Gov. Steve Beshear
May 13, 2013
On May 9, I announced what I believe is the most important single decision for the health of Kentuckians in our lifetimes; the expansion of Medicaid coverage to the approximately 308,000 uninsured Kentuckians. This expansion, coupled with the creation of the Health Benefit Exchange under the Affordable Care Act, means that for the first time in Kentucky’s history, every Kentuckian will have access to affordable health care.
Who will be covered by this expansion? These are single working men or women with incomes below 138 percent of the Federal Poverty Level – less than $16,000 a year, or families of four making less than $32,500.
Contrary to what some might have you believe, these are not individuals waiting for a handout, content to live off of government support. These are people we all know and interact with every day. They live in our communities, they go to our churches and our children attend school with them. They are hardworking individuals and families doing all that they can to pay their bills, put a roof over their heads, food on their tables and clothes on their backs. Health care coverage is not provided by their employer, individual coverage is too expensive for them to afford on their own, but they don’t qualify for Medicaid under the current system. These folks currently do without health insurance, at an alarming cost to themselves and our entire society.
Kentucky is one of the least healthy states in the nation. In 2012, Kentucky’s overall health ranking was 44th. Kentucky is at or near the very bottom of many national health rankings. We are 50th in smoking, 40th in obesity, 41st in diabetes, 50th in cancer deaths, 49th in cardiac heart disease, 43rd in high cholesterol and 48th in heart attacks. And the list goes on.
A multitude of state and national reports have shown the positive impacts on health status that occur when an individual becomes insured. They are more likely to get preventive care and seek out medical treatment when they need it. When they do have serious health problems, they are better prepared to deal with them, and the costs of treatment are less. They miss fewer days of work and school. And they live longer and more productive lives.
And while my primary concern is for the improved health outcomes that will be possible for many of our citizens through the expansion of Medicaid, my decision was not solely based on the obvious health benefits that extending insurance coverage will provide to the people of Kentucky. It was also based on the far-reaching economic benefits of expanding Medicaid.
The federal government will pay 100 percent of the cost of the expansion through 2016 with federal funding gradually decreasing to 90 percent by 2020. The expansion of Medicaid will create nearly 17,000 new jobs for Kentuckians and a $15.6 billion positive economic impact to the Commonwealth between 2014 and 2021. In that same time frame, our state budget will see a positive impact of $802.4 million. If we chose not to expand, our budget would see a negative impact of nearly $40 million. Not only is expansion the right thing to do, it’s a savvy financial investment.
Another important consideration in my decision to expand Medicaid is the cost that the Commonwealth would be required to absorb if it does not expand. These costs include reduced payments to hospitals for uncompensated care; the cost of new substance abuse treatment coverage required under the Affordable Care Act; and the likelihood that a large number of individuals already eligible for Medicaid, but not currently enrolled, would apply as public awareness increases.
We’ve done exhaustive research on the impacts of expansion on our state and on each individual county. In Perry County, 4,386 residents are currently uninsured. Expanding Medicaid will have a profound effect, allowing 2,330 of these residents to become eligible for Medicaid. Additionally, in January 2014 when the Affordable Care Act is implemented, another 1,729 of these residents will have access to subsidized insurance through the Kentucky Health Benefits Exchange.
The expansion will also protect funding for hospitals. Hospitals receive federal Disproportionate Share Hospital (DSH) payments to help cover the cost of treating low-income, uninsured patients. The Affordable Care Act reduces federal DSH payments; for Perry County, the reduction is an estimated $5.9 million over the next seven years. Expanding Medicaid means that your local hospital will continue to receive payment for care, because many people who were previously uninsured will now be covered through Medicaid or through the Health Benefit Exchange.
Finally, the expansion is good news for the county budget as well. Not only will the expansion generate additional local taxes, it will ease some of the burden of paying medical costs at the county jail, which ran $262,000 in 2011.
It comes down to this; if a company was willing to invest billions of dollars in Kentucky over the next 7 years, creating nearly 17,000 jobs and significantly reducing the uninsured population, while greatly improving the health of our citizens, we would not hesitate to welcome them into our state.
Medicaid expansion is no different. Extending coverage to more individuals will improve the physical and financial health of our state and our citizens for generations to come. It is an opportunity we cannot afford to miss and a decision I am proud to make.