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Lawmaker Wants To Sell Kentucky's Health Insurance Exchange To Other States

Phalinn Ooi/Creative Commons

State Sen. Ralph Alvarado is looking into whether Kentucky can start selling its successful health insurance exchange program — Kynect — to other states.

Alvarado wants to offer the technology and expertise behind Kynect to other states for a fee. States currently have the option of creating their own insurance marketplace or using the federal government’s under the Affordable Care Act. More than 30 states currently rely on the federal exchange.

Alvarado, a Republican physician who represents Winchester, said profits from his plan could help pay for the future costs of expanded Medicaid in Kentucky, which are estimated at $1.1 billion over the next six years.

“It will provide our neighbors who want state exchanges a service that they want, and it would give our taxpayers a break from having to foot that bill in the future,” he said.

Under Alvarado’s proposal, first reported by the Lexington Herald-Leader, Kentucky would send software and hardware to other states and run the online health insurance marketplace for them.

“My thought was you could convert Kentucky into a state health exchange hub for the country,” he said. “There are stipulations within the ACA that allow for regional exchanges to take place.”

Sabrina Corlette with Georgetown University’s Health Policy Institute said Alvarado is correct about the law. And his plan wouldn’t be unprecedented: Connecticut successfully sold its exchange to Maryland.

“There is a template out there for states that have a successful platform to market that, and potentially sell it and generate revenue,” Corlette said.

But Corlette said the bigger issue is convincing states with a federally run exchange to buy Kentucky’s services.

“For now, they seem pretty content with the status quo,” she said. “Not a lot of states are actually very interested in building their own state exchange at this point.”

Corlette said the federally run exchange is operating fairly well and doesn’t require states to put “skin in the game.” It isn't clear whether there would be a cost difference to policyholders if states adopted their own exchanges.

Nor is it certain the legislature would even consider the idea. Republican state Senate President Robert Stivers, an opponent of the ACA, told the Herald-Leader he hasn't reviewed Alvarado's proposal. Meanwhile, state Health and Family Services Secretary Audrey Haynes told the newspaper that the concept is worthy of merit, but she said the continued political disputes over Kynect could tarnish its image if the state were trying to market it elsewhere.

More than 500,000 Kentuckians have signed up for health insurance through Kynect since it came online in 2014. The vast majority of those are receiving coverage through expanded Medicaid.

Alvarado, who said he is not a fan of the federal health law, told WFPL his plan is in the “discovery phase.” He said he would meet with federal health officials to assess its feasibility.

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