A newly released Kansas plan to give more people Medicaid is an example of the tricky balancing act needed in states that have resisted expanding the low-income health program so far.
The good news, supporters of growing Medicaid say, is that a powerful Kansas state senator who has obstructed previous expansion proposals has put together what appears to be a sincere proposal to expand health coverage in the state.
But the plan put forward by Senate Majority Leader Jim Denning (R) is also so complex and festooned with add-ons that it risks being shot down by the Centers for Medicare & Medicaid Services even if it manages to make it through the state Legislature and become law.
Supporters of growing Medicaid rolls are encouraged, but not ready for their victory lap, according to April Holman, executive director of Alliance for a Healthy Kansas, a group that has been pushing Medicaid expansion for at least seven years.
“This is a complex plan, with a lot to digest,” Holman said in an interview. “But we’re encouraged that a real discussion has begun, and that the state Senate is ready to take a part in it.”
The Affordable Care Act allows states to expand Medicaid eligibility to include low-income adults earning up to 138% of the federal poverty level. Kansas is one of 14 states that have chosen not to do so. Expanding Medicaid in Kansas would add around 150,000 people to the state’s Medicaid rolls, advocates say.
Balancing Act
“I can see that Sen. Denning is trying hard to thread the needle here to get the support he needs, but it’s a complicated plan, and I’m not sure it’s going to work,” said Rep. Susan Concannon, a Republican member of a joint committee that has oversight responsibility for KanCare, the state’s Medicaid program.
“You go too far in one direction in search of Republican support, and you lose the Democrats,” said Concannon, a longtime Medicaid expansion supporter. “Too far in the other, and you lose the Republicans.”
To appease Democrats, Denning chose not to include work requirements for the new Medicaid beneficiaries, which have been proposed in other states to attract support from skeptical Republicans, Concannon said.
That’s one way to avoid a possible veto from Gov. Laura Kelly (D), a firm supporter of expansion. But the omission also risks driving away Republicans. “It’s going to be tough,” she said.
The state Senate Select Committee on Healthcare Access held a two-day hearing on the plan in late October. The Special Committee on Medicaid Expansion is expected to consider the plan Nov. 12-13.
Denning didn’t respond to requests for comment.
Partial Expansion
Under Denning’s plan, the state would first ask the CMS to consider two different proposals for expanding Medicaid to only adults with incomes up to 100% of the federal poverty level. KanCare currently does not cover single adults under 65 unless they are disabled or fall into one of several disability-related categories.
Either of these two initial schemes offered to the CMS would create a smaller Medicaid population than is called for under the ACA, which provides for coverage up to 138% of the poverty level.
In the first of these proposals, adults with incomes between 100% and 138% of the poverty level would be allowed to purchase subsidized private insurance through the ACA marketplace, according to a summary presented to the Select Committee on Healthcare Access.
In the second proposal, these adults would be allowed to choose between Medicaid coverage and subsidized private insurance through the ACA marketplace.
Full expansion of Medicaid eligibility to 138% of the poverty level would come about only if the CMS were to reject the first two proposals.
That hasn’t worked so far. The CMS rejected in July a partial-expansion proposal put forward by Utah, which suggests a thumbs-down of similar proposals from Kansas is “very likely,” said state Senate Minority Leader Anthony Hensley.
“We need to learn from the mistakes of other states and pass a straight Medicaid expansion bill,” Hensley said. “We don’t need to complicate things unnecessarily.”
Kelly took the same line in an Oct. 21 statement released ahead of the committee hearing.
“Medicaid expansion plans that are too big, too expensive, and too complex turn what could be a historically beneficial policy into an administrative and financial nightmare, doomed to fail,” Kelly said.
Reinsurance Proposal
Denning’s plan also includes a second request to the CMS aimed at driving down the cost of insurance in the ACA marketplace by reimbursing plans that cover the most expensive patients.
Under that proposal, the state would purchase reinsurance, a form of insurance for insurance companies, to cover the highest-cost patients.
This in turn would enable insurers in the ACA marketplace to reduce premiums for other participants, making Obamacare a more realistic option for people between 100% and 138% of the federal poverty level.
The CMS delayed a decision on a similarly complex proposal from Idaho in August, in part because it appeared likely that the plan would increase the federal deficit.
Adding another wrinkle, the means chosen to pay for the reinsurance proposal—a $50 million tobacco tax increase, combined with savings on tax subsidies passed through to the state from the federal government—raise additional problems for the plan, according to state House Majority Leader Dan Hawkins, who has been a consistent opponent of Medicaid expansion.
“If you want to galvanize smokers in the state and the convenience store folks and turn them into opponents of what you want to do, just propose a tax increase on cigarettes,” Hawkins told Bloomberg Law.
But the plan could undergo substantial revision once it hits the Legislature in 2020, Hawkins said. “This bill has a long way to go, and it’s not exactly what anyone wants, including the governor,” he said. “This thing is going to get massaged a lot before it’s all said and done.”