GOP Views Kentucky Election as Victory over Obamacare

The election of a conservative outsider as Kentucky governor has given Republicans a laboratory to show the rest of the country how they'd replace President Barack Obama's health care law.

Three years into a coverage expansion that has brought the share of uninsured Americans to historically low levels, Matt Bevin's lopsided victory underscores how politically divisive the law remains. But experts say slamming the brakes in a state already deeply entrenched in the Affordable Care Act would cost lots of time and money, testing the new Republican administration's ability to rein in costs.

Kentucky has been one of the health care law's success stories. The share of uninsured state residents has been slashed from about 20 percent in 2013 to 9 percent by the middle of this year, according to the Gallup-Healthways Well-Being Index, a major independent survey. Experts credit that to a synergy between Kentucky's state-run insurance marketplace and the decision to embrace Medicaid expansion.

But the expansion added 400,000 people to the state's Medicaid rolls, more than twice what officials had predicted. Combined with the existing Medicaid program, Kentucky taxpayers now pay for the health insurance of a quarter of the state's population. The state will begin paying for the expansion in 2017, and costs could surpass $300 million by 2020.

"(Bevin) is the one who has received the mandate here. We have to do something different," said Republican state Sen. Ralph Alvarado, a doctor who opposes the Affordable Care Act. "The legislature and the governor needs to follow through. It's clear on what voters are telling us they want to do."

Outgoing Democratic Gov. Steve Beshear initiated both the insurance exchange and the Medicaid expansion by executive action. Bevin has said he'd dismantle the insurance marketplace, which would revert to federal operation. Kentucky would become the first state to do so for political reasons. Residents covered through the marketplace would continue to get subsidized health insurance, but they would do so through the federal website HealthCare.gov.

On Medicaid, it's unclear how far Bevin would push for changes. He has said he would reverse the expansion "immediately," and his campaign website says the Medicaid expansion "should be repealed." But Bevin has tried to walk back those comments when confronted with the fact that a complete rollback would mean 400,000 people losing coverage.

Robert Stivers, president of the Republican-controlled state Senate, said lawmakers are preparing to find an extra $75 million to pay for the expansion in 2017, plus another $175 million the following year. He said he has already had discussions with Bevin about how to replace the program.

"I believe we can develop a system where they will have health insurance," Stivers said. "We think we can develop a plan that will not expose us to $400 million of cost but still provide health insurance and health care for those individuals."

The White House signaled it expects Bevin to take a measured approach once in the governor's office. Spokesman Josh Earnest keyed on comments made by Bevin before the election that people would not be kicked off Medicaid.

"I think this is an indication ... that (while) vowing to repeal the Affordable Care Act in some cases has been used as an effective political strategy, that's not a terribly effective governing strategy," Earnest said.

Economist Douglas Holtz-Eakin, an adviser to Republicans nationally, said conservatives do have options.

Bevin has said he wants to do what Indiana and Montana have done by asking the federal government to change the expansion by charging recipients a small premium. But he has also said he would impose stricter income requirements for Medicaid, which are currently based on federal poverty levels.

Requiring modest premiums from those newly enrolled might find acceptance from a Democratic administration. But dramatically restricting eligibility for the coverage expansion would likely be rejected.

If Bevin and the Obama administration can thread a middle path, Holtz-Eakin said that might defuse some of the contentious politics around the health care law. In any case, Democrats should be more open to changes once Obama leaves office in 2017.

"Once the president leaves, his signature domestic accomplishment is on the history books, and they don't need to preserve it in its current form," Holtz-Eakin said.

So far, 60 votes in the GOP-led House have failed to slow the health care law's momentum. Two Supreme Court decisions left the basic structure in place. Now, a Republican with fundamentally different views has a chance to get his hands on it.

However, whatever Bevin does, it's not likely that much will be accomplished overnight.

The federal government requires at least 12 months' notice from a state that's seeking to shut down its insurance exchange, said Judy Solomon of the Center for Budget and Policy Priorities in Washington, which supports the health care law.

"You can't turn the switch so quickly," Solomon said. Bevin takes office next month. The current open enrollment season on Kentucky's marketplace started Sunday and ends Jan. 31.

Medicaid changes could also turn into a protracted negotiation if Bevin seeks a federal waiver to put a conservative spin on the coverage expansion.

"We can all take a deep breath and see how this plays out," Solomon said.