February 25, 2013

Medicaid expansion proposals draw debate in Legislature

Rep. Jim Ward says his bill to expand Medicaid would do more than bring health care coverage to tens of thousands of people who don’t have it. The federal spending that comes with it would be an economic boon to the state.

Rep. Jim Ward says his bill to expand Medicaid would do more than bring health care coverage to tens of thousands of people who don’t have it. The federal spending that comes with it would be an economic boon to the state.

“If someone came to Kansas and said, ‘I’ve got a business that’s going to create 3,400 jobs and $2 billion over a seven-year period,’ would we (legislators) not be lining up to get our photo taken with that group?” said Ward, a Wichita Democrat.

Maybe not, said Rep. David Crum, an Augusta Republican who is pushing a bill that would do the opposite of Ward’s and put the Legislature firmly in opposition to expanding Medicaid.

Crum said that even though almost all the expansion would be funded with federal dollars, it’s still taxpayer money in the end.

Also, expanding Medicaid would be “contributing to the big, big problem we have with deficit spending in Washington,” he said.

At issue is a proposal to expand health coverage to everyone who makes less than 133 percent of the federal poverty level, or about a quarter of a million Kansans. For a family of four, that would be $2,555 a month, state records show.

For months, the Medicaid debate has zig-zagged among competing – and sometimes wildly diverging – estimates of what it would cost the state and its taxpayers.

But the picture started to clarify somewhat in the past week as the Kansas Department of Health and Environment issued its definitive estimate of the cost of Medicaid expansion and the Kansas and American hospital associations released a parallel study looking at both costs and benefits of the proposal.

State lawmakers could begin holding committee votes as early as this week on whether to expand Medicaid.

That expansion was originally a requirement of the 2010 Patient Protection and Affordable Care Act, better known as Obamacare.

But the decision on expansion ended up with state governments after a Supreme Court decision last summer upheld almost all of the Affordable Care Act but struck down a provision requiring states to expand Medicaid.

Taken together, the KDHE’s and hospital associations’ studies paint the clearest picture to date of what Kansans can expect if lawmakers expand Medicaid – or don’t.

When the studies’ numbers are adjusted to the same time period, the two groups come within 10 percent of each other in forecasting the costs of expansion.

But the hospital associations’ study also projected the economic benefits of expanding Medicaid – which KDHE didn’t address – and they estimated the state would actually make money from a $2.2 billion influx of federal matching funds.

The federal government has promised to fully fund the newly eligible Medicaid recipients for the first three years and pick up 90 percent of the tab after that.

According to the KDHE study, the 10-year cost to state government would be about $616 million more than what the state would spend if Medicaid weren’t expanded.

The KDHE study, done by the national consulting firm Aon Hewitt, also estimated that Medicaid expansion would extend coverage to 226,000 Kansans.

Of those, about 74,800 are currently eligible but haven’t applied for benefits. The remaining 151,200 won’t get government help without the expansion.

The hospital associations’ study, done by researchers from George Washington University and Washington-based Regional Economic Models Inc., largely agreed with KDHE on the cost.

But it also looked at benefits. It estimates that the federal government’s share of the increased Medicaid spending would bring $2.2 billion to Kansas, generating 3,500 to 4,000 new jobs in the health care field and boosting state tax revenue by $112 million over the next seven years.

In addition, the study forecast that the state would save $312.5 million it now spends to cover indigent patients who don’t pay their medical bills, plus money that the state now spends on mental-health services that would be covered by expanded Medicaid.

Overall, the benefit from additional tax income and savings to state government would exceed the cost of expanding Medicaid by $82 million over seven years, the study estimated.

The cost estimate in the hospital associations’ study is slightly higher than the cost KDHE estimated for the first seven years.

Rod Motamedi of Regional Economic Models said the two estimates are close enough that the ratio of costs and benefits wouldn’t change much if the KDHE spending numbers were to be substituted into the model.

Ward said the numbers look good, even without considering that the expansion would provide health coverage to 226,000 Kansans who don’t have it now.

“We know people who have health insurance live longer, are healthier and are more productive,” Ward said. “There’s no way to estimate what that economic value is.”

Gov. Sam Brownback has expressed concern about the cost of expanded Medicaid but has not publicly opposed it. A spokeswoman said the governor wants to work with the Legislature to find the most effective way to proceed.

While Republican opposition to national health care remains a unifying theme of the party, some conservative governors have recently broken ranks to take the Medicaid money.

The most recent to do so was Gov. Rick Scott of Florida, a staunch opponent of Obamacare, who on Wednesday came out in support of Medicaid expansion.

But opposition to expansion remains strong among Kansas conservative Republicans who control the Legislature.

On Friday, the House Appropriations Committee held a hearing on Crum’s measure to reject Medicaid expansion.

Some Republicans are distrustful that the federal government, facing massive deficits, will keep its word on the promised Medicaid funding.

“I don’t think we ought to be accepting federal dollars when the federal government is broke,” said House Speaker Ray Merrick, R-Stilwell. “I’m not willing to sign on to something with a promise down the line that the money is always going to be there. … The numbers don’t work for me.”

Ward counters that Kansans aren’t going to get a tax cut if they refuse to take Washington’s money – it will just go to other states.

And, he added, “We have the ability to withdraw if they don’t pay us what they said they would.”

House Appropriations Chairman Marc Rhoades, R-Newton, said it may not be easy for the state to opt out after expanding Medicaid.

“If you think it would be easy to jump out of this program, I’ve got some swamp land I’ll sell to you,” he said.

He said he’s not sure whether the House committee will advance Crum’s bill to the full House for a vote.

“It’s not at the top of my agenda,” Rhoades said. “But if there’s a desire by a good chunk of my committee to work it, then we’ll work it.”

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