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Kentucky examines Medicaid expansion's effects

Chris Kenning and Laura Ungar
The Courier-Journal

One year after Kentucky enacted expanded Medicaid under Obamacare, the health care program for the poor and disabled has grown to serve nearly 1.2 million residents — a quarter of Kentucky's population.

Now, consultants are finalizing a report examining the expansion's impact on the state's health care system — and its bottom line — in a review that advocates say will carry important implications and is being watched by other states still considering an expansion.

The study, set for release by the Cabinet for Health and Family Services in the coming weeks, will explore how the change has affected areas such as provider reimbursements and uncompensated care; whether it's beginning to create more jobs or tax revenue; and its future enrollment outlook.

It's likely to highlight the benefits of expanded care in one of America's unhealthiest states, where rates of smoking, cancer deaths and heart disease are among the country's highest.

Regan Hunt, head of the advocacy group Kentucky Voices for Health, said she hopes it sheds light on how coverage is translating into care. "Are these folks who now have coverage, are they getting care? Are they having trouble getting care? … We have lots of questions," she said.

But it also may renew concerns about cost. Fully funded by the federal government for three years, Kentucky will have to start bearing a small share starting in 2017 that will grow to 10 percent by 2020. Medicaid is already one of the state's second-highest expenses at $1.5 billion in 2013-14, and some Republican lawmakers worry it could curb funding for other programs.

Critics also say they'll be watching to see if the expansion has begun to create jobs and tax revenue that a previous state-contracted study predicted would more than offset state costs.

"By the time the bill comes due, this administration will be out of office. And they won't pay any kind of price," said Jim Waters, president of the Bluegrass Institute, a conservative think tank.

The state's Medicaid rolls, including adults and children, have increased from an average enrollment of 843,586 in 2013 to 1.17 million in 2014, according to cabinet figures. That includes about 500,000 children and 270,000 adults who are aged 65, blind or disabled.

"Kentucky did see more enrollment than they anticipated," said Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured.

That was the main driver behind a sharp drop in Kentucky's uninsured rate, which fell from 20 percent in 2013 to less than 12 percent in 2014, according to the Gallup-Healthways Well-Being Index. Many of the uninsured in the past put off care, leading to acute illnesses and high costs.

In Louisville, for example, hundreds of people are enrolling in insurance through the Affordable Care Act each week at Family Health Centers, most in Medicaid, said Executive Director Bill Wagner, who expects enrollment to pick up even more in the next couple of weeks.

"From the Family Health Centers perspective, we have seen the percentage of patients who are uninsured drop from about 51 percent a year ago to about 19 percent. Thousands of patients that we've had for years now have Medicaid," Wagner said. "From the patient perspective, it's certainly been a blessing. I think they can now sleep at night not worrying about how they will pay for health care. And it's easier to make specialist and mental health referrals, and prescription drugs are more accessible."

After the Supreme Court in 2012 ruled that it was optional for states to expand Medicaid under the ACA, Kentucky, along with dozens of other states and the District of Columbia, did so by raising the eligibility to 138 percent of the federal poverty level, bringing coverage to singles making less than $16,000 a year and families of four earning no more than $32,500.

Gov. Steve Beshear based his expansion decision in part on an analysis that predicted the move would generate $802 million in new revenue by 2021 and 17,000 new jobs — while reducing unreimbursed hospital costs and increasing preventative care. However, it assumed fewer Medicaid sign-ups.

Beshear previously said that although the new study — conducted by Deloitte Consulting, as well as Aon Consulting and the University of Louisville — would help the state re-examine its assumptions, but that he was still confident the state could "stay within our budget."

He also has noted that the law allows Kentucky to pull back on Medicaid if the state hit major financial problems.

But already there are some initial signs of the expansion's impact, he has said. Last November, Beshear reported that from July 2013 to July 2014, 3,000 jobs were added in core health care services, and 8,000 jobs added in administrative and support services.

In addition, he said, indigent care costs were dropping and total health care revenues and payments were up 13 percent. And among Medicaid recipients, preventative health visits such as well visits and flu shots rose almost 37 percent from a year earlier, he said.

Hunt said it's still unclear to what extent access to doctors has been an issue for the newly covered. Some also worry about changes in provider rates.

Dr. Michael Stillman, a primary care physician with the University of Louisville Department of Medicine, late last year authored an article in The New England Journal of Medicine about the changes brought by the ACA, including Kentucky's decision to expand Medicaid. Previously, he wrote, the 60 percent of his clinic patients and 650,000 Kentuckians without health insurance "received disjointed and disastrous care," but now that they are insured, they are able to get the care they need.

Stillman said in an interview that 60 percent to 70 percent of patients in a clinic where he works now have Medicaid. "They have better access to specialists. They have better access to medications ... (and they are) significantly less concerned about accruing medical debt."

He said he's concerned about the recent end to an increased Medicaid reimbursement for primary care doctors because there's probably a tipping point at which doctors may no longer accept Medicaid patients. The ACA increased Medicaid payment rates for physicians providing many primary care services to Medicare fee levels in 2013 and 2014, with the federal government covering the entire increase, according to the Kaiser Family Foundation.

A survey by the Kaiser Commission on Medicaid and the Uninsured last fall asked states about plans to extend rate increases beyond 2014 and found that 24 states — including Kentucky and Indiana — did not plan to extend the increase.

But so far, Stillman said, he's only heard from a few patients who came to him after other doctors said they weren't taking new Medicaid patients. He said he believes most doctors are still opening their doors to them.

Overall, he said, "I'm delighted to be living in the only state in the South that has fully embraced the Affordable Care Act."

Reach Chris Kenning at (502) 582-4697. Follow him on Twitter at ckenning_cj. Reporter Laura Ungar can be reached at (502) 582-7190.