I never looked at it from a Kentucky resident perspective. But it does seem like Louisville has a better deal for in-state kids now. Not sure how the two schools are perceived in terms of preference for Kentucky residents. Seems to me that often ebbs and flows somewhat (at least in some states looking at top 2-3 schools in the state).
Kentucky seems to get a lot of National Merit kids from out of state (Ohio and Illinois in particular). I would imagine that would continue though maybe they will lose some? Although the Patterson is not as good a deal as it was last year, it still seems like a good deal. In Ohio, Ohio State has reduced its merit awards somewhat (maximus is now $4k/year rather than the $6/year it was a couple years ago). So Patterson is still a good deal (though Ohio State is a higher ranked school).
Also seems to me that the Patterson is comparable with the Oklahoma, Alabama and UTD NMF scholarships that are available. Though I have not spent much time looking closely at each of the scholarships for those schools for 2018.