Kansas is en route to become the 37th state to expand Medicaid under the Affordable Care Act (ACA), the result of bipartisan negotiations led by the state’s Democratic Governor, Laura Kelly. About 150,000 more low-income adults in the state—whose income is up to 138% of the federal poverty level—can potentially avail of Medicaid benefits starting January 1, 2021, once the bill is approved by the state Legislature.
The agreement also includes provisions to initiate the federal “reinsurance” program (Section 1332 reinsurance waiver), which protects insurers from the high cost (sometimes in the hundreds of thousands of dollars) of certain high-risk enrollees—this in turn protects the remaining enrollees from a premium increase. Interestingly, while enrollees can avail of a program that helps them find employment, this bill does not mandate work requirement for continued Medicaid coverage, unlike states such as Indiana (20 hours/week) and Michigan (80 hours/month).
The current status of work requirement in Medicaid expansion states can be found on the Kaiser Family Foundation website.
There’s now a glimmer of hope for the underprivileged residents of Kansas to be able to access primary and preventive care as well as treatment for debilitating chronic conditions. But how will the costs of expansion be covered? While the federal government will cover 90% of the total costs, the agreement includes a provision for a hospital surcharge that will be used to offset the remaining 10% of expansion costs to be shouldered by the state. The Kansas Hospital Association (KHA) has predicted that expansion would generate savings, economic growth and fees that would cover the costs associated with this move and even spare a few million.
According to The Commonwealth Fund, expansion states can fold adults from state-funded health programs under expansion coverage to realize savings. It also reduces states’ burden of uncompensated care as the uninsured are now covered. In Montana, for example, the state spent $24.5 million on Medicaid expansion costs (of the total $576.9 million) following expansion in January 2016. Savings realized from state-sponsored health programs, such as substance use disorder, that the state now did not need to spend on, offset some of these costs. Moving people from traditional Medicaid to the expansion population added to these savings, and the offsets totaled $25.2 million leaving Montana with a surplus of $700,000 in fiscal year 2017. A 2015 report estimated that surplus savings in Kentucky and Arkansas within the first 2 years of expansion would be enough to cover the states beyond fiscal year 2021.
“This agreement is clearly the most significant progress we have seen in the Medicaid expansion debate in Kansas,” said KHA president and CEO, Tom Bell.
While both Republican and Democratic leaders in Kansas hope this bill is approved and implemented as law, the previous Republican Governor of the state, Sam Brownback, had vetoed a 2017 attempt by his own party to expand Medicaid in the state. The large number of uninsured patients, however, have burdened the state’s rural hospitals and led to numerous closures due to lower rates of repayment, which makes care delivery unaffordable. Between 2010 and 2019, 5 rural hospitals shuttered their doors for good in the state. According to Bell, expansion would offset 18% of uncompensated care costs of urban hospitals and 26% for rural hospitals and make care delivery and access sustainable in remote areas.