How Kentucky Got Obamacare Right

About a year ago, on Aug. 22, a team of inspectors from the Centers for Medicare and Medicaid Services (CMS) unit of the U.S. Department of Health and Human Services arrived in Frankfort, Ky., to see if the people working out of a nondescript warehouse there were going to be able to pull off the launch of Kentucky’s Obamacare health-insurance exchange.

Kentucky was one of 14 states, plus the District of Columbia, that had opted to build its own version of the Obamacare exchange; the federal government, through CMS, was building an exchange to offer insurance in the other 36 states.

There was less than six weeks to go before the scheduled Oct. 1 debut, in Kentucky and nationally, of what was perhaps the most complicated e-commerce venture ever envisioned.

The various plans–“bronze,” “silver,” “gold,” “platinum”– offered by multiple insurance companies in different regions of each state would somehow have to be presented in an intelligible way to consumers.

Consumers would then have to establish their identities by answering a series of security questions that would have to be checked instantaneously.

They would then have to be told the amount of the subsidy the government would offer them to help pay the premiums for each plan, based on a complicated formula that depended on what they listed as their income. And that claimed income would have to be checked in real time with the Internal Revenue Service.

In short, there was a lot for the CMS inspectors to worry about when they got to Kentucky.

They need not have worried. Over the past year, Kentucky’s health care website has proved to be a huge success. More than a half-million Kentucky residents have signed up for the Bluegrass State’s version of Obamacare. A majority of Kentuckians approve of it. That this has happened in a deeply red state is unexpected but hardly an accident.

This is the story of how one state, led by Governor Steven Beshear and a team of smart, determined career civil servants, got it right–by preparing exhaustively, by dealing frontally with the system’s challenges and by celebrating rather than soft-pedaling the reality that Obamacare is a social-welfare program intended to help the poor and the middle class get health care coverage. It’s also a story about how the politics of Obamacare has played out differently in Kentucky compared with much of the rest of the country. Which helps explain why the Affordable Care Act, as put into place elsewhere, may never become as broadly popular as Social Security or Medicare–even if it survives as long as those programs.

In some circles, that continues to be a big if. Nearly a year after its launch, Obamacare is under constant fire from Republicans and is the target of lawsuits designed to tear it apart. One U.S. Court of Appeals in July ruled in favor of Obamacare in one such suit, while another ruled against it. The dueling decisions could set up another possible–though long-shot–test for the Affordable Care Act at the Supreme Court.

A Launch That Worked

What happened in the Frankfort warehouse a year ago should have happened in every state–and in Washington. For three days, “the federal people put us through the paces,” recalls Beshear, a Democrat who had embraced Obamacare as an especially important initiative in a state with some of the nation’s worst health care statistics.

Beshear had put together a team led by veteran state health-programs administrator Carrie Banahan and Christopher Clark, a state engineer whom Banahan had lured out of retirement. Together they supervised a contracting team from the Deloitte consulting firm.

Hundreds of consumer scenarios–different incomes, different immigration statuses, different choices of insurance plan–were tested from beginning to end to make sure everything worked the way it was supposed to.

“They put us through the wringer,” says Clark. “But we had already done all the testing ourselves, so we were fine.”

It was, it turned out, the feds who were in trouble. Back at CMS headquarters in Baltimore on Aug. 22, another group from CMS was reviewing a report about the federally run health-insurance exchange, called HealthCare.gov, that was going to offer insurance in the 36 states that, unlike Kentucky, were not going to offer their own state-branded websites. The report, from the lead outside contractor for the federal website, the Bethesda, Md., office of the Canadian-based firm CGI, was grim.

Together, the CMS and CGI teams went over pages of spreadsheets listing items that still had not been completed for the federal website covering those 36 states. As was reported three months later in the Washington Post, for each unfinished item, CGI had listed its level of confidence that the work would be completed on time. A majority were rated–incorrectly, it would turn out–“high” or “medium” rather than “low.” But even many of those given a “high” confidence level were described by CGI as being dependent on the performance of other contractors.

Two days later, on Saturday, Aug. 24, a memo from the CGI contractors to CMS reported that 62% of the exchange was now built. Without 100%, there could be no end-to-end testing of the kind being completed that same day in Kentucky by the same government agency.

Within days of the Oct. 1 launch, the difference would be clear. The Obama Administration’s federal website crashed in a stunning debacle. Meantime, Kentucky’s exchange hummed along. By the next morning, only six people had somehow managed to enroll on the federal exchange; Kentucky had enrolled 1,833.

On Oct. 8–by which time Kentucky had signed up 8,462 people, while the near dead federal exchange had enrolled perhaps 300–President Obama called Governor Beshear.

“He thanked me for showing the world that this can work,” Beshear recalls. Then, Beshear says, Obama added only half-kiddingly, “Hey, Steve, you have any computer people you can lend me?” Beshear’s computer people stayed in Kentucky, but Obama was able to bring in a rescue squad from Silicon Valley that repaired his website by Dec. 1.

The federal exchange recovered, and by the end of the initial enrollment period in spring, the Obama Administration was able to beat the Congressional Budget Office’s original projection of 7 million total enrollments in the federal and state exchanges by more than a million people. An additional 5 million enrolled in Medicaid across the country.

Even after the recovery of the federal exchange, Kentucky continues to outshine its big brother in Washington. Of that 13 million enrolled nationally for private insurance on the exchanges or for Medicaid, Kentucky has pulled in 521,000. That’s an astounding 82% of the state’s uninsured population, a percentage far above the national totals.

But beyond the numbers, there is a political difference. Obamacare continues to be a loser or at best a toss-up politically across much of the country. In Kentucky–one of the reddest of red states, where Obama lost to Mitt Romney 60% to 38% in 2012 and would surely lose by more today–Obamacare is a winner.

Only it’s not known as Obamacare. It’s called Kynect, the name Beshear smartly gave it in the run-up to the launch.

Polls consistently report that voters in Kentucky approve of Kynect, even if they voice disapproval when asked about Obamacare. Again, Kynect is Obamacare.

On Oct. 4, three days after the launch, Kentucky Republican Senators Mitch McConnell and Rand Paul wrote an op-ed in the Louisville Courier-Journal headlined “kentuckians not buying obamacare.”

“The governor likes to tout his so-called discounts for health insurance,” they wrote. “What he won’t tell you is that most Kentuckians won’t receive them … As so often happens when our friends on the left set out to fix a problem, their ideas, however well-intentioned, end up hurting the very people they sought to help. That’s just what we’re seeing with Obamacare.”

The Patients React

That afternoon, I was in a Community Center in Shelbyville, Ky., where Beshear’s team had set up a Kynect enrollment station. As he got up from a card table, Tommy Brown, 63, and his wife Viola, 62, were all smiles.

“Everything go O.K.?” I asked.

“Perfect,” Brown said.

In 2007, while hauling merchandise at the auto-parts wholesaler where he worked, Brown had fallen and broken his neck and crushed five vertebrae in his back. As a result, he continued to suffer from severe nerve damage and had not been able to work for the past three years.

Before that he had fought off two bouts of cancer.

Once he was unable to work, Brown was also unable to get insurance. Every insurance company, he said, “turned me down because of my condition or wanted to charge me a price that was way out of my league.” He had not seen a doctor in so long, he told me, “I have no idea who my doctor is.”

Because Brown was 63, he had been able to receive about $1,100 a month by opting for early Social Security benefits. He and his wife, who were about to celebrate their 46th anniversary, lived on that and food stamps.

Viola Brown had heart disease and severe diabetes, which she was able to get checked up only occasionally at a free clinic.

Neither of the Browns could afford any of the medicines–for pain relief, heart disease or diabetes–that a doctor would have prescribed for them or that the clinic doctors told Viola to use. “When we had money, we would buy the drugs,” Viola told me. “When we didn’t, we would go without.”

On the day we met, she too had not seen a doctor of any kind, even one at a clinic, in more than two years.

Now, at the Shelbyville community center, the Browns had just been helped by an enrollment assistant, called a Kynector, to sign up for Medicaid. All their care would be free, and generic versions of any drugs they needed would cost a dollar each, they were told. They were already talking about making appointments to see doctors.

“I just did a little dance in there when they told me we had been enrolled,” Viola told me. She was near tears but all smiles. “And you know, it’s hard for me to dance,” she added.

Why was that?

“I only have eight toes left because of the diabetes.”

The Politics of Kynect

Shelbyville is in Shelby County, which voted 64% to 36% for Romney over Obama. The Browns are white, as is 90% of Shelby County’s population. Yet Beshear’s insistent message–that people should check out how little the coverage would cost–seemed to have gotten through. What they were doing at those card tables was not about Obama. In fact, no one mentioned Obamacare, except for the one enrollee who said that Kynect was “a lot better than Obamacare.”

Such stories have changed health care politics in the Bluegrass State. McConnell–who is in a hard-fought race to retain his Senate seat–is no longer writing op-eds attacking the health-reform law. He’s not talking much about it at all.

McConnell’s newfound reticence may have something to do with the fact that more than 1 in 10 Kentuckians have taken advantage of Kynect, which probably means that everyone in the state either just got coverage or knows someone who did.

In fact, in late May, McConnell, who as Senate minority leader led the fight against Obamacare, awkwardly attempted to walk what may become a new third rail in Kentucky politics. Responding to a reporter’s question about the apparent success and popularity of the law in his state, he said that while he still wanted Obamacare to be repealed, he saw no reason people getting their new coverage from Kynect would have to lose it.

When I asked McConnell campaign spokeswoman Allison More to clarify how people could keep Kynect if the subsidies and Medicaid expansion provided by Obamacare were repealed, she insisted that I put the questions in writing. I did, but I never heard back except to get a boilerplate statement a week later that McConnell “supports replacing it [Obamacare] with commonsense reforms that actually lower costs for patients.”

McConnell’s Democratic opponent, Kentucky secretary of state Alison Lundergan Grimes, has been approaching the issue just as tentatively from the other direction. Apparently sensitive to the popularity of the law among those benefiting from it but worried about supporting anything linked to Obama, she has said Obamacare should not be repealed and taken away from Kentuckians but that changes should be made. However, she hasn’t specified what those changes would be.

I asked Grimes spokeswoman Charly Norton whether Grimes would have embraced the law by setting up her own exchange and marketing it heavily and personally the way Beshear did. Would she have chosen to expand Medicaid as he had? Norton said she would have to get back to me. I never heard from her.

Obama’s Legacy or Albatross?

“I’m not going to tell Alison how to run her campaign, but I would embrace it,” said Beshear, who is term-limited and cannot run for re-election in 2015. “And by the fall I wouldn’t be surprised if she does.”

Across the country, however, polls continue to show that more people disapprove of Obamacare than approve of it. The difference in Kentucky is not just about a website that functioned well from the start.

Beshear and his team did a smarter job setting expectations and anticipating hurdles. For example, they were unafraid to acknowledge how complicated buying health insurance would be for consumers, let alone consumers buying it for the first time. Rather than tout, as the President did, that logging on to Kynect would be as simple as buying an airplane ticket online, the Kentucky team prepared from the start to guide people through the complicated process of buying insurance, especially for the first time.

They took full advantage of federal funds available to deploy specially trained assistants–those Kynectors, like the ones who helped the Browns–at all enrollment centers to guide consumers through the process. And unlike the federal exchange, they included on their website a tool for people to search for insurance agents who could help them enroll (and be paid by the insurance companies for doing so). In fact, 44% of the Kentucky enrollees on the exchange used an agent.

More important, Beshear’s basic sales pitch was better because, unlike Obama, the Kentucky governor was unafraid to highlight what Obamacare really is: a massive new government income-redistribution program providing health insurance, through subsidies and the expansion of Medicaid, to millions of people, like the Browns, who could not otherwise afford it.

Across the country, 87% of all those who bought insurance on the exchanges got subsidies, while everyone who got added to the Medicaid rolls got coverage for free.

Enroll America, a nonprofit organized by Obamacare advocates to encourage people to enroll nationally, reported that many people did not even know that generous subsidies were available to help pay for premiums. Enrollment would have been even higher, the report concluded, if officials had done more to highlight the subsidies and emphasize the low cost of getting coverage.

Of course, in a political climate where anything that smacks of income redistribution is a liability, that was something the Obama team was not likely to do. Beshear–whose state is so disproportionately poor that 80% of the people coming to Kynect got Medicaid–had no such compunctions.

That also may explain why, while Obamacare may not help McConnell or hurt Grimes, it is not likely to generate the same kind of partisan loyalty for Obama and Democrats generally that Medicare and Social Security did. Unlike those two entitlement programs, which are for everyone, Obamacare is a program for the uninsured and the underinsured. That’s a minority of Americans, maybe 25%. Everyone else gets health insurance from their employers, is protected by Medicare or was poor enough to qualify for Medicaid before the law expanded it.

Moreover, Medicare and Social Security provide a free benefit (though it is paid for by taxes). Except for those receiving new Medicaid coverage, people have to pay for Obamacare. In fact, they are required to pay for it if they do not have any other insurance.

And even those who bought insurance on the exchanges–with those generous subsidies–will still have much to complain about when insurance companies dispute a claim or when they have to pay out-of-pocket costs because of deductibles and co-insurance requirements that they don’t understand. Their complaints will be about Obamacare, because that is the name many associate with the new insurance that the new law encouraged–indeed, forced–them to buy.

The majority of Americans who are completely unaffected by Obamacare, like those with insurance paid for by their employers, are also likely to have complaints about Obamacare. Even before the law took effect, when their employers raised their deductibles or co-payments, many blamed these benefit cutbacks on the new law, despite the fact that they had been raising deductibles and co-payments for years.

Indeed, by pushing his health-reform plan, the President, as one of his senior advisers put it to me, “was taking over ownership of health care in America. It’s a complicated, often terrible system, and now he will be blamed for everything that goes wrong.”

Obama deserves great credit for taking that on and for doing it mostly to help the minority of Americans, like the Browns in Kentucky, who would never get health care without it. But while Steven Beshear may be lionized in Kentucky, Obamacare is not likely to put Barack Obama up there with FDR or LBJ anytime soon.n

Brill, who a year ago wrote Time’s special report “Bitter Pill: Why Medical Bills Are Killing Us,” is writing a book about the business and politics of health care, to be published this year by Random House