Kentucky's surprise GOP win: Will new governor roll back Obamacare?

By many measures, Kentucky's version of Obamacare helped residents. Yet many voted for a new governor who has vowed to roll it back. Their decision could echo beyond the Bluegrass State. 

For five years “repeal and replace” has been the Republican mantra for Obamacare. Now – thanks to a surprise victory in the Kentucky governor’s race – the GOP may have a chance to show the nation what that entails.

Conservative Louisville businessman Matt Bevin campaigned on a promise to overturn large pieces of the Affordable Care Act (among other things). That seemed a risky bid, given that Kentucky’s uninsured rate has fallen by half since the law’s implementation.

It wasn’t. Kentucky voters’ dislike of President Obama and what they see as the administration’s liberal drift trumped the fact that many benefited from the president’s signature health policy. Mr. Bevin beat Democrat Jack Conway by nine percentage points, though most preelection polls had predicted he’d lose.

Bevin’s plans for Kentucky health care aren’t fully in focus. He’s promised to ditch the state’s health-care exchange marketplace, KYnect, pushing enrollees onto the federal exchange system. The larger issue is what he’ll do about Kentucky’s expansion of Medicaid, a federally funded move that’s accounted for much of the drop in the state’s uninsured rate.

“States are laboratories of democracy; nat’l GOP leaders will be watching closely to see how or if Bevin can repeal/replace health care in KY,” tweeted NBC News political director Chuck Todd in the aftermath of the Kentucky vote.

For national Democrats, the Kentucky race is a hard blow to the theory that they can compete in purple or red-leaning states by demonstrating that government programs can help people, and then slamming Republicans for planning to take that help away.

Outgoing Democratic Gov. Steve Beshear had insisted this approach would work. And he put it to the test: Using executive orders, Governor Beshear bypassed a gridlocked legislature to expand Medicaid and establish the state-run KYnect exchange in the first place. The result was a fall in the number of Kentuckians without health insurance from about 20 percent of the population to 9 percent.

That’s among the biggest such drops of any state in the country.

“This is a winner for our people, and because it’s a winner for our people, it’s going to be a winner politically,” Beshear said in the runup to Election Day.

Reality undermined this assertion. Rates have risen for many existing policies on Obamacare exchanges, forcing buyers to shop around if they want to keep their costs as low as possible. More than a third of the 23 nonprofit health plans founded with ACA seed money have financially collapsed, including the Kentucky Health Cooperative.

Nationally, opinion about the Affordable Care Act remains almost exactly split. The latest results for the Kaiser Health Tracking Poll show that 42 percent of respondents have a favorable opinion of the health law, and 42 percent have an unfavorable opinion.

In the end, the Kentucky gubernatorial race appeared to turn, not on the ACA, but on the state’s low opinion of Mr. Obama and its general slide toward the Republican column.

Obama won only 38 percent of the vote in Kentucky in his 2012 reelection, and his favorability rating in the state is probably lower than that today. In the days leading up to this week’s voting, the Republican Governors Association hammered Democrat Conway with ads linking him to the White House and Obama’s policies.

The GOP’s Bevin rolled up some of his biggest margins in Kentucky’s hardscrabble eastern counties, which also have some of the highest KYnect enrollment rates in the state. Support for a generally conservative approach appeared more important than personal benefit from liberal policies, at least for some.

The question now is whether Bevin’s actions on health insurance will result in an eventual reversal of this situation – or not.

Unwinding KYnect and moving Kentuckians to the national exchange won’t happen for at least a year, as open enrollment season for 2016 has just begun. Bevin can order this change with a pen and an executive order, as it was created by his predecessor.

Early in his campaign, Bevin suggested he’d end Kentucky’s participation in Medicaid expansion entirely, due to the projected expense to the state of its share of future costs. Later he said he’d repeal the program as it exists but replace it with a new version featuring tighter enrollment requirements and lower costs. Kentucky would have to get a waiver from the federal government to approve such a nonstandard Medicaid expansion.

“We’re going to use what’s called 1115 waivers,” Bevin told NBC News this week. “A 1115 waiver will be our request to CMS [the federal agency that runs Medicaid] for basically the ability to take a block grant and customize, as Indiana and others have done, to actually come up with a program that will provide for these folks.”

Bevin’s problem is that replacing an existing Medicaid expansion program with a scaled-down, cheaper version is inevitably going to result in some Kentuckians losing their coverage. How many will that be? Will there be a political uproar? Logistically how can it be handled? Can Kentucky actually get a federal waiver to carry this out? Is any of this doable in the real world?

Those are the sorts of things that Republican leaders outside Kentucky will be watching closely. After all, Election Day 2016 is now about one year away. If the GOP wins, a new Republican president might try to expand Kentucky’s effort.