Bevin Administration Reveals Substantial Taxpayer Savings in Transition to Federal Exchange


Cabinet for Health and Family Services Secretary Vickie Yates Glisson presented new details on the Commonwealth of Kentucky’s transition to the federal health exchange and revealed that the state’s net cost to transition to the federal exchange will be approximately $240,000.

“It is time to set the record straight on kynect,” said Governor Bevin. “My administration has repeatedly disputed the claim often made by proponents of kynect that it will cost the state $23 million to transition to the federal exchange. This is not true. In fact, we now know that the net IT costs for the transition are expected to be $240,000.”

“The methodical approach by this administration is paying off,” said Secretary Glisson. “By transitioning to the federal exchange, Kentucky will save $20 million a year that can be used for other pressing healthcare needs without compromising access to health insurance products.”

On December 30, Governor Bevin notified the Department of Health and Human Services (HHS) that Kentucky would be closing down kynect and moving to Healthcare.gov in order to eliminate redundant spending and save much needed state resources. Last week Governor Bevin met with Secretary Burwell and they expressed their commitment to continue to partner on ways to strengthen healthcare for Kentucky residents.

Facts:

Less than 2% of Kentucky’s population has used kynect to purchase a Qualified Health Plan:

• 2014 average QHP kynect enrollment was 69,000 (1.6% Total KY Population)

• 2015 average QHP kynect enrollment was 85,000 (2% Total KY Population)

Kynect is not self-sustaining:

• Total Operating & Capital to-date cost: $330M

• Kynect operations cost $51 million in FY15, and $35 million is budgeted for FY16. These amounts exclude some expenses, such as capital expenses

The federal exchange will cost significantly less for same services:

• Based on average enrollment and premiums, Kentuckians will be able to access plans on healthcare.gov for approximately $6.4 million in costs paid to the federal government as opposed to $35 million budgeted for kynect FY 16

• The Commonwealth will begin seeing savings in the first biennium of transition

• The Commonwealth will save an estimated $15 million to $25 million per year post transition to healthcare.gov

The transition to healthcare.gov is far less expensive than reported:

• Kynect will not cost the Commonwealth $23 million in IT costs to transfer. Instead, the net IT costs to the state will be closer to $236,000 when taking into account the reduced need for operations and maintenance for the kynect website in 2017. The federal share is expected to be $3.7 million.

• No general fund dollars will be used for the transition. The winding down and transition will be funded by the current revenue stream used to operate kynect

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