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Wednesday, July 18, 2012


Beshear creates health-benefit exchange; legislative panel rejects rental space
By Jack Brammer

FRANKFORT — Gov. Steve Beshear signed an executive order Tuesday to create an online marketplace offering health insurance plans for Kentuckians, as called for in the federal Patient Protection and Affordable Care Act.

Shortly afterward, the Kentucky General Assembly's Capital Projects and Bond Oversight Committee rejected, on a 4-3 partisan vote, a proposal by the Cabinet for Health and Family Services to spend $294,540 for rental space to accommodate 210 employees associated with the health insurance exchange.

Despite the vote, Finance Secretary Lori Flanery has the authority to override the oversight committee's decision and let the rental project proceed. Beshear said late Tuesday that Flanery will sign the lease "in order to make sure that we don't fall behind on implementation and run the risk of a federal takeover of our health benefits exchange."

Sen. Bob Leeper, an independent from Paducah who usually sides with Republicans, said he could not support the rental lease because he was reluctant to put his name on anything related to "Obamacare."

He also expressed concern that the state has not yet determined whether health plans in the exchange will cover abortion and contraception. The state will have to notify the federal government of its plans by Sept. 30.

Rep. Jim Wayne, D-Louisville, said the exchanges are vital to the federal health care act, which he said was based on a Massachusetts law that was approved under then-Gov. Mitt Romney, the expected Republican nominee for president.

Leeper and three Republicans voted against the lease, and three Democrats supported it.

Senate President David Williams, R-Burkesville, appeared before the committee to question the health cabinet's authority to spend money on the lease.

He criticized the Beshear administration for not briefing legislative leaders about his executive order "on one of the biggest public policy changes in the history of the commonwealth."

Williams said the state has "no idea" how much it will cost to operate the health benefit exchange when it becomes fully operational in 2015. Health cabinet officials told the oversight committee they had no information on the future costs of the exchange.

Several interest groups, including the Kentucky Hospital Association, the Kentucky Chamber of Commerce, Kentucky Voices for Health, and Anthem Blue Cross Blue Shield, have said they want the state, not the federal government, to operate the exchange.

"Kentucky is more in tune with the unique regional and economic needs of our citizens, as well as the health insurance needs of individuals, Kentucky small businesses and non-profits," Cabinet for Health and Family Services Secretary Audrey Tayse Haynes said in a statement.

Kentucky's exchange "will provide one-stop shopping" for Kentuckians who have had difficulty finding or qualifying for affordable health insurance, Beshear said.

The exchange, which is to begin operation Jan. 1, 2014, also will assist employers with enrolling workers in health plans, enable individuals to receive tax credits and subsidies for their insurance premiums and qualify small businesses for tax credits, Beshear said.

Beshear, a Democrat, said in May that he would issue an order establishing a state-operated exchange, provided that the U.S. Supreme Court upheld the federal law, which it did on June 28.

Beshear's order creates the Office of the Kentucky Health Benefit Exchange, which will oversee implementation and operations of the exchange. It will be housed in the Cabinet for Health and Family Services.

Beshear said the state has received three federal grants totaling $66.4 million for planning and implementation of a state exchange.

The development and operation of the state's exchange will be financed entirely with federal dollars until Jan. 1, 2015, after which it will be wholly financed with revenues it generates, Beshear said.

Rodney Murphy, executive director of the health cabinet's administrative and technical services office, told the legislative oversight committee that the federal government will pay 95 percent of the lease for 29,454 square feet of space at 12 Mill Creek Park in Frankfort through June 30, 2015.

The remaining costs will be paid through revenues it generates, he said.

State deputy budget director John Hicks said the legislative-enacted state budget set aside $5 million in Medicaid funds that could be used for the exchange, but Williams disagreed.

Murphy said the lease agreement has a 30-day cancellation notice in case the federal health care act is repealed or changed. He said the vendor who is selected to operate the exchange probably will bring in about 100 employees. The rest will have contracts with the state.

Beshear selected Carrie Banahan to be executive director of the new state office.

A career state employee with experience in the Department of Insurance and the Department of Medicaid Services, Banahan currently is the executive director of the Office of Health Policy within the cabinet. She will remain acting executive director of health policy until a permanent replacement is named.

Beshear's order also sets up an 11-member Exchange Advisory Board. He expects to announce appointments to the advisory board by mid-August.

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