Kentucky Gov. Matt Bevin has informed the federal government of his plans to dismantle Kynect, the state-run health insurance exchange. But at what cost?
Bevin, a Republican, took office in December 2015. He succeeds Gov. Steve Beshear, a Democrat who served two terms and established Kynect through an executive order. Bevin estimates that dismantling Kynect will cost $236,000, while Beshear has said the cost is closer to $23 million. So, what gives? It’s been difficult to get a definite answer.
Kentucky received $289 million in federal grants to establish Kynect and has $57.5 million remaining. The federal government has informed Kentucky that the remaining funds have to be returned and can’t be used to help Kentucky transition to the federally run exchange, healthcare.gov.
Kynect is also funded through a 1 percent fee on all individual plans sold on and off the exchange in Kentucky, while healthcare.gov charges a 3.5 percent fee on all of the policies it sells.
Although residents will be able to get polices through healthcare.gov, it’s the state efforts—the advertising about Kynect and the hundreds of Kynectors who help people through the process—that have made Kynect such a success. Kynectors not only provide help on the telephone but hold monthly events at health departments, clinics, and community centers, and even visit homes of those who are homebound or do not have transportation. Currently, there are about 500 Kynectors, but that could be cut to around 125 when the state moves to healthcare.gov,
Kentucky isn’t the first state to switch to the federal exchange. Hawaii, Nevada, and Oregon are among the states that have switched to healthcare.gov. However, those states had trouble with their exchanges, while Kentucky’s has been successful. According to the Kentucky Center for Economic Policy, the federal government picked up 90 percent of the information technology costs for states with problematic exchanges that switched to the federal exchange. Whether that will be the case for Kentucky—a state with one of the most successful state-run exchanges in the country—remains to be seen.
Dismantling Kynect also could affect Medicaid enrollment. Kentucky expanded Medicaid eligibility under the Affordable Care Act, and people also use Kynect to determine if they are eligible for Medicaid.
Kynect became operational in October 2013, and Kentucky’s uninsured rate dropped to 9.5 percent as of July 2015, compared to 14.8 percent in July 2013 (Decision Resources Group data).
Whatever the true cost of dismantling Kynect, Kentucky residents who obtain health insurance through the exchange will pay the actual price.
Follow Joyce Caruthers on Twitter @JCaruthersDRG.