It’s Kentucky’s Lack of Coverage and Poor Health that Are Unsustainable, Not Medicaid

While the administration claims that Kentucky’s Medicaid program is “unsustainable,” in fact Medicaid is a big benefit to Kentucky as it fills critical coverage gaps, improves health, injects dollars into communities and saves money in the budget previously spent on the uninsured.

Medicaid Is Helping Kentucky Cope with Economic Changes
Medicaid costs aren’t up because of any flaw in the program, but because of the impact of more people qualifying for Medicaid in a challenging economy.

The bottom fell out in the Great Recession, with 119,000 Kentuckians losing their jobs. Even though Kentucky’s unemployment rate has since dropped to 5.8 percent, the real employment situation remains depressed and some sectors like coal continue to decline. As a result, there were 137,380 more Kentuckians receiving traditional (non-expansion) Medicaid in 2015 on average than there was before the recession in 2007 (797,035 vs. 659,655), which is a 21 percent increase over that time period.

Even before the Great Recession, the number receiving Medicaid was elevated in part from the recession of the early 2000s. In the year 2000, when the economy was particularly strong, only 556,701 Kentuckians were covered by Medicaid.

Medicaid has helped cushion the economic blow. Because of Kentucky’s successful implementation of Medicaid expansion, the state led the nation in 2014 for its decline in the share of people that are uninsured.

It’s not just people who are out of work because of the downturn who are helped by Medicaid. The majority of those who’ve gotten coverage because of Medicaid expansion are workers. They’re employed in low wage jobs in industries like restaurants, construction, temp agencies and department stores, and either aren’t offered or can’t afford coverage through their employer.

It’s been the trend over the last few decades for fewer employers to offer health coverage. At the same time, wage growth has been stagnant, making it hard for workers to afford employer-based care even when it’s available. The share of Kentucky workers with employer-based coverage dropped from 70 percent in 1980 to 56 percent today, according to Bureau of Labor Statistics data.

Lack of coverage is one of the factors that contribute to Kentucky’s poor health indicators, which are a barrier to workforce participation and economic growth. By providing the coverage necessary for care, Medicaid can help address that challenge.

Medicaid Expansion is a Good Deal for the State
Factors contributing to Medicaid cost growth other than these economic trends aren’t crises for the state budget — especially when the whole picture of those costs is understood.

Besides the economy, another reason traditional Medicaid enrollment has gone up recently is the so-called “woodwork effect,” in which some of the uninsured who in previous years would have been eligible for Medicaid but not enrolled have signed up for coverage, in large part because of the publicity around health reform and the success of Kynect outreach. This effect is happening to some extent in all states, whether or not they have expanded Medicaid. It’s a one-time bump in costs for services people were already eligible to receive, and those costs won’t keep growing at the same pace.

The state has to begin paying for a portion of Medicaid expansion next year, and the costs are $62.3 million in 2017 and $149 million in 2018. But as the table below shows, that’s less than the $131.7 million in 2017 and $133.2 million in 2018 in savings to the state budget because some previous General Fund costs for indigent care, public health, mental health, substance abuse and other services are now covered primarily by Medicaid under the expansion.

medicaid chart

State costs will go up in future years as the match increases (growing from 5 percent of costs in 2017 to 10 percent in 2020). But there are also other benefits to the budget as the state improves its health status through expanded access to care and as jobs are created to meet the increased demand for care. Over $2.9 billion has flowed to health care providers because of Medicaid expansion and many thousands more people are getting preventive treatment, and it’s showing up in job growth in the health sector. Also, everyone saves when fewer people let health problems go untreated only to use expensive emergency room care later.

Far from being a burden, Medicaid plays a key role in the overall system of health coverage. The program and its expansion are a good deal for Kentucky. It’s bringing federal dollars into local economies throughout the state at a time they are desperately needed, securing more Kentuckians from the financial calamity that comes with serious illness or injury and providing care that will contribute to better health over time.

Budget Should Move Forward on Early Childhood, Not Back

Quality early childhood education, through child care and preschool, has been shown to have multiple layers of value:

In spite of these returns, the governor’s budget would invest less in this area. Preschool funding is not protected from potential 9 percent cuts in the budget. If preschool received the full cut, it would mean $7.9 million less in funding than in 2016.

Eligibility for Kentucky’s Child Care Assistance Program (CCAP) was restored in the last budget cycle with the limit returned to 150 percent of the 2011 federal poverty level, or $33,525 for a family of four. Recent regulations from the Cabinet for Health and Family Services will increase reimbursement rates to providers by a dollar a day, per child on average.

But the proposed budget would cut over $86 million across the biennium from the Department for Community Based Services, under which the Division of Child Care falls. It is unclear how those cuts would affect the division specifically, but historically, General Fund monies have made up roughly a third of the Division’s budget. Either way, such a valuable program should continue to be enhanced, rather than rolled back as budget decisions are made.

Consumers Seek to Save Ky Health Expansion

“Consumers Seek to Save Ky Health Expansion”

by Deborah Yetter

Op-Ed: Kentucky’s Past Shows Public Investment Is Essential to Progress

This article first appeared in the Richmond Register on March 20, 2016.

Kentucky faces a difficult budget challenge, but Governor Bevin’s proposal is based on a false assumption: that deeply cutting funding for public investments will make it easier to pay down our pension liabilities over the next few decades.

In fact, cutting our budget further will make it harder to address our debt by weakening the economy over time, slowing revenue growth and undermining our quality of life in the process.

Throughout Kentucky’s history, public investment has played a key role in the positive gains the state has made. Critical moments of progress can be linked to visionary public action, and the Commonwealth’s most revered leaders have understood that relationship.

Kentuckian Henry Clay was an early advocate of government’s role in economic development. He helped grow the 19th century American economy through a push for increased federal spending to build and maintain infrastructure like roads and canals and policies that nurtured homegrown industry.

Kentucky native Abraham Lincoln, even in the midst of Civil War, signed into law the Morrill Act to create the land grant university system — resulting eventually in the University of Kentucky and Kentucky State University — as well as the Homestead Act, which by providing land to settlers was essentially the first federal housing program.

In the industrial economy of the 20th century, publicly funded infrastructure became important to economic development — especially in Kentucky because of the state’s central location. President Eisenhower’s massive project to create an interstate highway system resulted in I-75, I-64 and I-65, and state road dollars built links to those main arteries. This system helped spur manufacturing, allowing materials to be shipped throughout Kentucky and across state lines.

That led to the growth of our auto industry over the last few decades, making Kentucky now the third-biggest auto producing state in the country. After slumping in the Great Recession, the industry has rebounded strongly the last few years thanks to federal aid that helped keep producers and suppliers afloat.

Kentucky also benefits heavily from programs created through the New Deal, the War on Poverty and related federal and state efforts to ease hardship. Social Security, food stamps (now known as SNAP), Head Start, Medicare and Medicaid, Pell Grants and more help boost Kentuckians’ well-being while injecting dollars into local economies that need them most.

Kentucky has long recognized how important these programs are to a poor state like ours. We were 1 of 22 states to launch a Medicaid program within a year of the law’s passage, doing so in July 1966. In the last few years, we’ve become a nationally-recognized leader in the expansion of Medicaid under the Affordable Care Act.

State investments in education have been essential to advancing Kentucky. After years of neglecting school funding at the state level, we significantly increased our commitment with the Kentucky Education Reform Act in 1990 and raised $1 billion in taxes to pay for it. Since then, Kentucky has jumped from the bottom of the heap in a range of education success measures.

In higher education, we grew enrollment in our regional universities and flagship institutions, created a system of community colleges throughout the state and pulled all of postsecondary education into a unified system in 1997. The share of Kentuckians over age 25 with a bachelor’s degree or higher has increased from 5 percent in 1960 to 22 percent today.

Such investments have been crucial to forward progress, and it’s only recently that public debate has distorted that connection. But we are called a Commonwealth for a reason, and we forget the relationship at our peril.

The future will belong to states with the skilled workforce, infrastructure and quality of life needed to spur the industries of tomorrow. Stepping away from those investments will worsen our long-term financial challenges.

The budget decisions we make now and over the next few years are pivotal. We need to both improve our fiscal footing and rebuild the investments that have changed the course of our state in the past.

To do that we must remind ourselves of what was once commonsense and take steps — like cleaning up the tax code — that can put Kentucky back on track.

With Medicaid Expansion, Kentucky Healthcare Job Growth Picked Up in 2015

After modest growth in health care and social assistance jobs during the first year of Medicaid expansion, growth picked up at a rapid pace in 2015, according to newly-revised Bureau of Labor Statistics data. The billions of additional federal dollars coming in to the state to provide care for the newly insured likely played a role.

As shown in the graph below, jobs in the sector were tapering off before the state began signing people up for Medicaid expansion. Hospital employment declined (in Kentucky and nationally) as that industry reorganized and was impacted by cuts in reimbursement rates and other factors.

However, by Fall 2014 job growth in Kentucky’s health care and social assistance sector began improving and jobs increased dramatically in 2015. A total of 10,500 more people work in the industry in January 2016 than in January 2014, when Medicaid expansion began. Growth in ambulatory health care services (doctors’ offices and other outpatient care) continues and hospital employment has rebounded adding 2,300 jobs over the last year.

medicaid expansion jobs

Source: KCEP analysis of Bureau of Labor Statistics, Current Employment Statistics data, seasonally adjusted.

That’s 4.6 percent job growth since January 2014 in the health care and social assistance sector compared to 3.1 percent job growth in all other Kentucky sectors.

There are other factors influencing job growth in this sector, both positively and negatively, besides Medicaid expansion, and these numbers are subject to further revision. But there’s no question the $2.9 billion that has flowed to providers as of October 2015 is an economic boost. Uncompensated care costs are way down and more people are utilizing preventive health services.

The Medicaid expansion has meant health insurance for 428,000 Kentuckians, making Kentucky a national leader in health coverage gains. The expansion saves money in the state budget previously spent on indigent care, public health, mental health and substance abuse. An added bonus is the much-needed jobs in Kentucky communities from the injection of federal dollars — and the resulting tax revenue — that help make expansion an even better deal.

Column: Ky. Needs Tax Reform to Support Pension Reform

Criminal Justice Reform Bill Would Save State Money and Reduce Recidivism

While our state has taken some important steps in passing criminal justice reform legislation in 2011, additional reforms are needed. HB 412, a bill sponsored by Representative Yonts, would further the legacy of 2011’s Public Safety and Offender Accountability Act (HB 463) by reducing time spent in jail/prison for certain non-violent offenses, increasing economic opportunities for some offenders and saving the state money. Kentucky is in particular need of additional reform measures given the increases in the inmate population, as shown in the graph below, and associated spending that has been above what was projected.

Inmate Graph 1

Source: Kentucky Department of Corrections.

A January 2014 estimate said that HB 463 had resulted in a total savings of $34.3 million; however, the state’s inmate population has been increasing fairly steadily since mid-2013 and is now back to 2011 levels. The additional cost to the state in necessary governmental expenses for the inmate population being above projections was $72.8 million between 2012 and 2015.

HB 412 would save the state money and help more Kentuckians who have made mistakes in the past get their lives back on track by reducing time in jail/prison. The bill would do that by:

  • Creating a Gross Misdemeanor level of offense: Some non-violent offenses currently classified as a Class D felony, the lowest level felony, would be newly classified as a “gross misdemeanor.” Among those affected by this new classification are people charged with certain forgery offenses and those who have consistently not paid child support. A Class D felony carries with it a charge of one to five years; a gross misdemeanor sentence would be no more than 24 months. Offenders would be held accountable through penalties and supervision but would not face the lifelong consequences of a felony conviction.
  • Establishing Presumptive Parole for non-violent offenders serving sentences for Class D felonies: Non-violent offenders serving sentences for Class D felonies would automatically earn parole after serving 15 percent or 2 months of the original sentence — whichever is longer. This is important as one of the reasons HB 463 hasn’t led to greater reductions in the state’s inmate population is that parole rates went down. Over 30 percent of low risk inmates are not being paroled, at great cost to the state. According to the corrections impact statement for HB 412, this aspect of the legislation alone would save the state approximately $19.9 million a year, although it would also require costs such as for the hiring of additional probation officers.
  • Providing misdemeanant jail credits: Currently those in jail for a misdemeanor are not able to earn credit toward early release — for instance, by performing community service, earning a GED credential or maintaining good behavior. Those serving time for a felony conviction can already earn credits toward their sentence.
  • Ensuring implementation of graduated sanctions for those on probation and parole who commit technical violations: The 2011 reforms included graduated sanctions for those who commit technical, non-violent violations of probation and parole — rather than automatically sending them to jail/prison for a minor violation. However, these graduated sanctions are frequently not being followed. HB 412 would require a decision to revoke probation or parole be based on specific findings.
  • Allowing discretionary rather than mandatory sentence enhancements for some repeat offenders: This enables the determination of an appropriate sentence without the lengthening of a repeat offender’s sentence being required in every case.
  • Reducing recidivism by increasing economic opportunities for former offenders: Those affected by the new gross misdemeanor classification would have more economic opportunities than if they were convicted of a Class D felony. A felony conviction prevents many from being able to find work, and gainful employment is critical to preventing a former offender from returning to incarceration.

Several bills this session are proposing increased penalties for drug offenses — including one to reverse sentencing reforms from 2011 that created a new definition of heroin trafficking in order to differentiate true trafficking from addicts who may share drugs and undo measures from comprehensive anti-heroin legislation passed just last year. Such legislation would send Kentucky in the wrong direction, eroding the state’s prior criminal justice reform efforts and increasing state corrections costs. In addition, harsher sentences for drug offenses have been shown not to be effective in addressing illegal drug problems or increasing public safety.

HB 412, however, would help make progress toward the goals of HB 463 — reducing the state’s inmate population and creating savings in the budget.