Dear Friends:
Most of us know all too well that Kentucky is not a very healthy state. We are overweight and don't exercise enough. We eat and smoke too much. Health insurance costs are high, and so are Kentucky's rates of diabetes, heart disease and cancer. This crisis reaches beyond health to other critical issues facing the commonwealth. It reduces our quality of life. It costs money that could otherwise be invested in education or jobs. And an unhealthy work force limits our economic productivity. Nowhere is this crisis as pronounced as in our Medicaid program. Medicaid is the health insurance program for the poor, elderly, and disabled that Kentucky operates with the federal government. Kentucky's Medicaid program is very expensive - costing $4.7 billion this year and rising. It is a one-size-fits-all program that offers little or no choice to members about their care. And it focuses on simply treating members when they get sick, not keeping them healthy in the first place. This contributes to the commonwealth's unhealthy population.

If this all sounds like a recipe for disaster, that's because it is. Through Medicaid, Kentucky pays too much for medical care that is often delivered in the wrong place, at the wrong time, and without proper patient involvement. What caused this crisis? Simply put, Medicaid is an outdated government program that struggles to cope with the realities of health care today. Medicaid hasn't changed much since it took effect in 1966, except in one key aspect. That year, it cost American taxpayers a total of $1 billion. Last year, it cost more than $309 billion. Along with the Medicare program, Medicaid was intended to prevent Americans from having to choose between food and medicine. Today, it forces states like Kentucky to choose between paying for Medicaid or funding other priorities such as better schools and safer highways.

From coast to coast, states are dealing with runaway Medicaid spending, often by cutting tens of thousands of people from the rolls or slashing benefits. States like Kentucky are left to treat a 21st century problem with a 1960s health plan. When a program like Medicaid still offers the same one-size-fits-all treatment to its many different members, it's no wonder costs are skyrocketing without corresponding gains in peoples' health.

My administration will not neglect this problem. That's why we're modernizing Medicaid to meet Kentucky's 21st century needs. A central part of Medicaid modernization is our application for a "waiver" from the federal government. Known as Kentucky Health Choices, this waiver will give us flexibility to avoid many cumbersome federal regulations and design programs specifically for the commonwealth. We realize there is a big difference between the health needs of seniors in nursing homes, children with disabilities, and pregnant women. What we don't understand is why Medicaid currently treats them all the same. Under the new waiver, these categories of Medicaid members will be served by unique health plans tailored to their specific needs. We also realize that empowering people to make choices about their medical care will lead to better decisions and better health.

Today's Medicaid benefits are largely free and unfettered. So it's not surprising to see instances of overuse and abuse, with some individuals taking dozens of prescriptions at the same time, or visiting the emergency room 50 times in a year. No incentives exist for members to make responsible decisions, such as choosing a family doctor over an unnecessary ER visit. By making wise choices like this one, Medicaid members can improve their own health and the state's financial outlook.

Kentucky's Medicaid program has come a long way in two short years. Last year, we balanced a $526 million projected deficit without cutting anyone from the Medicaid rolls. We actually reduced our pharmaceutical costs in 2004, after they had skyrocketed by 80 percent over the previous four years. But these measures alone are not enough. Over the next three years, Medicaid spending growth could consume all new revenue growth. That leaves no money to fund other priorities such as better schools and universities - the long-term investments that Kentucky needs to get ahead in the new economy.

At age 40, Medicaid faces a midlife crisis. To emerge from it, Kentucky must take bold action by modernizing the program for the 21st century. And as the leader of this commonwealth, I intend to do just that. In the months and years ahead, Medicaid will look much different from the 1960s-era relic we see today. These changes won't be easy, but they're necessary for progress in Kentucky.

As we move forward, I need and appreciate the support of the General Assembly and concerned citizens like you. Together, we can guarantee a modern and enhanced Medicaid program will be around to serve our children and grandchildren.

Sincerely,
Ernie Fletcher
Governor
www.governor.ky.gov

Greetings! As the old year draws wearily to a close and the new one beckons with promise and hope, I'm pleased to tell you that the Governor's Office of Minority Empowerment is holding its own in the race to achieve our goals. At times we have stumbled, certainly, but our will has never retired and our faith has never weakened.

On Nov. 19, the opening of the Muhammad Ali Center on Main Street in Louisville sent a message to the world that Kentucky will not tolerate discrimination on the basis of race, gender, religion, or culture. It sent the message that equal opportunity, in Kentucky, will be more than an empty phrase.

Naturally, the Governor's Office of Minority Empowerment embraces the Ali Center's goals, and, as fate would have it, our work also was recognized by the Kentuckiana Minority Business Council in the same month that the Ali Center was opened.

The Council inducted the Commonwealth of Kentucky into the "Million-Dollar Club" in honor of the fact that Governor Ernie Fletcher's administration spent more than $1 million with minority-owned vendors during 2004. The Fletcher administration has increased state spending with minority-owned vendors by a whopping 86 percent and increased the number of minority vendors by 41 percent.

In addition, the KMBC honored me as the recipient of the Ferda C. Porter Advocate Award for "demonstrated outstanding civic leadership" and taking extra steps to devote personal time to minority business development initiatives. I was indeed quite humbled by this acknowledgment.

With Governor Fletcher's blessing, we established the Minority Action Committee (MAC) to be an adjunct of the Governor's Office of Minority Empowerment. The MAC consists of high-ranking minority executives in state government, and one of its first items of business was to develop a strategic marketing/communications plan to showcase the commonwealth's diversity and attract more minorities to visit and/or relocate in Kentucky.

Here's some more good news:

* Minority employment in state government increased from 7.95 percent as of December 15, 2003, to 8.4 percent as of August 19, 2005. At the director level and above, the improvement has been especially dramatic. In those key jobs, the number of females has increased from 247 to 285 and the number of racial minorities from 52 to 61.

* The Fletcher administration has provided federal dollars to expand the construction training program for women and minorities. The purpose of this program is to increase the pool of qualified disadvantaged business enterprises by enhancing their technical, managerial, and entrepreneurial skills in the highway industry. Originally based solely in Lexington, the program now is operating in Louisville, Hopkinsville, Paintsville, and northern Kentucky.

* The Administration supported and endorsed the passage of Senate Bill 109, which raised the minimum contract amount requiring performance and payment bonds in order to give small businesses a fairer chance to procure state contracts.

Now, in 2006, we need to pick up the pace. We need to "make it happen."

Due mainly to the widespread influx of Hispanic workers, our culture has changed dramatically since Governor Fletcher took office and will change even more in the foreseeable future. It is the goal of the Office of Minority Empowerment to embrace these changes and assure all our citizens that Kentucky whole-heartedly endorses diversity and inclusion.

I wish you all a happy holiday season and a bright new year.

Sincerely,
Tierra Kavanaugh Turner
Executive Director of Minority Empowerment
Office of the Governor
www.ome.ky.gov