Insurance companies that initially lost money managing Medicaid in Kentucky are now enjoying a windfall described as "astonishing" by an analyst for the global bank Citigroup.
According to Citi Research, "taxpayers spent almost $275 million more on purchasing Medicaid services (in Kentucky) over the first nine months of 2014 than was necessary."
Citi's calculation of the insurers' excessive profits is subject to some complicated caveats. Also, the companies will be required to refund most of their windfall once all the numbers are in for 2014. And the state will renegotiate their rates and contracts next year.
But this and other massive transfers of public health-care dollars should serve as a reminder:
The influx of a half-million newly insured Kentuckians is not just a great opportunity. It's also a grave responsibility to develop a system of care that produces better outcomes and healthier Kentuckians.
If you doubt the urgency of the task, check out the United Health Foundation's 25th annual rankings published last week. On a broad range of measures, Kentucky fell from 45th to 47th among the states.
The report is based on data from before Gov. Steve Beshear made full use of the Affordable Care Act to expand access to health care, so the rankings miss improvements that already have occurred in Kentucky.
But the major challenges the report cites for our state are perennials: the high percentage of smokers and children in poverty and the high rate of preventable hospitalizations.
The legislature can tackle the No. 1 cause of preventable deaths and disease by enacting a ban on smoking in indoor public spaces, including workplaces and restaurants. The measure will have bipartisan sponsors, Rep. Susan Westrom, D-Lexington, and Sen. Julie Raque Adams, R-Louisville, when the General Assembly convenes next month. The Kentucky Chamber of Commerce has long endorsed a statewide smoking ban, as does the Kentucky Hospital Association.
The chamber recognizes that smoking and Kentucky's high rates of disease and disability are not just health issues but also a drag on the economy. Potential new employers want a healthy workforce and a healthy place to live — and that means smoke-free.
Meanwhile, Beshear has a year left as governor to make sure the Medicaid managed care system he instituted is really managing care and improving outcomes — not just managing cash flow by withholding payments and squeezing hospitals and doctors, as many providers say is still the case.
The expansion of the Medicaid program, which is giving working poor Kentuckians access to routine preventive care for the first time, is expected to reimburse Kentucky health-care providers an additional $1 billion this year.
Policy-makers and providers should zero in on reducing preventable hospitalizations and making Kentuckians healthier while the federal government is still picking up the entire cost of the Medicaid expansion, which is providing free coverage to most of the 500,000-plus Kentuckians who have signed up for insurance through the Kynect exchange.
By 2017, the state must pick up 5 percent of the expansion's cost, then 10 percent by 2020. The healthier Kentuckians are, the more affordable that will be.