Kentucky Gov. to Dismantle State-Run Health Care Exchange

Brittany M. Hughes | January 12, 2016
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Kentucky Gov. Matt Bevin recently announced his state will close its state-run health insurance marketplace, making it the first state to dismantle its marketplace based on a political promise.

Bevin campaigned last year on the pledge that he would sever the state’s ties with President Obama’s signature health care law.

According to a local ABC affiliate in Frankfort, only about two percent of Kentucky’s population, about 85,000 people, currently get their health care through the state-run exchange, called “kynect.” The marketplace is funded by a one percent tax on all private health insurance plans, purchased both on and off the marketplace, the report adds.

The state’s marketplace costs $27 million annually, but doesn’t generate enough revenue to be self-sustaining.

From the report:

Bevin spokeswoman Jessica Ditto said the fees from the sale of plans on kynect generate between $2.5 million and $4 million of the approximately $27 million it takes to operate the exchange each year.

"A majority of Kentuckians are paying a 1 percent assessment on their own premiums to support kynect operations which they do not use," Ditto said.

Once Kentucky moves to the federal exchange, that tax goes up to 3.5 percent. But the tax is only applied to plans sold on the exchange, Ditto said.

Officials say it will take at least nine months to take down the state exchange.

Since the announcement that he'll be closing kynect, Bevin has been getting a lot of flak for the move from those who say dismantling the exchange will cost millions and force thousands of Kentuckians to lose their current health insurance plans. But the state certainly isn't the first to bow out of Obamacare's state marketplace option -- it's just one of the few to leave by choice.

Under Obamacare, many states that chose to set up their own marketplaces have been plagued with financial problems as they try to sustain the cost of maintaining their exchanges. According to one Washington Post report last May, nearly half of their 17 states with their own exchanges were having trouble dealing with the exorbitant costs.

Some states, including Colorado and Obama's home state of Hawaii, have already been forced to shut down their exchanges due to financial struggles (according to the president's law, a state exchange must prove it can sustain itself or the federal government will turn off the funding faucet).

If that weren't enough, UnitedHealthcare, the nation's largest health insurer, announced last year that it may stop providing insurance plans on the Obamacare marketplace altogether next year due to plummeting profits. Couple that with steadily rising premiums on many health insurance plans bought on the government exchange, as well as the fact that tens of thousands of Americans are about to see their subsidies disappear for not filling out their tax forms correctly, and this health care roller coaster just gets more and more wild.

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