On Dec. 30, we started the process of transforming Kentucky’s Medicaid program to produce better health outcomes, while ensuring the program’s long-term fiscal sustainability. At the same time, we are working to improve community involvement and restore dignity to Medicaid recipients by engaging them more fully in making decisions about their own health care.
Kentucky is hurting. Twenty percent of our residents live in poverty; we are 47th in the nation for median household income; nearly one-third of Kentuckians are on Medicaid and our workforce participation is among the worst in the nation at less than 60 percent. In addition, our Commonwealth faces significant budget issues, including fixing the most underfunded state pension plan in the country.
Kentucky must transform its Medicaid system immediately. Beginning next year, we will be required to start paying a portion of the costs of Medicaid expansion for the first time. This is expected to cost Kentucky taxpayers approximately $1.2 billion in new spending for fiscal years 2017 through 2021. These costs create funding issues that jeopardize coverage for our traditional Medicaid program which, itself, is projected to cost Kentucky taxpayers $9.5 billion over the same period, as well as putting other state programs such as education, pensions and public safety at risk.
Many politicians take as a matter of pride the number of people that have been covered under the Medicaid expansion. However, simply increasing a public program that has not historically demonstrated an impact on improving health outcomes does not equate to success. Kentucky HEALTH is designed to engage individuals in improving their health, investing in their communities and preparing them to be independent of public assistance.
Federal Medicaid policy has long supported employment for individuals with disabilities, recognizing that “employment is a fundamental part of life.” Research also indicates that community engagement and work can improve health. Kentucky HEALTH seeks to demonstrate the application of these principles to an able-bodied population, by requiring individuals to engage in work, job search and training activities or to volunteer in their communities.
Kentucky HEALTH also restructures current coverage into a consumer-directed health plan consistent with our state employees’ plan. Kentucky HEALTH requires participants to pay affordable monthly premiums, starting at only $1 per month, to ensure individuals have “skin-in-the-game” and to familiarize them with private coverage concepts. Each participant will be responsible for managing a deductible account to fund initial medical expenses, and leftover funds can be directed to their “My Rewards Account,” an innovative new feature provided to all participants making their monthly premium contributions.
Participants can earn money for their My Rewards Account by completing activities such as disease management classes, community service, smoking cessation programs, financial literacy programs or job search and training activities. The money in the account can be used to fund additional benefits such as dental, vision, over the counter medications or reimbursement for the purchase of a gym membership. If participants leave the program and secure private insurance for 18 months, they can keep the remaining balance of this account up to $500.
Like any other health insurance program, when a participant doesn’t pay their premium, there are penalties. The penalties are intended to prepare individuals for the realities of commercial coverage. The penalties vary based on federal poverty level, but they have a corresponding “on-ramp.” Individuals that take a financial or health literacy class and begin paying their premiums can get back on the plan.
Included in our health care reforms, Kentucky HEALTH will also address Kentucky’s drug abuse epidemic by continuing enhanced benefits for substance abuse and mental health services. In addition, we will be developing a pilot program for select high-risk counties to improve access to treatment.
We will align various Kentucky HEALTH components to support our Commonwealth’s existing public health infrastructure and current efforts to address chronic disease prevention and management. Lastly, we will introduce delivery system reforms to ensure that Kentucky taxpayers are getting the best value for their investment, including measures incentivizing providers to improve quality and outcomes.
Recently, we toured the state to hear from Kentuckians face-to-face about how our proposed changes might affect them. We have also been collecting written comments from all over the commonwealth, and we are using that feedback to help us make an even stronger waiver application.
It is of no value for current and former politicians to simply brag about Medicaid expansion without actually improving health outcomes or providing a plan to pay for its costs. We owe it to our families and our communities to offer a health care program that will improve quality of life and equip individuals to enter commercial insurance with the knowledge and confidence they will need to be successful.
Kentucky HEALTH is innovative and necessary. It empowers individuals and creates a platform for shared responsibility in improving their own health. I look forward to federal approval of our waiver application so Kentucky can implement a plan designed to meet the specific health care needs of our citizens and ensure the long-term sustainability of our entire Medicaid program.
The basic human dignity of Kentuckians and the prudent stewardship of taxpayer dollars deserve no less.