medicaid, and the results have been phenomenal. In one year we have had the second largest drop in the uninsured rate in the country, from 20.4% in 2013 to 11.9% halfway through 2014. We’ve signed up more than 521,000 Kentuckians.

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