Executive-orders weapon a two-edged sword that cuts Kynect both ways

By Jim Waters - Bluegrass Beacon


The inherent risk associated with bypassing the hard work of reaching consensus with legislatures by issuing executive orders—all the rage of governors and presidents these days—is that they can be undone by successors.

Gov. Steve Beshear in July 2012 issued an executive order creating Kynect, a state-run health insurance exchange heavily dependent on federal subsidies.

Gov.-elect Matt Bevin in the 2015 gubernatorial campaign promised to undo—also by executive order—programs created by the misnamed Affordable Care Act, calling it “a disaster for Kentucky’s taxpayers.”

Beshear created Kynect by executive fiat out of frustration with the failure of the politically gridlocked legislature to climb aboard Obamacare’s train as it huffed and puffed through the Bluegrass State.

Legislators’ concerns—members of both parties wanted to slow that train down—have again been confirmed with the recent announcement by the Kentucky Health Cooperative, Kynect’s largest insurance provider, that it’s shutting down.

The co-op, which has sold 75 percent of the policies on Beshear’s exchange, is closing down after losing $50 million last year—the most of any of the 22 Obamacare-subsidized co-ops nationwide.

Kentucky Republican and Senate Majority Leader Mitch McConnell effectively drove home how this failure overlaps the entire Obamacare debacle in causing real harm to real people.

Referencing the most-deceptive statement ever—and repeatedly—made about federal health-care reform by President Obama himself that “if you like your health care plan, you keep your health care plan,” McConnell noted that the 51,000 Kentuckians losing their plans because of the co-op’s shutdown “may now be losing the health insurance they had and liked twice within the past three years because of Obamacare’s failures.”

Beshear waves the protests aside, claiming it’s really not a big deal since those obtaining insurance through the cooperative still have multiple choices between insurers on the exchange.

But what if they want to keep their existing plan?

Only minor surgery on this policy is required to discover: Obamacare is an absurdly schizophrenic scheme that both forces people who don’t even want a plan to purchase one or face IRS penalties while at the same time causing people to lose plans they had and liked.

It’s also an unsustainable policy.

How many businesses, for example, could bleed at the rate of the co-op and keep their doors open?

It’s an uncertain policy, especially in terms of the federal government’s failure to keep its promise to prop up plans, like the soon-to-be-defunct Kentucky co-op, which bled cash while funding claims of previously uninsured—and unhealthy—clients who rushed to the doctor’s office after obtaining a Kynect card.

The feds, which pledged to assist state exchanges forced to pay out far more in claims than originally anticipated to cover these losses, sent less than $10 million of the $77 million expected by the Kentucky co-op.

Not even the co-op’s steep premium increases during the past two years could plug such a gap.

Allow for the fact that no federal bailout money will be provided to Kynect after 2016—resulting in Standard and Poor’s conclusion that Kynect is in serious financial trouble—and the wisdom of legislators wanting to move slower is justified.

Considering all but one of Kynect’s insurers hiked premium rates this year and a Families USA report indicating one in four people with insurance plans purchased through government-operated exchanges skip doctor’s visits and important medical tests because of struggles to pay premiums and high deductibles—with the number being closer to one in three among poorer enrollees—and Bevin’s assessment on the campaign trail that Obamacare is a “disaster” is defensible.

Finally, the likely unconstitutionality of a unilateral executive order creating a government program involving taxpayer expenditures—which, gridlocked or not, remains the legislature’s prerogative—means Beshear’s successor has an airtight case, arguably even an obligation, to rid the commonwealth of the Kynect disaster.


By Jim Waters

Bluegrass Beacon

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

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