Last week the Republican majority in both Houses voted to repeal Obamacare in its entirety. On Monday, Kentucky’s new Republican administration stated they are moving forward with plans to shut down the state’s health insurance exchange. It will mark the first U.S. state to cut ties with one of the key pieces of the President Obama’s signature legislation passed by one vote (all Democrats) in 2010.
The action derives from a political promise by Gov. Matt Bevin. He notified federal officials in a letter dated Dec. 30 that the state exchange will cease operations “as soon as is practicable.” It should be noted that full action will not occur for a year and will not affect health plans sold for 2016.
Kentucky is in a distinct minority of just 14 states that run their own state health insurance exchanges. The Kentucky exchange is called kynect. Over 100,000 Kentuckians have used the exchange to purchase private health insurance plans with the help of a federal subsidy since it was implemented in 2013.
Bevin, only the second Republican governor in Kentucky in the last four decades, had campaigned heavily on the elimination of kynect. It is funded through a one percent tax on all individual health plans sold in the state, in or out of the exchange. Bevin cited the low percentage of the state’s insured that have purchased a private health insurance plan through kynect, about 2 percent of the total population.
The governor’s spokeswoman Jessica Ditto explained that fees from the sale of plans on kynect generate only between $2.5 million and $4 million. It takes an estimated $27 million to operate the exchange each year. “A majority of Kentuckians are paying a 1 percent assessment on their own premiums to support kynect operations which they do not use,” Ditto said.
Once considered a role model for the rest of the nation, Kynect‘s reputation was viewed as a success story for a Democratic administration plagued by technical problems with the federal system. The former governor, Democrat Steve Beshear created kynect with $290 million in federal grants.
In 2017, all eligible Kentuckians who purchased subsidized private health plans can still purchase them. However, they have to buy them from the federal system. The main difference is the federal system has a different plan with different rates than were previously offered on kynect.
Bevin also has plans to overhaul the state’s expanded Medicaid program. It has provided health care to over 400,000 people cutting the percentage of uninsured in the state by more than half.