Former Gov. Steve Beshear: Medicaid expansion changed course of Kentucky history

When former Kentucky Gov. Steve Beshear took office in 2007, the Bluegrass State had many challenges — not the least of which was lack of health care for working folks — and limited resources to address them.

“Kentucky faced a number of fundamental weaknesses, not unlike Mississippi and a lot of other Southern states,” Beshear recently told Mississippi Today. “We had a lack of educational attainment. We had a workforce that wasn’t as trained or agile as the marketplace would demand. We had too many children getting a poor start in life. We had an economy that wasn’t as diversified as it needed to be. And one of the biggest fundamental weaknesses we had was a population that wasn’t healthy.”

“… Governors have a lot of power and a lot of resources at their disposal, but none of us really have the resources locally to make a huge difference in the health of your people,” Beshear said. “We made progress in health care, from 2007 to 2010, but we couldn’t really make any huge changes. Then along came the Affordable Care Act.”

Kentucky, starting in 2014, accepted federal funding to expand Medicaid and has been one of the most successful states in using the ACA to reduce its number of uninsured people. Its creation of a state-run health insurance marketplace has been held as a national role model.

Mississippi Today has interviewed governors in the three Southern states that have expanded Medicaid: Arkansas, Louisiana and Kentucky, all of whom report net positives from the move. Despite numerous polls showing public support for expansion, Mississippi remains one of 10 states rejecting federal money for expansion, led now by Gov. Tate Reeves who has remained steadfastly opposed.

Beshear, whose son Andy Beshear is now governor and running for reelection this year, expanded Medicaid by a 2013 executive order. He said Medicaid expansion far exceeded initial projections in number of jobs created, money injected into hospitals, the state’s economy and state budget. The number of uninsured Kentuckians dropped from over 20% to 7.5%. The net positive impact on Kentucky’s economy was $30 billion over eight years.

“Medicaid expansion was the single-most important decision I made in eight years as governor because we changed the course of Kentucky’s history,” Beshear said.

Beshear’s interview with Mississippi Today is below, edited for brevity.

Mississippi Today: Could you give us a quick overview of where things stood in Kentucky in 2013, both health-care wise and politically?

Gov. Steve Beshear: It was estimated that some 640,000 Kentuckians, out of a little over 4 million, had no access to affordable, quality health care. These were folks who would get up every morning and go to work, and just basically roll the dice — just hoping and praying that you don’t get sick or get hurt. They were having to choose between food and medicine at times. They would have to ignore checkups that could catch serious conditions early. They just lived every day knowing that bankruptcy was just one bad diagnosis away.

… Fixing this is an expensive proposition, and a state by itself is just simply not in a position to address it … The Affordable Care Act was passed, and of course immediately became embroiled in litigation. My health care people came to me and we sat down and talked through what it allowed. We realized we had two decisions to make. One was, do we create a state-based exchange or do we go into the federal exchange. And two, do we expand Medicaid.

The first decision was a pretty easy one because basically all of our providers and folks who would be involved felt that we needed to have more flexibility and be able to address Kentucky’s particular needs with a state-based exchange … Ours became sort of the national standard, the gold standard for state-based exchanges … President Obama called me personally to congratulate us and thank us for showing the world that the Affordable Care Act can work.

… Whether to expand Medicaid was a tougher decision. Morally, I felt that we needed to do it because I believe health care is a basic human right and that Kentuckians needed it. The question came down to can we afford it? The opponents of expanding and of the Affordable Care Act were all saying it would bankrupt us.

I felt like we needed to answer that question. I hired PricewaterhouseCoopers — an internationally renowned accounting firm — to come in and analyze what they felt would happen in Kentucky if we expanded Medicaid.

They took about six months and came back, sat down and looked at me across my desk and said, “Governor, you cannot afford not to do this.” Wow. OK. They said because over the next eight years, you’re going to create 17,000 new jobs. You’ll inject about $15 billion into Kentucky’s economy over the next eight years. You’ll protect Kentucky’s hospitals from the impact of cuts in indigent care funding and protect rural hospitals. And, you’ll have about an $800 million positive budget impact over the next eight years.

I was thrilled with that analysis, and we publicly announced that we were going to expand Medicaid as well as have our own state-based exchange. I was fortunate from a political standpoint that I did not have to have legislative approval. At that time I had a Democratic House and and Republican Senate and it would have been difficult, if not impossible, because of the politics surrounding quote-unquote Obamacare. Fortunately, years before, the Legislature had delegated the authority to define Medicaid eligibility under the federal law to our cabinet for Health and Family Services.

Mississippi Today: Did expansion live up to those early projections?

Beshear: The results were a little short of amazing. In the first six months, over 400,000 Kentuckians signed up … most of whom had never had affordable quality health care before. In the first 18 months, our uninsured rate dropped from over 20% to 7.5%. The uncompensated care rate dropped from 25% to less than 5%.

… But the critics would persist, particularly on the affordability of the program. So, after the first year, I went to Deloitte, another internationally known consulting firm, and said, OK, here’s the Pricewaterhouse study done before we implemented it. Take this and look at a year of actual results and numbers and tell me where we are. Were they right?

They did an in-depth study, came back, sat down across my desk, looked me in the eye and said, “Well, governor PricewaterhouseCoopers was wrong. They weren’t optimistic enough. They projected that you would create 17,000 new jobs over eight years. Yeah, you’ve already created 12,000 in the first year, and we project you’ll create 40,000 over eight years.” Wow, that was almost $3 billion in new revenue had gone to providers in the first 18 months. Then there’s a $30 billion positive impact on Kentucky’s economy over eight years … a net impact of $820 million impact on the state general fund over eight years.

Now, we haven’t had a totally smooth history since I was governor. After my eight years, I was followed by a Republican governor who had campaigned on repealing Medicaid expansion. During his four years, he did abolish the state-based exchange and pushed us into the federal exchange. He proposed a waiver to the federal government that would place a lot of complicated work requirements on folks on the Medicaid program. But, fortunately, a fellow named Andy Beshear, who happens to be my son, defeated him in the next election and he has reinstituted the state-based exchange and made it even stronger and just recently announced the expansion of Medicaid even further to cover dental and vision and hearing for adults.

Mississippi Today: What is your take on Mississippi and other states struggling with this issue, and any advice on what we should do?

Beshear: Mississippi is one of what, 10 states now that haven’t expanded? I would predict that the question is not if it ever will, it’s just when will it expand. Because this should not be a political issue. This should not be a partisan argument. Why does anybody want to argue that people shouldn’t have good quality health care?

A lot of the Southern states that are left, that have not expanded Medicaid, tend to fall at the bottom of the list in virtually every ranking that we have now. Sure, Kentucky has also been there, and is still there in some of the rankings, but we’re determined that we are going to move out of that category, instead of a state that’s continually trying to catch up.

This should be an easy decision, for either political party to make. It’s a matter quite honestly of putting people first and partisan politics second. When I was governor and I had to deal with a Republican Senate and Democratic House, I would tell them both, look, our elections are set up on a partisan basis. I understand that. We’ll get out there and fight and scratch and carry on in these elections, but once they’re over, we’re all Kentuckians first … That’s exactly the way I think Mississippi ought to approach an issue like this.

Throw out, throw away the partisan bickering and just look at what’s best for your people. It’s hard to argue that everybody having health care would not make life better for everybody. But there’s also sound evidence, that this is not only affordable for a state to do, this is economically beneficial for a state.

Mississippi Today: You’ve made points very similar to other governors we’ve talked with. They’ve said the decision was relatively easy, and believe it was a hallmark of their administrations.

Beshear: … It was an easy decision to make from the question of whether it was the right thing to do, or whether it would economically benefit Kentucky. It was a hard decision to make politically. In Kentucky at the time, President Obama had a 30% approval rating. Some of my advisors said, governor, do not touch the Affordable Care Act with a 10-foot pole, it will kill you.

But I felt, number one, how many times do you ever get to make a decision that will change the course of, change the history of your state for the good? You know that, and you can’t turn your back on that, you have to step up and do the right thing … Medicaid expansion was the single-most important decision I made in eight years as governor because we changed the course of Kentucky’s history.

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Geoff Pender