Why Kentucky’s New Guv Won’t Be Able To Destroy Obamacare As He Promised

Matt Bevin wouldn’t be the first politician to over-promise and under-deliver.

But what the Obamacare-hating Bevin has promised to do as Kentucky’s new Republican governor versus what he may actually be able to do offers new insight into how entrenched Obamacare already is in the health care economy.

Top health policy experts contacted by TPM the day after Bevin’s victory weren’t panicking or predicting a dramatic rollback of Obamacare in Kentucky. They were generally concerned about mischief Bevin could make at the margins, because any additional hassle faced by insurance customers can dampen participation. But experts watching closely said they were skeptical Bevin would be able to deliver a grave setback to the progress the state has made through its Obamacare programs.

“It is nearly politically impossible to take benefits from people — even for Republicans,” Caroline Pearson, vice president of Avalere Health, an independent consulting firm and a top expert on health policy, told TPM. “I think that’s not likely to happen, even though that might sell well on the campaign trail.”

Outgoing Democratic Gov. Steve Beshears’ success in establishing a state-based health insurance exchange and significantly reducing the state’s rate of uninsured has been a model nationwide, particularly since Kentucky remains a red state. Bevin’s fierce anti-Obamacare campaign rhetoric had stoked fears among Democrats that if Bevin does what he promised to do then hundreds of thousands of Kentuckians could lose their insurance.

But the limitations that Bevin, a tea party favorite, will face in tearing apart the health care law that he and GOP lawmakers vehemently oppose show how deeply rooted the Affordable Care Act has become.

“Obamacare is here to stay,” Pearson said. “At this point it’s going to be about how you deliver that coverage more efficiently and sort of modifying the flavor a bit, but none of it’s going to disappear.”

Bevin’s plan to take on Obamacare’s footprint in Kentucky has involved two prongs: turning the state exchange over to the feds and rolling back Medicaid expansion.

“Legally it can be done. The two big subsidy programs can be disrupted at a minimum and literally terminated at the worse,” said Sara Rosenbaum, a professor of health policy at George Washington University. “But the price that his home state residents will pay is extraordinary and whether there are political considerations that will stop that kind of all-out onslaught remains to be seen.”

Experts can’t be conclusive about what Bevin will or won’t do because it’s not entirely clear how Bevin plans to go about altering the law. Beshear — who was term-limited — pushed through both the state exchange and the Medicaid exchange with executive orders. There’s reason to believe undoing them wouldn’t be so simple for Bevin to do single-handedly, given the political realities. He has already changed his rhetoric significantly over the course of his campaign.

When it comes to tackling the state exchange, Bevin’s plan to eliminate it and move users on to a federal exchange is fairly clear cut, though it would not have a major impact on the benefits users receive from the marketplace, experts said.

“To the extent that he wanted to disrupt things for people, that would be an option,” Rosenbaum said. The turbulence the transition would cause should not be understated, as users would have to learn a new system. But states are required to give the federal government a year’s notice before eliminating their own exchange, giving the feds time to smooth out the process.

“There’s no reason in terms eligibility why anybody should lose coverage, so the question would be, would they lose coverage because of some bureaucratic screw up in the transfer process,” said Timothy Jost, a health law specialist at the Washington and Lee University School of Law. “If they give a year’s notice, I think it should be feasible to make the transition and there shouldn’t be too much chaos.”

Bevin’s intentions for the Medicaid expansion are much murkier. He could roll it back entirely, as he at first suggested he would do. But in more recent interviews — perhaps due to political blowback — he has said he would alter the expansion instead.

“We’re going to use what’s called 1115 waivers. An 1115 waiver will be our request to CMS [the federal agency that runs Medicaid] for basically the ability to take a block grant and customize as Indiana and others have done to actually come up with a program that will provide for these folks,” Bevin told NBC News the day before the election. “Nobody’s losing anything.

In theory, the waiver program — which dates back decades, to Medicaid before Obamacare — is for states to try to out new ideas to make programs more effective. In practice, experts said, red states that have used them for Obamacare’s Medicaid expansion have largely made their programs more complicated.

“A lot of this is bureaucratic busywork and punitive stuff that they want to run Medicaid recipients through because they do not want to give people health care and then what happens is people just give up,” Jost says.

Even here, however, Bevin will be limited in what the federal government’s Centers for Medicare & Medicaid Services is willing to approve.

“It is a big deal to establish a 1115 demonstration and it has taken the demo states months and months and months to put a demo together that the CMS will accept,” Rosenbaum said.

Bevin has said he wanted to establish a premium for the Medicaid expansion program — akin to Indiana’s model — and has also suggested that he would be able keep on the current enrollees in the expanded program but block out new recipients.

But Rosenbaum called the idea that he could cap or block new enrollees “a total nonstarter” for CMS and also said that even if Bevin followed Indiana’s model to set up premiums, CMS has had some level of control of what Indiana has been allowed to do.

“CMS has been relatively conservative in not granting wide scale modifications to the program under the waivers,” Pearson said. “There’s a bit of political rhetoric here where the Republican governors are able to hold up the waivers as an indication that they got a custom solution, but it’s not having as dramatic of an effect as they are asserting.”