Judge OKs Medicaid expansion and health insurance exchange

A judge upheld Gov. Steve Beshear's decisions to expand Medicaid and set up the state's health-insurance exchange under federal health reform, but his adversaries say they will continue to fight in court.

Franklin Circuit Judge Phillip Shepherd's two rulings mean that implementation of the Patient Protection and Affordable Care Act, through Medicaid expansion and the health exchange will continue as planned, at least for now.

Circuit Judge Phillip Shepherd

Tea Party activist David Adams filed a lawsuit in April challenging the governor's legal authority to create the insurance exchange, which is called Kynect and begins enrollment Oct 1, without first seeking approval from the General Assembly.

Shepherd said Beshear is simply implementing a section of a federal law that has been upheld by the U.S. Supreme Court, reports Tom Loftus of The Courier-Journal. Adams said he will appeal both the Medicaid expansion and exchange orders directly to the Kentucky Supreme Court, attempting to bypass the Court of Appeals.

Republican Sen. Julie Denton of Louisville, chair of the Senate Health and Welfare Committee, told Loftus she expects major problems to occur if the administration proceeds with Medicaid expansion.

"My overriding concern from the beginning is that Medicaid is not being run well now; they?ve never gotten their hands around managed care,? said Denton. ?Do we really want to expand a broken system? And do we want the government to take on another new project like the health-care exchanges??

Beginning next year, most Americans will be required to have health insurance, and Kynect is designed to help as many as 640,000 uninsured Kentuckians get coverage through private insurance plans. The online service will allow individuals and business to shop for plans, compare benefits and determine eligibility for payment assistance or tax credits.

Beshear announced Medicaid expansion in early May

Adams challenged the constitutionality of a state law mandating that Kentucky use all available federal funds for Medicaid. Shepherd said the legislation was a clear step towards achieving a state objective, to expand health care benefits to "indigent citizens," Loftus reports.

?The Kentucky Supreme Court has held that this legislative power may be delegated to the executive branch of government in these circumstances, so long as there are standards governing the exercise of discretion, and the legislature retains the authority to withdraw the delegation,? Shepherd wrote. ?Those conditions are clearly met here.?

The law calls for expansion to cover people under 65 in households up to 138 percent of the federal poverty level -- currently $15,856 for an individual or $32,499 for a family of four. The federal government will pay all the cost of newly eligible Medicaid patients from 2014 to 2017, when Kentucky will increasingly pick up part of the tab, rising to 10 percent by 2020.

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