What’s In the Governor’s Proposed Medicaid Changes

Governor Bevin rolled out proposed changes to Kentucky’s Medicaid program that would put up harsh new barriers to coverage and care for Kentuckians including premiums and work requirements. The plan also reduces benefits and creates complex new administrative systems to track and collect payments and activities.

The proposal, called a Section 1115 waiver to the Medicaid program, is subject to public comments in Kentucky before going to the Department of Health and Human Services (HHS) for their consideration and response. Aspects of the proposal put Kentucky’s nation-leading health gains at risk and threaten progress in getting people the preventive care needed to improve health.

Major components of the plan include the following:

Work Requirements for Participation

The plan includes a requirement that non-disabled adults without children engage in certain work and/or community requirements beginning after three months in the program. These activities start at 5 hours a week and ramp up to 20 hours a week after 1 year. Failure to do so results in suspension of benefits.

Such requirements have been consistently rejected by HHS in waiver proposals, and rigorous evaluations show attaching similar requirements to safety net programs doesn’t work to reduce poverty.

Premiums with Penalties for Failure to Pay

Members will have to pay $1 to $15 in premiums a month based on income. After a year in the program, premiums continue climbing for those with incomes above the poverty line, up to $37.50 a month. Co-pays from the current program are eliminated for those paying premiums, though those co-pays are often not collected currently.

Premiums must be paid within 60 days of eligibility. Those above the poverty line who do not pay are locked out of the plan for six months; they can re-enroll before that time if they pay back premiums owed and take a financial or health literacy course. For those below the poverty line, members not paying premiums keep benefits but must begin contributing co-pays and will lose access to their MyRewards account mentioned below.

Premiums have been attempted in past Medicaid experiments, and strong evidence suggests they significantly reduce the number of people covered.

Elimination of Certain Benefits

Dental coverage would no longer be part of the regular Medicaid benefits package despite Kentucky’s poor oral health, and neither would vision coverage (see more below). Also eliminated is help with transportation for non-emergency medical visits.

Elimination of Retroactive Coverage and a Lockout for Those Who Miss Signing Back Up

Currently, Medicaid provides retroactive coverage to new members for up to three months prior to enrollment. However, the proposal would make coverage start on the first day of the month payment is received (a pre-payment can be made to begin coverage for those not yet determined eligible). Because some people may not seek coverage until they have a serious health problem, this could mean facing unpayable health care bills.

If a member does not re-enroll for coverage before the expiration of each 12-month period, he or she loses coverage. The member then will have three months to re-enroll and if they do not must wait an additional six months to reenroll unless they take a financial or health literacy course. According to the Center on Budget and Policy Priorities, that’s something “no state has proposed doing.”

Two Kinds of Health Savings Accounts for Each Member

Medicaid members would have a $1,000 deductible each year, though the plan contributes $1,000 to each member in a health savings account to make the payment. Half of the unused deductible each year will go into a second health savings account, called MyRewards. The MyRewards account is also set up to receive funds for certain health, community and job training activities. The monies in that account can be used for benefits not covered including dental, vision and over-the-counter medications. Monies are taken out of the account as a penalty for non-emergency use of the emergency room.

Attempts to Link Medicaid to Private Employer-Based Insurance

The waiver proposal attempts to link Medicaid to employer-provided insurance for those employers that offer coverage to workers who are Medicaid recipients. Members with access to these plans are encouraged — and ultimately required — to enroll in the employer-sponsored plans, and are given monies for the premiums (minus the Medicaid premium payment above). Medicaid pays for benefits the employer does not provide. According to a recent study of similar ideas, there are challenges with such programs and “more research is needed” to know how to administer them.

Changes to the Medicaid program proposed through an 1115 waiver must be approved by HHS. By law, any changes must improve coverage, access to providers, health outcomes or the efficiency and quality of care. A number of elements in the proposal are at odds with those goals and threaten to move Kentucky backward in our important recent health care gains.

Public hearings in Kentucky will begin next week and written and emailed comments will be collected until July 22, more info here.


Rising Kentucky Prison Population Should Make Penal Code Reform a 2017 Priority

The governor’s announcement today about the formation of a Criminal Justice Policy Assessment Council to work toward needed reforms is an important step in addressing a serious problem in our state. The latest data from the Department of Corrections (DOC) shows Kentucky’s inmate population has been rising rapidly, far above the state’s projections. Without additional criminal justice reforms, the number of incarcerated Kentuckians will likely continue to increase, costing the state money needed for other vital public investments and harming Kentucky families without improving public safety.

inmate population

Source: Kentucky Department of Corrections.

Among the major factors contributing to Kentucky’s persistently high inmate population are low parole rates and long sentences resulting from the state’s mandatory minimum laws — for instance, from the state’s Persistent Felony Offender (PFO) law, which significantly increases the sentence of someone who commits any felony (including writing a bad check, failure to pay child support for a period of time, theft over $500) who already has at least one prior felony.

The sharp increase between December 2015 and June 2016 shown in the graph above is mostly due to a decrease in parole rates. According to the Department of Public Advocacy, from July 2015 to April 2016, the average parole rate dropped from around 60 percent to around 40 percent of those eligible. A 20 percentage point drop means around 2,400 inmates that would have been paroled in a year remain in prison.

Many of those individuals who are denied parole are low risk offenders. For instance, in April 2016, 63 percent of inmates deemed “low risk” were denied parole and 60 percent of those considered to be “low moderate risk” were denied. Among other reforms, HB 412 in the 2016 General Assembly (which did not pass) would have made parole automatic for non-violent offenders serving sentences for the lowest level felony (Class D) after serving 15 percent or 2 months of the original sentence — whichever is longer.

The need for criminal justice reform is felt at the state, individual and family levels. Kentucky’s state corrections spending went from $140 million in 1990 to $440 million in 2010 — an increase of 214 percent — making it one of the nation’s fastest growing prison populations during this decade. The state’s corrections budget is now over $500 million, despite the passage of 2011’s Public Safety and Offender Accountability Act (HB 463). There are of course significant costs to peoples’ lives as well, with Kentuckians serving time in prison who could safely return to their families and communities. Around 135,000 Kentucky children (or 13 percent) have had a parent incarcerated, the largest share among states.

The creation of a new council will mean much-needed further discussion of this issue. Hopefully that will lead to positive criminal justice reform in 2017 that will reduce the state’s inmate population and create savings in the budget while maintaining public safety. HB 412 proposed some important reforms — including establishing presumptive parole for some non-violent Class D felonies, creating a gross misdemeanor level of offense to reclassify some low-level felonies, and allowing discretionary rather than mandatory sentence enhancements for some repeat offenders — and there are other reforms that could help to make an even greater impact. Penal code reform in 2017 could include additional methods for low and moderate risk inmates to earn parole and further reforms to the PFO law, among other proposals.

In Kentucky, The 1 Percent Are Getting Richer

Average Income for Top 1 Percent of Kentuckians Continues to Rise While Dropping for All Others

Income Inequality Growing in Kentucky

Report: Kenton Co. Has Highest Income Inequality in Kentucky

Louisville’s Top Earners Make Nearly 20 Times The Average Income, New Report Says

New Report Shows Cause for Concern Over High Income Inequality in Kentucky

The top one percent of earners in Kentucky have taken home one-fourth of all income growth in the recovery from the Great Recession, continuing a decades-long trend of rising income inequality in the Commonwealth and across the nation. A new report from the Economic Policy Institute measures this trend at the national, regional, state and local level, showing, for instance, that while real income for the wealthiest 1 percent of Kentuckians rose by 60.1 percent between 1979 and 2013 (the last year for which data are available), it dropped by 2.6 percent for everyone else.

Prior to 1979, in the half-century following the Great Depression, states and the country as a whole experienced greater equality of incomes. By 1979, the top 1 percent’s share of all income in Kentucky had fallen from its 1929 peak of 19.9 percent to 9.3 percent. But today, that share has climbed back up to 14.1 percent.

Even though Kentucky is a relatively poor state, where the average income of the top 1 percent is just over half of the US average, it is clear from the data that those at the top are still disproportionately benefitting from growth in our economy. The report’s data show:

  • In 1979, the top 1 percent of Kentuckians made 10.1 times what everyone else made, but by 2013 that ratio had risen to 16.6.
  • The average income for the top 1 percent in Kentucky is $619,585, while for everyone else is $37,371.
  • In Kentucky’s most unequal county, Kenton County, the top 1 percent makes 21.9 times more than everyone else. Robertson County has the lowest ratio with the top 1 percent making 5.9 times what everyone else makes (the average income of the bottom 99 percent is $26,076). Click here for a map of income inequality across Kentucky’s counties.

The numbers are stark, and reason for concern. With more income accruing to those at the top and less to everyone else including the middle class, the social ills of relative poverty, the likely reduction in economic mobility, and the drag on consumer demand cast a shadow on economic growth and on the American dream. Strategies to combat growing income inequality include:

  • Federal and state tax reform that cleans up tax breaks benefiting the wealthy; restores estate taxes to mitigate concentration of wealth; and generates new revenue to invest in education, health, infrastructure and other important foundations of economic opportunity.
  • Policies to spur stronger wage growth across the bottom and the middle including immediate investment in areas like infrastructure to get the economy to full employment, a higher minimum wage, the new overtime threshold and policies that strengthen workers’ ability to bargain collectively through unions.

If Kentucky is to bridge the growing funding gaps between rich and poor public school districts, make college more affordable, protect health care access and generally strengthen rungs on the economic ladder, state tax reform must be a priority. In contrast, the bad tax fad idea of cutting income taxes and moving to a consumption based model would make inequality worse by further cutting taxes for those at the top while shifting responsibility to everyone else. Kentucky already has a state and local tax system that exacerbates income inequality, with the top 1 percent paying 6.0 percent of their income in state and local taxes, and the middle 20 percent paying 10.8 percent.

Press Release: New Data Show Reason for Concern about Income Inequality in Kentucky

Income inequality in Kentucky has risen significantly in recent decades, with the latest data showing real income for the wealthiest 1 percent of Kentuckians rose by 60.1 percent between 1979 and 2013, while dropping 2.6 percent for everyone else. It’s only one stark indicator of income inequality detailed in a new report from the Economic Policy Institute looking at trends across states, counties and metropolitan areas.

“Income inequality has been a growing problem in Kentucky and the nation since the late 1970s” said Anna Baumann, policy analyst at the Kentucky Center for Economic Policy. “It persists in relatively poor states like ours, both in big cities and small towns, pointing to the widespread problem that those at the top are disparately benefiting from growth in our economy.” Some facts from the report:

  • In 1979, the top 1 percent of Kentuckians made 10.1 times what everyone else made, but by 2013 (the last year for which data are available), that ratio had risen to 16.6.
  • In Kentucky’s most unequal county, Kenton County, the top 1 percent make 21.9 times more than everyone else.
  • During the recovery from the Great Recession, the top one percent in Kentucky have captured a one-fourth of income growth.
  • The average income for the top 1 percent in Ky. is $619,585, while for everyone else is $37,371.

Strategies to combat growing income inequality include:

  • State and federal tax reform that cleans up tax breaks disparately benefitting the wealthy; restores estate taxes to mitigate concentration of wealth; and generates new revenue to invest in education, health, infrastructure and other important foundations of economic opportunity.
  • Wage protections like raising the minimum wage, the new overtime threshold and safeguarding workers’ ability to bargain collectively.

“We have a choice – we can support policies that keep funneling economic growth to those at the top or we can enact policies that grow our middle class and restore the American dream,” said Baumann. “Given the need for tax reform in Kentucky, it’s especially important at this time that we differentiate the bad from the good…cutting income taxes and shifting to a consumption based system would worsen income inequality and leave us less to invest in our schools, our people, our communities.”

EPI’s report can be found here and an interactive looking at inequality across states here.

How Income Inequality Looks Across Kentucky Counties

The average income of the top 1 percent of Kentuckians is 16.6 times greater the average income of everyone else in the state according to a new report by the Economic Policy Institute. The report determined the average income of the top 1 percent earners in Kentucky is $619,585 compared to an average income of $37,371 for the “bottom” 99 percent using IRS tax return data from 2013.

When looking at counties, the ratio of top income earners to the rest varies from 5.9 in Robertson county to 21.9 in Kenton county. Generally speaking, the greatest income inequality is in the so-called “golden triangle” bounded by the Northern Kentucky, Lexington, and Louisville areas that contain neighborhoods of both great wealth and high poverty. However, Pike County in eastern Kentucky and McCracken County in western Kentucky also were among the 10 counties with the highest income inequality.

Oldham County had the highest incomes for both the 1 percent and the 99 percent, and was still among counties with the most income inequality (24th). In contrast, Robertson County had the lowest average income for the top 1 percent of earners and also had the lowest income inequality.

See larger version of map here.

The report also details the income inequality in major metropolitan areas, including 25 contained all or in part in Kentucky. These areas ranged from 1 percent earners making 9.5 times more than the rest in Frankfort to 18.6 times more in Paducah.