It doesn’t add up: The Bevinomics of health care

Published 12:29 am Wednesday, August 1, 2018

Conservatives should ask themselves: Just how much tax money are they willing to spend to deny people health care?

This question is becoming more urgent as the Trump administration encourages states to follow Gov. Matt Bevin’s lead by enacting work requirements and other bureaucratic barriers to health care for low-income people.

The cost of Bevin’s Medicaid red-tape machine recently caught the eye of Fitch Ratings.

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The credit rating agency reports that Kentucky’s Medicaid administrative costs are rising 40 percent or $35 million from the previous biennium, mostly attributable to the cost of Bevin’s proposal for new “engagement” requirements, frequent income reporting deadlines, collecting small premiums and co-pays, and temporarily locking out from coverage those who fail to comply.

The cost of keeping track of all that is significant and “could limit savings from enrollment declines,” says the credit rating agency, while “potentially raising the number of uninsured.”

Bevin’s plan, which is expected to reduce Medicaid enrollment by 95,000 people over five years, was set to begin July 1 but is on hold because of a federal court order.

Fitch noted that Kentucky’s uninsured rate fell from 16.6 percent in 2013 to 7.2 percent in 2016, according to the Kaiser Family Foundation, because of growth in Medicaid enrollment during the Affordable Care Act expansion. “Fitch has previously noted that improved insured rates, and ACA expansion in particular, led to improvement in hospitals’ operating performance.”

The Bevin administration estimates that the plan, known as an 1115 waiver, would save Kentucky $300 million to $400 million over five years. But that decline in state spending would cost Kentucky $2 billion in lost federal support for Medicaid, which provides health care to low income, elderly and disabled individuals.

That’s $2 billion that would be lost to the hospitals, doctors, clinics, dentists and others who provide health care to low-income Kentuckians and their neighbors.

The potential harm to hospitals suggests an obvious solution. Kentucky’s hospital provider tax has been frozen since 2007 at $183 million, the amount hospitals paid based on their revenue in 2005-06.

Kentucky hospitals’ revenue has significantly increased since then, in no small part because of the Medicaid expansion. Other states have used provider taxes to pay for Medicaid expansion. The provider tax flows into a restricted fund that supports health care and is returned to providers.

Adam Meier, Bevin’s secretary of Health and Family Services, said on the July 23 edition of Kentucky Tonight that the waiver is needed to “mitigate” a $300 million shortfall in Medicaid and that without it benefits or eligibility for Medicaid might have to be cut back.

Meier and other defenders of the plan say it will spur individuals to become more engaged in and responsible for their own health. In reality, the new requirements will mostly snag people who are too busy or sick to keep up with the paperwork.

Bevin has threatened to end coverage altogether for the almost 500,000 working-poor Kentuckians in the Medicaid expansion if he can’t have his waiver.

Hospitals should be clamoring to raise a tax that comes right back to them and could preserve almost $400 million a year in federal health care funding for Kentucky.

Conservatives should be asking if it’s really smart to spend more to get less of a critical service.

Lexington Herald-Leader