As many in our community are aware,the U.S. Supreme Court ruled when they reviewed the Affordable Care Act that states could not be required to expand their Medicaid eligibility. As a result, to date, Kansas has declined to expand Medicaid eligibility for low-income residents. Current income limits for eligibility for KanCare, which is the name for the state’s Medicaid program, are among the worst in the country, and about one in seven Kansas adults under 65 remains uninsured.
The Kansas Hospital Association estimates that expanding KanCare could
enable 169,000 low-income Kansas adults to gain coverage, nearly half of the state’s 369,000 uninsured. Based on U.S. Census Bureau estimates, there are at least 9,000 people in Douglas County below the eligibility criteria for expanded Medicaid. This is significant.
Making a decision on expansion of KanCare is first and foremost about coverage for those individuals. But it’s also about costs and the economy.
The cost of caring for those who would be covered by KanCare expansion is already being absorbed by hospitals, health care providers, businesses and other payers. Lack of insurance keeps people from receiving regular care. Unfortunately, these individuals often resort to using our emergency rooms because their health is not properly managed. Uncompensated care ultimately touches all of us because it increases the cost of health care, and a portion of those costs are passed along to those who have insurance in the form of higher premiums.
Millions of dollars are leaving Kansas, going to the federal government, and then going out to states that have decided to expand Medicaid. Kansas hospitals, as well as 72 percent of Kansans (according to a recent poll by the American Cancer Society) would like to see Kansas money come back to Kansas to cover more of the uninsured, and not go to states like California, Colorado and Ohio.
According to the Kansas Hospital Association, Kansas is losing approximately $334 million in federal funding in 2014 and more than $380 million in 2015, compared to the amounts it would have earned had it expanded KanCare. The association has issued a report, Economic and Employment Effects of Expanding KanCare, conducted by the Center for Health Policy Research at George Washington University, which quantifies the negative consequences of the state’s decision to not expand KanCare in 2014. The report also highlights the positive benefits implementation of KanCare expansion by 2016 could have for Kansas taxpayers and businesses, as well as uninsured citizens. This independent analysis provides solid data to help Kansas decide whether to accept or decline some $2.2 billion in federal funds between 2016 and 2020.
The study indicates that not expanding KanCare is already hindering job creation and economic growth because Kansas is not capturing hundreds of millions in federal matching dollars that would otherwise flow into the state economy to make expansions more affordable. The research concluded that expansion would have created more than 3,000 jobs statewide in 2014 and beyond.
The report clearly demonstrates the economic benefits of KanCare expansion. About half of the jobs created would be in health care, but the other half would be in diverse sectors, including construction; retail and wholesale; professional, scientific and technical; and food and beverage. Although KanCare expansion increases funding for health care, the benefits spread broadly as health care providers purchase additional goods and services and use their income to pay their mortgages, buy groceries and make consumer purchases that broadly impact the state’s economy.
The report further goes on to say that over the five-year 2016 to 2020 period, KanCare expansion would increase the state gross product by more than $1.2 billion and total business activity by about $2.2 billion. Expanding KanCare would trigger additional economic growth for Kansas, leading to greater state tax revenues without changing tax rates. Failure to expand KanCare will derail substantial economic gains that could boost the state’s economy and forego more than $69 million in potential state revenue that could be used to help balance state budget.
The bottom line for many is cost, and this report demonstrates that KanCare expansion produces a net savings to the state. If the state expands KanCare by 2016, there are increased state Medicaid costs, but those are offset by new state revenue and reductions in other health care spending. The net savings to Kansas would total $29 million in 2016 and approximately $36 million from 2016 to 2020, according to the financial analysis in the report. The full report and a summary brief can be found on the KHA website at www.kha-net.org.
A decision to forego KanCare expansion is more than just a decision to refuse the federal funding associated with Medicaid expansion. In fact, it amounts to real cuts to hospitals like Lawrence Memorial that are currently serving as the primary safety net for many uninsured individuals, and it comes at a time when the uncompensated care burden continues to grow at an alarming rate. In 2014 it is estimated that LMH will write off about $15 million in charity care alone and that number is projected to grow to about $16 million next year.
I and many of my peers at Kansas hospitals believe that Kansas should thoughtfully develop a unique, Kansas-based solution that takes advantage of the federal funds to build upon and improve our current KanCare program. To do this will require the Kansas Legislature and governor to address this critical social and economic issue in a reasonable way. We read of the deficit our state has that could be offset by the positive economic impact KanCare expansion would have. It is imperative that our legislators act on this in the upcoming legislative session.
If you have questions or thoughts on this, I welcome your call. My direct number is 505-6130 and my e-mail is gene.meyer@lmh.org. Thank you.
Gene Meyer is President and Chief Executive Officer of Lawrence Memorial Hospital.
