Health Care

Study: Medicaid expansion would be budget neutral, possibly a moneymaker

Six Kansas health foundations – including the Wichita-based Kansas Health Foundation – commissioned Manatt Health Solutions to study the financial impact of Medicaid expansion in Kansas.
Six Kansas health foundations – including the Wichita-based Kansas Health Foundation – commissioned Manatt Health Solutions to study the financial impact of Medicaid expansion in Kansas. File photo

A study released Tuesday shows Medicaid expansion could not only be budget neutral but could potentially turn into a moneymaker for the state.

The study runs contrary to popular belief by some Kansas politicians who say expansion is too expensive and therefore not possible given the state’s budget problems.

“I think that the fact that Kansas is facing a budget crisis is exactly the reason why it needs to evaluate the economics of expansion,” said Deborah Bachrach, author of the study.

I think that the fact that Kansas is facing a budget crisis is exactly the reason why it needs to evaluate the economics of expansion.

Deborah Bachrach, author of the study

Six Kansas health foundations – including the Wichita-based Kansas Health Foundation – commissioned Manatt Health Solutions to study the financial impact of Medicaid expansion in Kansas. Manatt evaluates Medicaid expansion for states and foundations across the country.

The Kansas Division of the Budget previously estimated raw costs of expansion but did not factor in any savings or revenue from expansion in other areas of the budget.

The Affordable Care Act was passed with the expectation that Medicaid would be expanded nationwide. The Supreme Court later allowed each state to decide whether it wanted to expand. Thirty states and the District of Columbia have expanded Medicaid.

Lawmakers not convinced

Gov. Sam Brownback’s office questioned the study’s credibility because one of the study’s authors previously directed the Center for Medicaid and State Operations under Kathleen Sebelius.

“It is little surprise that a study authored in part by a Kathleen Sebelius appointee who worked to implement Obamacare and Medicaid expansion would advocate for Medicaid expansion,” Eileen Hawley, spokeswoman for Brownback, said in a written statement.

Brownback has said he would consider only those expansion proposals that are budget neutral with sustainable funding, have a workforce component for recipients and include a way to lower the state’s waiting list for disability services.

Rep. Daniel Hawkins, chairman of the Health and Human Services Committee, discredited part of the research in an e-mail Tuesday.

Among his criticisms: He says a five-year analysis was too narrow, that costs were underestimated and that he doesn’t think federal funds are a reliable source of revenue.

“Looking at only the first five years and making a conclusion is a recipe for disaster,” he said in the e-mail. “The costs are always the lowest during the first five years.”

Ray Merrick, speaker of the Kansas House of Representatives, echoed his Republican counterparts and referred to Manatt – the group commissioned for the study – as a left-wing law firm.

“They have a vested interest in seeing Medicaid expanded so their political agenda is successful,” Merrick said in an e-mail referring to the Affordable Care Act. “The ‘study’ is not objective or a scholarly effort.”

About the study

The study laid out benefits of Medicaid expansion savings in three broad categories: savings from state fund dollars that would be replaced with federal funds, savings from higher federal matches and potential new revenue from fees associated with higher enrollment.

The study included analysis of public data and experiences of expansion states around the country and applied it to areas of the Kansas budget through 2020.

It looked only at savings and potential revenue directly from Medicaid expansion. It didn’t include analysis of broader economic impact such as jobs creation. Bachrach, co-author of the study, said that broader impact would add more benefits to expansion rather than detract from it.

“There may be enough dollars to cover more than the cost of expansion, permitting the state to invest in other priorities – health care, education or roads,” Bachrach said.

Study: Expansion could add money to the budget rather than detract from it.

One area the savings could aid is the state’s waiting list for disability services. The governor’s office previously called Medicaid expansion morally reprehensible because it would give able-bodied Kansans access to insurance before the thousands of disabled Kansans waiting for services receive help.

Others argue that expansion of Medicaid and lack of funds for the disability waiting list are mutually exclusive.

“It’s like saying, ‘We can’t expand Medicaid until we repair all the potholes on state highways,’ ” said Sheldon Weisgrau, director of the Health Reform Resource Project for the Kansas Association for the Medically Underserved. “It would be nice if we could fill all the potholes on state highways, but it’s not an issue related to expansion.”

Weisgrau said accepting expansion would simply bring federal tax dollars paid by Kansans back to Kansas.

Our federal taxes are not going down because we chose not to participate in this program.

Sheldon Weisgrau, director of the Health Reform Resource Project for KAMU

“Our federal taxes are not going down because we chose not to participate in this program,” he said, referring to Medicaid expansion.

The newly released study shows the state pays for medical care of uninsured Kansans in several ways. Examples include prisoner inpatient care, disability care through a program called MediKan, costs of uncompensated care and mental health and substance abuse programs paid by the state general fund.

“This is a way to pay for it up front in a way that the federal government will pick up a huge portion of the costs,” Weisgrau said.

More important than budget benefits, Weisgrau said, Medicaid expansion would provide health care access to 150,000 uninsured Kansans.

The study aimed to overcome Brownback’s concerns that a Medicaid expansion must be budget neutral.

“I just think they (the governor and politicians) have this philosophical view that they don’t want to do anything that has any connection with Obamacare or the ACA,” said Dave Sanford, CEO of GraceMed, a Wichita-based health nonprofit that serves the uninsured and people with low incomes.

“I don’t think it’s based on logic at all. I think it’s just based on some animosity against the whole program.”

Gabriella Dunn: 316-268-6400, @gabriella_dunn

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