The chief fallout from killing Kynect

Articles about the plans of Kentucky's new Republican governor, Matt Bevin, to junk Kynect, the state's home-grown ACA exchange, and switch to Healthcare.gov don't always make it entirely clearly where the loss or risk lies.

There's the waste of some $290 million in federal grant money used to build Kynect, and  $23 million in one-time expenses that the outgoing Beshear administration estimated it would cost to move to the federal exchange. But since the choice of website does not in itself threaten the Medicaid expansion or change private plan offerings (though it may bump up prices, since HealthCare.gov charges insurers a higher assessment than Kynect has), wherein lies the operational damage?

Kynect won a good reputation early on because it functioned reasonably upon launch in fall 2013, when HealthCare.gov was a groaning disaster -- and also because Kentucky's Democratic administration threw itself vigorously into outreach and swiftly, massively cut the state's uninsured ranks, mainly through Medicaid expansion. Purely as a shopping site, though, Kynect is no great shakes, at least as far as I can tell by using its "shoparound" function for those previewing plans before they apply. The shoparound is hard to find, the typeface is light and hard to read, and the plan summaries confusingly presented. HealthCare.gov has a much cleaner interface and easier process -- at least in the shoparound.

Kynect is a major loss, though, on at least two fronts. First, the Kynectors, the state's navigators who did so much to reach out to and assist the uninsured, are funded through the exchange -- though that funding was winding down. Second, and perhaps most importantly, Kynect is integrated with the state's Medicaid and CHIP programs and has enabled direct Medicaid enrollment, as opposed to a referral to the state agency through HealthCare.gov. And that referral process has been rocky in many states, as a Kaiser Family Foundation survey of state Medicaid agencies indicates.  Modern Healthcare's Virgil Dickson led with that slow integration in his overview of the Kaiser survey:

States that rely on HealthCare.gov are still struggling to enroll people deemed eligible for Medicaid, according to a Kaiser Family Foundation survey of Medicaid agencies.

The 38 states that rely on the federally facilitated marketplace to determine eligibility and facilitate enrollment must electronically transfer accounts between Medicaid and HealthCare.gov. The majority of these states can receive and send transfers of information. But 20 states say the transfers are delayed or problematic. The survey didn't specify the issues are or their severity.

“We have more work to do at the federal level on strengthening our coordination with states and I think we're making progress,” CMS Medicaid Director Vikki Wachino said during a briefing about the report Thursday.

On the plus side, the Kaiser survey stresses that the 50 states taken together have made tremendous progress over the last two years in streamlining the Medicaid enrollment process. Huge backlogs have been cleared, online application capability has become universal, 34 states have enabled automated renewals and 49 enable telephone applications.  All 38 HealthCare.gov states can electronically send and receive account transfers to and from HealthCare.gov.

But again, 20 states suffer delays in such transfers -- and in most states, HealthCare.gov only assesses Medicaid eligibility and leaves it up to the states to make a final determination.

Judith Solomon of the Center for Budget Policy and Priorities recently summarized the likely integration losses that will result from dis-kynecting:

Health reform provides a “no wrong door,” seamless eligibility system so people can easily apply for and move between coverage programs — including Medicaid, the Children’s Health Insurance Program (CHIP), and exchange coverage — as their situations change.  Making coverage seamless has proved challenging for both HealthCare.gov (the federal exchange) and some state exchanges that have kept their Medicaid and exchange systems separate.

Kentucky, by contrast, enjoyed early success in developing an integrated system in which individuals and families can apply and get covered in the program for which they’re eligible.  The state’s uninsurance rate for low-income adults has fallen from 40 percent to 12 percent.  In states using the federal exchange, cases must be transferred between HealthCare.gov and state Medicaid and CHIP programs.  While HealthCare.gov works better now than it used to, low-income people still may face delays and coverage gaps when their incomes change or they apply at HealthCare.gov and are eligible for Medicaid. ...

Medicaid and CHIP beneficiaries would also be affected, since Kynect is the portal for their coverage, too.  Kentucky would have to establish new systems to transfer cases between its Medicaid and CHIP programs and HealthCare.gov.  That could prove challenging, since some states are still experiencing problems with these transfers, resulting in delays and coverage gaps.

Without Kynect, families with children in Medicaid or CHIP and parents in exchange coverage would have to straddle two systems.  They would have to report changes in income or employment to both the state and HealthCare.gov and follow different processes to renew and verify their coverage, rather than working only through Kynect.  Kentucky would no longer operate its own website and call center or manage outreach for its programs, so consumers would no longer have support that’s specific to the state’s programs and health plan choices.

Of course, the integration of state and federal systems depends on people as well as technology. And on that front too, as Charles Gaba noted  (via SNL Financial reporter Adam Cancryn) a couple of weeks ago, the news is not promising:

In other news related to Kentucky's Medicaid program, Lisa Lee, the Medicaid commissioner appointed by Beshear, has resigned.

NEWS: KENTUCKY INSURANCE COMMISSIONER SHARON CLARK TO LEAVE THE DEPARTMENT, three sources tell @InsuranceSNLLiz and me

— Adam Cancryn (@adamcancryn) January 11, 2016

Clark has served since '08. Is also NAIC president-elect & chaired Ky's Health Benefit Exchange Advisory Board #kentucky cc: @charles_gaba

— Adam Cancryn (@adamcancryn) January 11, 2016

Killing Kynect is not as heavy a blow to affordable care in Kentucky as reversing the Medicaid expansion would have been (though Bevin will probably at least marginally weaken coverage and usability if he goes through with his stated intent to implement a "private option" Medicaid alternative). But by several small cuts it will probably reduce access to affordable coverage in the state.

Update: The intangibles are important too. In a recent Kaiser poll, state residents had a negative view of the ACA overall, 41-49, but a positive view of Kynect, 42-28 (and 29% not knowing enough to say).  The response recalls the guy impressed with a Kynect demo at the Kentucky State Fair in August 2013: "This beats Obamacare." Ditto for the Medicaid expansion, which 72% of respondents wanted to keep as is rather than change it to cover fewer people (which is technically impossible in any case, as HHS would never agree to a waiver with that goal explicit).