February 24, 2024

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Panel Debates Consequences of Medicaid Expansion

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Medicaid expansion could jeopardize the state’s budget, according to House Majority Leader Dan Hawkins.

“I would like to hear from each proponent of expansion: What tax do you suggest or what programs do you want to cut?” the Wichita Republican challenged participants in a panel discussion about Medicaid expansion.

Experts estimate Medicaid expansion would cost the state more than $50 million in its first year, but some expansion advocates said how the state pays for the program isn’t a question worth answering; other advocates suggested the program would pay for itself. 

Brenda Sharpe, President of the REACH Healthcare Foundation, said it’s unfair to pit expansion advocates against advocates of other state-funded services, like education.

“With all due respect, I have to reject the question as a false choice,” she said. “…A state’s budget should reflect our values. We value, in this state, taking care of our neighbors.”

More than half of the state’s general fund is directed to schools, and they have lawyers suing on behalf of school districts for more funds, said Rep. Brenda Landwehr, a Wichita Republican and chair of the Kansas House Health and Human Services committee. She inferred vulnerable populations like the mentally ill and the physically disabled are forced to compete for limited taxpayer dollars without the help of well-funded lobbies and attorneys.

Expansion opponents said Medicaid expansion would require they compete against able-bodied adults for Medicaid dollars as well. As originally designed, Medicaid insures the disabled, children and pregnant mothers below certain income levels. Kansas is one of 14 states that haven’t expanded the program. Expansion would add about 90,000 able-bodied adults and 39,000 children onto Kansas’s Medicaid welfare rolls, according to estimates by the Kansas Health Institute. More children already eligible for regular Medicaid are expected to enroll because of publicity surrounding expansion, and the state would incur about 40 percent of the cost of their coverage, whereas the state picks up ten percent of the costs related to expansion.

“I’ve heard numerous times that Kansans are OK paying taxes for those who really need it,” Michael Austin, director for the Sandlian Center for Entrepreneurial Government at Kansas Policy Institute, said. “What they’re not OK with doing is paying taxes for those who are able to work or have the personal responsibility to engage in a civil society.”

He provided some ways Kansas could fund expansion. He said according to quick, back-of-napkin math, raising Kansas’s top income tax rate to 5.9 percent, raising the corporate tax rate to 7.8 percent or raising the state’s sales tax rate to 6.7 percent could help provide funding necessary for expansion. He noted other states are using cigarette and tobacco taxes to fund their share of expansion, but he said getting an accurate handle on just how high those taxes would need to go to pay for it is tricky.  Austin said he wasn’t proposing tax hikes or expansion, but provided those examples to put the cost in perspective.

Rep. Monica Murnan, a Pittsburg Democrat, said the legislature isn’t tasked with funding Medicaid expansion over the long term. They’re simply tasked with figuring out how to pay for it for the next two years. The federal government currently provides a 90-10 match for every dollar a state spends under Medicaid expansion.

“Where I stand on that, right now we have a budget submitted by our Governor that has Medicaid expansion. It’s paid for with the 90-10 match. It’s paid for by drug rebates. That’s how it’s paid for this year,” she said. “That’s how it’s paid for next year… we don’t, at this red hot moment, need to raise taxes to pay for it now. That’s what I have to answer. That would be our answer.”

In one heated exchange, the senior vice president for member services at the National Rural Health Association, Brock Slabach, verbally sparred with Michael Cannon, the Cato Institute’s director of health policy studies, over how expanding Medicaid would affect rural hospitals.

Slabach told panelists that 81 percent of rural hospitals in Kansas are on the brink of closing, including one that may shut its doors over the weekend. Expansion, he said, would provide a lifeline to keep hospitals open and people employed in rural Kansas. Cannon fired back.

“Medicaid is not going to keep hospitals from closing,” Cannon said. “…it’s not the engine of jobs proponents make it out to be…If you want to expand the economy or create jobs, Medicaid expansion is not the way to do it. The bottom line is that employment in health care should not be a policy goal or a key metric of success. Treating the health care system like a wildly inefficient jobs program conflicts with the goal of ensuring access and low cost health care.”

Slabach agreed that there are multiple problems affecting rural hospitals, but he said expansion is a shovel-ready product and a tool that many rural states are using successfully to keep hospitals open.

Keeping some hospitals from closing might be one intended consequence of expansion, but Cannon warned the group should also consider unintended consequences, like rising costs for those with private sector insurance as well.

One such consequence is that as many as two out of five people eligible for Medicaid under expansion rules are currently insured, according to Melissa Fausz, the director of state government affairs at Americans for Prosperity.

“A lot of them are insured in private programs that offer higher reimbursement rates than Medicaid does,” she said.

And, she noted, having Medicaid doesn’t necessarily translate into having access to a doctor. She said one study found that while most doctors accept Medicaid, only about half are accepting new Medicaid patients. That results in Medicaid patients using emergency rooms.

“Medicaid enrollees use the ER more than any other class of insured or uninsured patients…I think it’s important before you expand to add a massive number of people into a program like that, that you actually have true access,” she said. “Or else, you’re giving people a card they can’t use, and people will just keep showing up in the emergency room. That’s what the research shows.”

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