New ad blames problems of Ky. hospitals entirely on Obamacare; they say it's only partly to blame, but worry about future impacts

By Al Cross
Kentucky Health News

A new ad in the race for governor says "There's a crisis in our hospitals" in Kentucky, and blames it entirely on the federal health-care reform law. That is not true, according to the hospitals themselves.

The TV commercial is from Americans for Prosperity, a group supported by the Koch brothers, Wichita-based industrialists who have become major financiers of conservative campaign causes. It attacks Attorney General Jack Conway, the Democratic nominee for governor, as a supporter of Obamacare. It resembles ads run by the Republican Governors Association, but makes a stronger claim.

The ad says, "There's a crisis in our hospitals. Billions in cuts. Services shut down. Premiums are skyrocketing. And now, it's costing us jobs. The reason? Obamacare."

The ad cites no source for the "costing us jobs" claim. Overall health-care employment in Kentucky is up, but hospitals in the state have cut their number of employees by about 6.5 percent in the last three years, with total jobs declining to 72,000 from 77,000.

The Kentucky Hospital Association does give Obamacare part of the blame for that, but its recent report on the financial challenges of hospitals said the law is only part of ?major changes in the health system,? including the managed-care system that the state instituted for the federal-state Medicaid program in 2011. The decline in total hospital employment in Kentucky began about nine months later.

Most of the hospitals? layoffs have not been a result of Obamacare, but ?a changing scene in health care, with more focus on the outpatient area,? which started long before the law took effect, KHA President Michael Rust said this month. One of the law?s aims is to further reduce expensive use of hospitals, which Americans and especially Kentuckians use too much.

?Our concern is moving forward,? Rust said, noting the law?s impending cuts in special Medicaid payments that many hospitals get for treating a disproportionate share of poor patients ? many of whom are now on Medicaid because Gov. Steve Beshear used the reform law to expand eligibility for the program to 138 percent of the federal poverty level.

The law?s intent ?was that the cuts would be offset, for the most part, by health-care payments from people who had previously been uninsured,? the KHA report noted. National estimates were that ?half of the newly insured would be covered by private insurance and the other half by expanded Medicaid,? but because Kentucky is a poor state, 75 percent of the newly covered are on Medicaid.

?The expansion has helped the hospitals in the state of Kentucky,? so they want to keep it, Rust said. However, they note that Medicaid covers only 82 percent of the cost of care, putting them in a financial bind. State officials say hospitals are writing off much less bad debt because more patients have insurance (82 percent being better than 0 percent), but hospitals say the problem has not abated because many patients can?t pay the high deductibles and co-payments of their Obamacare plans.

Christian Hertenstein, spokesman for Americans for Prosperity's Kentucky chapter, acknowledged in an email that hospitals are affected by other factors. "We are not in disagreement with providers that poor-decision making in Washington and Frankfort over several decades has led to serious problems," he wrote. "We are asserting that Obamacare has burdened an already burdened system with a new crisis."

As for the ad's "premiums skyrocketing" line, one Kentucky insurer, the nonprofit Kentucky Health Cooperative, will increase its premiums 25 percent (4 percent for small groups) in the next open enrollment that begins Nov. 15. The average individual premiums of one insurer, WellCare, are going down 11 percent next year while others are going up: Anthem 12.2 percent (0.4 percent for small groups), CareSource 11.8 percent, and Humana 5.2 percent (7.8 percent for small groups).

The co-op is raising rates to make up for a $50 million loss in its first year of operation. It has been funded by federal loans authorized by the reform law, which aimed to use the co-ops to create more competition for private insurance companies. The co-op sold 75 percent of the policies sold through the state's Kynect insurance exchange, and its officials say it got too many sick people, whose claims were more than expected, requiring it to place much money into a solvency fund to cover future claims.

The commercial notes that Conway "supported Obamacare" and did not join other attorneys general in a lawsuit against it. Conway's campaign called the ad "false" but did not say what it considered false, Sam Youngman reports for the Lexington Herald-Leader.

Conway spokesman Daniel Kemp said the ad is false because "It badly misrepresents Jack Conway's proven record of putting Kentuckians over partisan politics, and the ad contains numerous misrepresentations about healthcare in Kentucky." He cited the Courier-Journal article that quoted Rust and examined the claims made in the Republican Governors Association ads.

Republican nominee Matt Bevin initially called for immediate elimination of the Medicaid expansion, and Conway made that "part of his stump speech, accusing ... Bevin of being 'callous' for wanting to 'kick a half a million' Kentuckians off of their health insurance," Youngman notes.

After state Senate President Robert Stivers, R-Manchester, said the legislature would decide Medicaid policy and would look at making Kentucky's program more like Indiana's, Bevin said he would look to states like Indiana in making revisions and wouldn't immediately end the expansion.

Bevin has called "nonsense" the state-funded study by Deloitte Consulting that said the expansion would pay for itself through 2020 by adding patients to the health-care system, creating jobs and generating tax revenue.

Conway has said that if the expansion doesn't pay for itself, the state will have to look for ways to reduce its cost. The federal government is paying the entire cost of the expansion through next year, but states will begin paying 5 percent in 2017, rising in steps to the law's limit of 10 percent in 2020.

The new TV ad is part of a campaign that "will be accompanied by mailings and a grass-roots component, with a goal of knocking on several thousand doors within the next three weeks," Youngman reports.

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

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