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Medicaid Expansion in Kentucky

The Supreme Court upheld much of President Obama’s Patient Protection and Affordable Care Act (“PPACA”) in National Federation of Independent Business et al v. Sebelius, but overturned a key element of PPACA’s Medicaid expansion provisions. Originally, PPACA required states to expand Medicaid coverage to individuals at or below 133 percent of the federal poverty level or risk forfeiting existing federal funding for the state’s Medicaid program.  In National Federation, the Supreme Court held that PPACA could not withdraw existing Medicaid funding from states choosing not to expand their programs. This change presents each state with a meaningful choice to opt in or out of PPACA’s Medicaid expansion.

PPACA’s Medicaid expansion provisions are set to take effect in 2014.  If a state chooses to participate in the expansion program, the federal government will assume 100 percent of the costs of the expansion in the first three years, phasing down to 90 percent in 2020 and all subsequent years.  The Obama Administration estimates that if the Medicaid program is expanded in each state, some 17 million Americans who otherwise do not qualify for Medicaid would receive coverage.  There is a sharp divide among proponents and opponents of the law (see previous McBrayer post from July 30, 2012, The Federal Medicaid Apple: Poison or the Cure? ), with many state legislatures currently in heated debate about whether to join PPACA’s Medicaid expansion program.

Currently, twenty-four states have said they will expand their Medicaid Programs. Kentucky has yet to make a decision.  On February 22nd, Senate Bill 39 was passed, 22-13, in Kentucky’s Republican-controlled Senate. The bill was sponsored by Senator Julie Denton (R-Louisville) and it would prohibit Kentucky from participating in PPACA’s Medicaid expansion unless authorized by the General Assembly.  Without Senate Bill 39, the decision about whether to expand the Medicaid Program remains in the discretion of the Governor’s Office.  Governor Beshear has not officially said whether he will agree to expand Medicaid in Kentucky, but he issued an executive order in 2012 which set a state health benefit exchange in motion—signaling that Medicaid expansion may follow.  Regarding Bill 39, Denton said in support of the bill: “as the policy-making body, [the General Assembly] should be making these decisions.”

According to Senate President Robert Stivers (R-Manchester), Senate Bill 39 does not “pose [a question] as to whether or not to expand Medicaid.  It is just that [the decision to expand Medicaid] should be a legislative-driven decision versus an executive branch decision.”  Stivers is worried that the state will start the expansion, only to see the federal government pull their participation, leaving states “picking up all the costs.”  Democrats are not concerned about federal participation after three years because, they say, that Kentucky can abandon the expansion after the first three years of the full federal assistance. As Senator R.J. Palmer (D-Winchester) put it, “If we don’t like it after that, we can walk away.”

The bill is now in the House before the Health & Welfare Committee.  Some lawmakers are concerned that if SB 39 becomes law, the legislature would not have enough time to approve the expansion in time to comply with PPACA’s timeline to implement expansion in 2014.  We’ll keep you updated as the Kentucky legislature debates whether we should sign up or opt out. You can track the progression of SB 39 by clicking here.

This article is intended as a summary of federal or state law and does not constitute legal advice.

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