by Nick Storm
The Bevin administration submitted its waiver proposal to the Department of Health and Human Services (HHS) today, keeping the problematic approach that was in the original plan with modifications in a handful of areas. The proposal includes work requirements, premiums, lockout periods and other measures that would reduce the number of Kentuckians covered, some of which have been consistently rejected by the federal government in other state proposals.
The revised proposal includes the following measures:
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. One small change in the new plan is that caretaking for a disabled adult dependent or a non-dependent relative such as an elderly parent counts toward the work requirement.
Work 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 Lockouts for Failure to Pay and Other Penalties
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. A change in the new plan is that premiums are paid per household rather than per individual as originally proposed. Co-pays from the current program are eliminated for those paying premiums, though those co-pays are often not collected currently.
Enrollees must pay premiums within 60 days of becoming eligible. 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 three months’ worth of premiums 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. In the new waiver plan, those considered “medically frail” will not lose coverage if they do not pay premiums (and they are exempt from co-pays), but they also lose access to their MyRewards account if premiums are not paid.
Premiums have been attempted in past Medicaid experiments, and strong evidence suggests they significantly reduce the number of people covered.
Elimination of Vision, Dental and Transportation 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 (the elimination of vision and dental benefits are delayed for the first three months of the demonstration in the revised plan). Also eliminated is help with transportation for non-emergency medical visits. The revised plan reinstates benefits for allergy testing and private duty nursing, which had been eliminated in the original proposal through a State Plan Amendment.
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.”
Complex New Administrative Systems
As before, the plan includes complex and expensive administrative systems to approve and track work and community engagement activities, financial and health literacy courses, and healthy behavior activities; to charge and collect premiums; to assess, manage, and track the costs and benefits of employer-sponsored health insurance programs; and to maintain two Health Savings Accounts (HSAs) – one for a high deductible account and the other for what’s called a MyRewards account.
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, and a new provision allows them to be used to pay fees associated with taking the GED. Monies are taken out of the account as a penalty for non-emergency use of the emergency room and potentially for “excessive missed healthcare appointments,” which is new to the final waiver request.
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.
As in the original waiver proposal, the plan would result in fewer Kentuckians covered — in fact the proposal contains the same estimate of numbers of people who would lose coverage as in the original plan. (Data from report presents “member months,” and the table below converts that to number of members by dividing by 12).
Source: KCEP calculations from Kentucky HEALTH document.
Now that the waiver request has been submitted to HHS, there will be a 15 day review period to ensure the application has been completed correctly. Then the federal comment period will be opened for 30 days, and during that time comments can be made through the HHS waiver website by searching for Kentucky’s 1115 waiver. Once that period ends there is no deadline for approval or rejection, but past demonstration waivers have taken 6-12 months of negotiation during this phase.
Kentucky has been on the right track for the past two and a half years, and erecting barriers, reducing benefits, and creating confusing and expensive administrative systems will only move us backward on our health progress. It is crucially important that during negotiations between HHS and state officials the gains we have made are preserved.
by Richard Dawahare
Although Kentucky’s economy is recovering, significant challenges face the state’s workers and too many are working but still living in poverty. Looking only at the state’s low overall unemployment rate misses the fact that many have dropped out of the labor force and the serious job deficits facing parts of rural and eastern Kentucky. While Kentucky workers overall experienced some wage growth in 2015, some of the fastest-growing industries pay low wages and 30 percent of jobs pay less than $12.22 an hour. A substantial share of working families make too little to afford a basic family budget, and workers are increasingly less likely to receive benefits through their jobs. Strategies to improve conditions include a greater focus on job creation across the state, improved job quality standards, and work and income supports that remove barriers to advancement.
KCEP made the following presentation on the trends and challenges facing Kentucky’s working poor to the House Task Force on Vulnerable Kentuckians.
Kentucky college students face barriers and challenges as they begin a new academic year, some of which are worsening as a result of yet another round of state budget cuts to higher educational institutions.
Tuition Continues to Rise
Tuition at public universities and community colleges has been on the rise in Kentucky for years, largely as a result of state budget cuts. As we’ve described elsewhere, while Kentucky continues to cut funding for higher education most states are increasing funding. The most recent cuts have led to more tuition increases in 2015-2016.
Tuition Increases at Kentucky’s Public University and Community Colleges
Sources: University and community college websites for most recent tuition and fees and Kentucky Council on Postsecondary Education for historical data.
It is important to keep in mind that tuition and fees make up only a portion of the actual costs of attending college (i.e., room and board, books, etc.). National research shows many community college students struggle with food and/or housing insecurity.
Student Debt Is Increasing
Kentucky students are going further in debt. The average amount of student debt for Kentucky graduates is $25,939, an increase of 48 percent since 2008 when inflation is taken into account. Tuition increases may lead to more borrowing.
Need-Based Financial Aid Still Not Adequately Funded
While the 2016-2018 budget did include more money for the state’s need-based scholarships — a $14.7 million increase, or nearly 8,000 more scholarships, over the two-year period — the need is much greater than the additional funds. In 2015, 62,200 students who qualified for the need-based scholarships were not awarded them, assuming all would have ended up attending. The two-year budget also included the new Work Ready Scholarship, but it will not be available to students until next year as a result of the governor’s veto, and details of the program still need to be worked out. The scholarship was originally designed to pay, starting in fiscal year 2017, for any tuition and fees not covered by grants or scholarships for Kentuckians attending a state community college right after high school.
Educational Quality and/or Student Supports May Be Jeopardized
As has been well documented by the Lexington Herald-Leader, budget cuts have caused other critical changes at Kentucky’s higher education institutions — including faculty and staff layoffs, hiring freezes, some degree and program eliminations, and student service units reducing hours. In response to previous rounds of budget cuts, the state’s universities and community colleges had already cut back on staff and were relying more heavily on part-time faculty, not to mention deferring maintenance issues that were very serious in some cases.
Even Greater Impact Felt by Low-income and Minority Kentuckians
Low-income and minority students are already less likely to enroll and graduate, face more financial difficulties even when they attend community college and receive Pell grants and more frequently take out additional loans to pay for college. Pell may cover tuition and fees at a community college but not the full cost of attendance, and students who receive Pell are more than twice as likely to borrow and have higher amounts of student loan debt. The additional budget cuts, which make college less affordable and may reduce the supports that can be critical to helping low-income and minority students graduate with a degree or credential, will likely worsen the situation.
by Lisa Gillespie
The safety net plays a critical role in alleviating poverty and strengthening the Commonwealth, lifting approximately 810,000 Kentuckians above the poverty line each year through federal and state funded programs, according to a recent fact sheet by the Center on Budget and Policy Priorities (CBPP).
For the nation, the federal poverty rate is reduced from 30 percent to 11.2 percent once these supports are factored into income (for a family of 4, the federal poverty threshold is $24,300).
The safety net includes both social insurance programs that are “universal” – their benefits are not limited to people with low-income – and public assistance programs that are “means-tested,” meaning individuals or families who are eligible earn less than a specified amount.
Important aspects of the safety net include the following:
Social Security is the leading program for alleviating poverty through retirement, disability and deceased survivors’ benefits. In Kentucky, Social Security raises approximately 450,000 mostly elderly recipients out of poverty, and whereas 58.4 percent of the elderly would fall below the poverty line without Social Security, with Social Security that amount is reduced to 12.1 percent.
SNAP (Supplemental Nutrition Assistance Program) – formerly known as food stamps – is a public assistance program that provides food assistance for low-income individuals and families. SNAP is administered at the state and local levels and issued through a debit-like Electronic Benefits Transfer (EBT) card which is then used to purchase eligible food items. SNAP allows approximately 160,000 Kentuckians to live above the poverty line, and provides food assistance for many more in poverty. In total, an average of 770,000 individuals in Kentucky receive SNAP benefits per month, including approximately 310,000 children.
Tax credits known as the Earned Income Tax Credit (EITC) and Child Tax Credit also provide key support to working families. The EITC is a tax benefit available to moderate and low income earners that reduces the amount of income taxes owed or, in the case that no income taxes are owed, provides a refund. The Child Tax Credit allows for parents or caregivers to receive a reduction or refund in their taxes for each dependent child. These tax credits assist in lifting an estimated 160,000 Kentuckians out of poverty, with the combined impact of 1.2 million beneficiaries – including 660,000 children.
Supplemental Security Income (SSI) is a public assistance program created for the elderly, blind or disabled who have little to no income. Eligible participants receive cash for basic necessities such as food, clothing and shelter. In Kentucky, SSI raises approximately 110,000 people above the federal poverty line.
Federal Rental Assistance helps to create affordable housing choices for the elderly, disabled and low-income tenants. Assistance is offered through privately owned subsidized housing, public housing units and rental assistance vouchers (Section 8). These programs provide 160,000 Kentuckians the ability to afford the cost of housing.
Medicare is the social insurance program that provides health coverage to people 65 years and older – and in special circumstances, some younger than 65.
Medicaid provides health coverage to means-tested individuals and families, with an estimated 1.4 million Kentuckians covered through Medicaid or Kentucky Children’s Health Insurance Program (KCHIP) today. In fact in Kentucky, over half of all insured children are covered through public health insurance programs. With the implementation of Medicaid expansion which increased the income threshold up to 138 percent of the federal poverty level ($16,394 for an individual) Kentucky has become a national leader in the reduction of uninsured citizens – in 2013, 20.4 percent of Kentuckians were uninsured and that declined to 7.5 percent in 2015.
Benefits of the safety net are not just short-term; Children living in families that receive income supports such as the EITC and SNAP, for instance, have better health and educational outcomes, work more and have better earnings later in life. Similarly, health coverage provides long-term gains for families, with less absenteeism and lower dropout rates in school leading to better educational outcomes and more productive, educated workers.
These gains represent progress that Kentucky individuals and families benefit from, but are also part of the path forward for our state as a whole. Proposals to weaken and cut the safety net would impose hardship on the people and communities of Kentucky. For example, the proposed Medicaid demonstration waiver would move Kentucky backwards on the significant strides that are being made with increased health care coverage, which evidence suggests are beginning to contribute to better health.
As Kentucky’s economy continues to grow, the state’s revenue intake reflects that growth less and less. Just over the last year from fiscal year 2015 to 2016, state personal income (a good measure of economic growth) grew by 4.7 percent in the Commonwealth, but the state’s General Fund grew by only 3.7 percent.
The disparity is reflective of a 25-year trend in which revenue hasn’t been keeping up with the economy. That means instead of being able to reliably maintain our investments in excellent schools, affordable higher education, job training and healthy citizens and communities, we have less of what it takes to create a better future.
Source: KCEP analysis of Office of the State Budget Director, Bureau of Economic Analysis data
Just how much less? The General Fund as a share of the state’s economy was 5.8 percent in 2016. If revenue had simply kept up with growth in the economy since 1991 – the year following the passage of the Kentucky Education Reform Act (KERA) when revenue was 7.3 percent of personal income – the Commonwealth would have raised in fiscal year 2016 alone an additional $2.6 billion. Even a small portion of those resources could have prevented across-the-board budget cuts in 2016, as well as a “lost decade” of investments in our state.
Ideally, a tax code fosters robust investments in education, infrastructure, workforce development and other areas, creating a “virtuous cycle,” in which smart allocation of resources today produces an even greater amount of growth and resources tomorrow. In reality in Kentucky, tax breaks for powerful interests siphon off billions of dollars each year, subsidizing the highest incomes in the state; and as a result of our “upside down” tax structure (which asks the least of those who are gaining the most in today’s increasingly unequal economy) we have less to invest in that virtuous cycle.
Cleaning up some of the billions in tax breaks the state gives out each year would help restore the link between our economy and General Fund and afford stronger investments in thriving communities.