- Associated Press - Thursday, February 12, 2015

FRANKFORT, Ky. (AP) - Gov. Steve Beshear’s decision to expand Kentucky’s Medicaid program will cost taxpayers more than $1.1 billion by 2021 according to a new state study released Thursday.

But the study also says Kentucky’s next governor should be able to find money to pay for that because the explosion of new health care spending caused by the expansion will generate $1.7 billion in savings and new revenue for the state over the same time period.

The study estimated the state’s total net savings from 2014 to 2021 to be $819 million.

“Today we remove the final reason Kentucky critics have for not supporting the Affordable Care Act,” Beshear said of the $140,000 study conducted by Deloitte Consulting and the University of Louisville’s Urban Studies Institute. “In conclusive fashion we bury that objection under an avalanche of facts.”

The federal Affordable Care Act required states to expand Medicaid, the government-funded health insurance program for the poor and disabled. The U.S. Supreme Court later ruled states did not have to expand Medicaid, but they could if they wanted to.

Beshear chose to expand Medicaid over the objections of many Republican lawmakers, making Kentucky one of two Southern states that did so. While the federal government promised to pay for 100 percent of the new Medicaid population for the first three years, conservative lawmakers warned that the state eventually would incur a heavy cost beginning in 2017. Kentucky finished its most recent budget year with a $91 million shortfall.

But the study found as Kentucky added nearly 400,000 people to its Medicaid rolls in 2014, the federal government poured nearly $1.2 billion money into Kentucky to pay for them. That new health care spending added 12,000 new jobs, producing more consumer spending and tax revenue and adding an extra $37.4 million to state coffers.

The state also saved money by transferring some of its health care obligations to the federal government, including some prison and mental health services. And because more people had insurance, the state had to pay hospitals less to care for the uninsured.

The study projects those savings and new revenues to grow every year.

“I think that this is the earliest glimpse and look back of the first year (of Medicaid expansion) of any state that we are aware of,” said Audrey Haynes, secretary for the Kentucky Cabinet of Health and Family Services.

Republicans questioned the study, noting a study the year before the expansion from PricewaterhouseCoopers projected 206,000 people would be added because of Medicaid expansion, but the actual number was nearly twice that.

“The initial projections were so far off of what the population reaction was going to be and the number of enrollees was going to be, it makes me wonder about this,” Senate President Pro Tem David Givens, R-Greensburg, said.

Beshear defended both studies, adding that PricewaterhouseCoopers and Deloitte are both respected independent auditors.


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