Health Insurance

Closing of Kentucky’s Healthcare Exchange Appears Imminent

A state healthcare exchange with more than 80,000 participants will likely close as soon as the end of this year. In a Dec. 30 letter to Sylvia Mathews Burwell, the Secretary of U.S. Department of Health and Human Services, Kentucky Gov. Matt Bevin announced the intention of the state to shut down its healthcare exchange. 

The letter was not a surprise. Bevin was sworn in as governor on Dec. 8, but made it known during his campaign for the office that he planned to close Kentucky’s healthcare exchange called "Kynect." A contract the exchange had with a Louisville ad agency expired Nov. 30 and has not been renewed, according to the Courier-Journal - another sign that that a closure is all but completed.

Transition to the federal marketplace will commence “as soon as is practicable,” according to the letter, but the 2017 open enrollment period is the soonest consumers will face any major changes. None of the roughly 81,000 healthcare plans purchased for 2016 will reportedly be affected. 

Kentucky is one of 13 states that runs its own exchange and it has been relatively successful. It outperformed all other states since the passage of the Afforbale Care Act with a decline in uninsured residents from 20.4 to 9%. Other states that have transitioned to the federal healthcare exchange from one that is state-run did so because the latter failed.

Some are worried about the consequences of closing the exchange, including former Kentucky Gov. Steven L. Beshear. Since the creation of the state exchange and Kentucky’s Medicaid expansion, about 425,000 residents - roughly 10% of the population - have purchased health insurance through Kynect. Proponents of the state exchange say it is easier to enroll in its plans than the federal exchange and Kynect applies a 1% assessment fee to insurers. charges a 3.5% assessment fee to companies and transitioning to the federal exchange and the higher rate might result in providers rasing rates. 

States with independent healthcare exchangesTotal number of individuals with 2015 plan selections through the exchnage Residents without health insurance in 2013Residents without health insurance through the first half of 2015Change in the uninsured rate from 2013 through the first half of 2015State that expanded Medicaid
California 1,412,200 21.6% 11.8% -9.8% Yes
Colorado 140,327 17.0% 10.6% 6.4% Yes
Connecticut 109,839 12.3% 5.0% -7.3% Yes
Idaho 97,079 19.9% 16.2% -3.7% No
Kentucky 106,330 20.4% 9.0% -11.4% Yes
Maryland 120,145 12.9% 7.0% -5.9% Yes
Massachusetts 140,540 4.9% 3.0% -1.9% Yes
Minnesota 59,704 9.5% 4.6% -4.9% Yes
New York 408,841 12.6% 8.3% -4.3% Yes
Rhode Island 31,337 13.3% 2.7% -10.6% Yes
Vermont 31,619 8.9% 4.6% -4.3% Yes
Washington D.C. 18,465 N/A N/A N/A Yes

Sources: The ASPE Office of Health Policy, Gallup

Dismantling the state exchange is only part of Bevin’s plan to overhaul healthcare in Kentucky. His office also announced Dec. 30 that it plans to make changes to the state’s Medicaid program. 

“Our state is financially in trouble and cannot afford to continue down the current Medicaid path that we are on,” Bevin statement read on “We have an opportunity to develop a transformational program that improves health outcomes, encourages personal responsibility and does both in a fiscally sustainable manner.”

Beshear told The New York Times the state exchange was “important to Kentuckians” but that the Medicaid expansion “must stay” and is an important part of providing affordable healthcare to residents.

Michael Thrasher

Michael is a former research analyst at ValuePenguin covering property and casualty insurance, including homeowners and renters insurance.