Health
1:48 pm
Tue December 4, 2012

New Report Projects Costs, Enrollment Under Kansas Medicaid Expansion

An optional Medicaid expansion in Kansas would result in about 75,000 previously uninsured residents gaining health coverage and cost the state about half a billion dollars in the first seven years.

That’s according to a new analysis from the Kansas Health Institute (KHI).

Under the federal health law, states have the option of expanding their Medicaid programs. The federal government would fully pay for the expansion for three years, starting in 2014, with states then kicking in about 10 percent of the cost by 2020.

How many residents would be affected?

An expansion in Kansas would affect about 300,000 residents, according to the new analysis, including many childless adults who currently are not eligible for the program no matter how low their incomes. The analysis estimates only about a third of those who are eligible would actually enroll. The majority, about 60 percent, would be previously uninsured, while others would shift their coverage to Medicaid.

How much would it cost the state?

The Medicaid program in Kansas currently costs about $3 billion. The state pays about 40 percent of that, with the federal government kicking in the rest. The KHI analysis has the expansion costing the state anywhere from $221 million to $912 million during the first seven years, but projects it will end up costing the state around $500 million. That's in addition to an estimated $2.8 billion the state would receive in federal funding for the program.

KHI's cost estimate also factors in "the woodwork effect," in which many residents who are currently eligible but not enrolled in the program would wind up signing up for Medicaid once the expansion takes effect. KHI estimates that alone would cost the state about $12 million during the first year of an expansion because the federal government only fully pays for Medicaid enrollees who are newly eligible under an expansion.

The report, however, does not take into account possible savings from an expansion, like there being less need for current state funds for services for the uninsured. It also didn't factor in the phasing out of federal funding to hospitals who care for uninsured patients. Hospitals have said without the expansion in Medicaid, private insurance costs will likely to go up, as hospitals look for ways to offset the loss in federal funds while continuing to care for the uninsured.

How likely is an expansion in Kansas?

The federal health law initially required all states to expand their Medicaid programs to 138 percent of the federal poverty level, making a family of four with an income up to $30,000 a year eligible. The recent U.S. Supreme Court ruling on the law makes that expansion optional for states. So in Kansas, where current Medicaid eligibility is capped at 32 percent of the Federal Poverty Level (that's an annual income of $5,900 for a family of four), the expansion decision now rests in the hands of governor Sam Brownback and the state legislature. Scott Brunner, author of the KHI report, says figuring out how the state would pay for an expansion will likely be a key question among lawmakers in the months ahead.

"Budget estimates and projections for fiscal year 2014, you know, they’re starting in the hole," says Brunner. "There’s not enough revenue to cover the current level of expenditures."

Brownback, a staunch opponent of the entire health law, has yet to make a decision on an expansion, but worries about its cost and whether the federal government, with all its fiscal troubles, will be able to foot its share of the bill.  Below is his recent statement on the issue:

“We continue to discuss options and alternatives with like-minded states and with our legislative partners in Kansas.  There are many factors to consider as the state determines the path forward for Medicaid. First and foremost we must effectively implement KanCare that will improve outcomes for the most vulnerable Kansans while protecting Kansas taxpayers over the long term.

We must be mindful of the impact of the cost an expansion would have on other state core responsibilities like K-12 education and prisons. There are serious concerns that the federal government will not keep its promise to pay for its part of the expansion. It cannot meet the spending commitments it already has made.  It is very unlikely it will be able to meet additional commitments, which means Kansas taxpayers would be stuck with a gigantic bill.”

Across the state line in Missouri, governor Jay Nixon recently announced support for an expansion, citing the economic benefits of doing so.

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This story is part of a reporting partnership that includes KCUR , NPR and Kaiser Health News.

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