Kansas Hospitals Advance Economic Argument For Medicaid Expansion
Several red-state governors have dropped their opposition to Medicaid expansion in recent months and are pursuing ways to use federal dollars to fund their own more conservative plans.
Governors in the solidly red states of Wyoming, Montana, Tennessee and Utah are pursuing expansion options that seek to use billions in additional federal Medicaid dollars to help low-income adults purchase private coverage or create health savings accounts. Many of the proposals, which require federal approval, also include incentives aimed at helping recipients get better jobs so that they can purchase their own coverage without government assistance.
Last week, President Barack Obama said he would instruct the Centers for Medicare and Medicaid Services to work with states to expedite the approval process and find compromises on expansion proposals.
Twenty-seven states and the District of Columbia have expanded Medicaid, according to the Kaiser Family Foundation. Another seven are considering it, while 16 states, including both Kansas and Missouri, are not actively discussing the issue.
Since his re-election in November, Kansas Gov. Sam Brownback has given no indication that he’s preparing to follow the lead of his GOP colleagues. He and other members of his administration have been in discussions with the Kansas Hospital Association (KHA) on an expansion proposal aimed at winning over conservatives. But so far, neither he nor any of the Republican leaders in the Kansas House and Senate have indicated they’re prepared to drop their opposition to expansion, which has prevented consideration of the issue the past two legislative sessions.
Still, Tom Bell, KHA’s president and CEO, is optimistic that this year could be different.
“There has been progress made clearly since last session in terms of people understanding the issue better and people feeling that we really ought to take a hard look at it,” Bell said.
Even so, he acknowledged, “I think it’s still a heavy lift. It’s still an uphill battle.”
The KHA proposal
In the weeks leading up to the 2015 legislative session, Bell and CEOs from hospitals across the state have been briefing legislators on the KHA plan. Though still being tweaked, it closely resembles some of the proposals crafted in other red states.
Called KanCare2.0, the plan attempts to build on the privatized system installed by the Brownback administration in 2013, which made three for-profit insurance companies responsible for administering Medicaid under contracts with the state.
The aim of the proposal is to cover as many as 144,000 low-income adults who don’t qualify for the state’s existing Medicaid program. Many of them earn too much for Medicaid but too little to be eligible for ACA subsidies to help them purchase private insurance.
The KHA proposal would use federal dollars to help low-income adults purchase coverage if they have access to it through their employers. It also would give newly eligible beneficiaries the option of purchasing high-deductible plans or help them create health savings accounts and manage their own care.
It also would require some level of cost sharing from recipients who earn less than 100 percent of the federal poverty level – annually $11,600 for an individual and $23,850 for a family of four – and include incentives for job search and training.
“Those kinds of personal responsibility things are things that we think are important,” Bell said.
Funding a big question
The Affordable Care Act promises to cover 100 percent of states’ cost for expanding Medicaid for the first three years. Kansas already has missed out on year one and likely the second year as well at a cost of more than $700 million, according to a KHA study done last fall by Regional Economic Models Inc. and George Washington University.
After 2017, the federal share of expansion costs goes down gradually until by 2020 it reaches 90 percent, where the law says it will remain.
But even with the federal government paying 90 percent of the bill, the cost of expansion would substantially increase the state’s Medicaid costs at a time when the governor and lawmakers are struggling to close a $280 million gap in the current year’s budget and deal with a projected shortfall more than twice that big in next year’s.
The hospital association estimates that expansion will cost the state an additional $312 million from 2016 through 2020. But it says jobs created by the infusion of federal Medicaid dollars and the increased tax revenue they generate would offset those costs with more than $35 million to spare.
“If Kansas were to move ahead with expansion, we actually create jobs … and bring more revenues to the state,” Bell said. “I don’t think you can say this program is just a cost to the state; I think you have to factor in a lot of other data.”
That argument resonates with Rep. Barbara Bollier, a moderate Republican from Mission Hills and a retired physician.
“In light of our budget issues, it makes even more sense because states that have expanded are doing better economically,” Bollier said. “We say we want to grow as a state and bring jobs in, yet the very thing that can do that we refuse to do. That makes no sense to me.”
Rep. Tom Sloan, a moderate Republican from Lawrence and chairman of the House Vision 2020 Committee, recently told the Lawrence Journal-World that he planned to hold hearings early in the session on the “consequences” of not expanding Medicaid.
Many moderate Republicans and Democrats already support expansion. But between them they hold only about one-third of the seats in the House and are significantly outnumbered in the Senate as well. Conservative Republicans, who control both legislative chambers, remain skeptical.
Rep. Peggy Mast is the speaker pro-tem of the House. Like Brownback, the Republican from Emporia isn’t convinced the federal government can or will keep its promise to foot 90 percent of the bill for Medicaid expansion.
“Looking down the road at the economic situation for the federal government as well as the state, we have to consider the implications of what could happen,” Mast said.
Still, Mast said she’s willing to listen to KHA and other advocates for expansion. And she credits the hospitals for doing their homework and crafting a proposal with conservatives in mind.
“I’m extremely impressed by their knowledge of the subject and how they’re willing to come to the table and try to resolve an issue that we’ve been working on for some time,” she said.
Urgent issue for hospitals
Hospitals are leading the charge for expansion for financial reasons. They were counting on expansion to help offset planned reimbursement reductions in that other federal health care program that starts with an “M” – Medicare.
“Medicare is in the neighborhood of 40 to 45 percent of our business, and we lost more than $100 million on that book of business last year,” said Bob Page, president and CEO of the University of Kansas Hospital in Kansas City, Kan. “And if you look to the next five years, we’ve got another $95 million in Medicare cuts coming and we don’t have Medicaid expansion in the offing. So, that puts a lot of pressure on us to come with that offset in a different fashion than was originally intended.”
Rural hospitals also are struggling. Scott Taylor, president and CEO of St. Catherine Hospital in Garden City, said expansion would significantly reduce the number of uninsured patients whose inability to pay their medical bills has increased the hospital’s uncompensated care costs by about $2 million.
“Medicaid expansion would allow us to treat more patients; particularly this group of individuals that are working hard but simply can’t afford the high cost of health care and don’t qualify for any other means of coverage,” Taylor said.
Senate President Susan Wagle, a conservative Republican from Wichita, has been more open to expansion than other legislative leaders. She recently told the Wichita Eagle that she believes the state should pursue a “plan that brings in (more) federal dollars” to help ease the pressure on Kansas hospitals.
“I haven’t pushed that on my Senate, but when people ask me, we need to keep our health care facilities as strong as other states and money needs to flow,” Wagle said.
Opposition strong in Missouri
The Missouri Chamber lists Medicaid expansion as one of its legislative priorities. Democratic Gov. Jay Nixon also favors expansion. And Sen. Ryan Silvey, a Kansas City Republican, said he will once again introduce a proposal to both reform and expand Medicaid.
“It’s going to be damaging to our hospitals if we don’t do something,” Silvey said last fall in an interview with KCUR.
But any expansion proposal will face entrenched opposition from Republican leaders, including Sen. Rob Schaaf, from St. Joseph, who took to Twitter in December to say: “Let me be crystal clear: We won’t be expanding Medicaid.”
A study published in August by the nonpartisan Urban Institute said that not expanding Medicaid would cost Kansas and Missouri hospitals more than $9 billion in federal funding over a 10-year period. Kansas hospitals would forgo $2.6 billion and Missouri hospitals would lose an estimated $6.8 billion from 2013 to 2022.
Jim McLean is executive editor of KHI News Service in Topeka, a partner in the Heartland Health Monitor team.