Kansas State University


Issues in Health Reform

Category: Hospital and ACA

The differences of opinion over Medicaid Expansion in Kansas

The reality of a southeastern Kansas hospital closure has pushed to the forefront the role that a Medicaid Expansion would or would not have played in keeping the doors to that hospital open.  A recent news release by the Kansas Health Institute summarizes well the differences of opinion over expanding Medicaid in Kansas, and whether doing so may have avoided the closing of the hospital.

Let’s first remember that Medicaid has been a state/federal partnership since 1966 that allows states to pay for medical services for low-income individuals and families using a mix of federal and state dollars.  In order to participate and receive federal dollars, the feds set certain minimum core standards that states must meet in their own programs.  (For more information on Medicaid see this website. For information on the core requirements see KFF issues brief, and particularly Appendix A.) Any divergence from those standards has to be approved by the feds through a waiver process.  Kansas has a waiver to allow for private managed care organizations to provide Medicaid services (using those federal dollars).  That program is called KanCare.  Those eligible for KanCare in Kansas include those who meet income requirements in the following categories:

  • Children up to age 19, including those who are in foster care or who get adoption support payments
  • Pregnant Women
  • Persons who are blind or disabled by Social Security rules
  • Persons age 65 or older
  • Persons receiving inpatient treatment for tuberculosis
  • Low income families with children
  • Persons screened and diagnosed with breast or cervical cancer through the Early Detection Works program

(The FPL income level varies by program but it’s worth noting that the federal standard minimum income level for parents to qualify is 28% FPL. The Kansas Medicaid program qualifies these parents close to that minimum, at just under 33% of FPL, $7870 for a four person household). Kansas does not include childless adults in its Medicaid program unless they are over 65 and meet income criteria for that category.)

The Affordable Care Act allowed for states to expand eligibility for states’ Medicaid programs to include all (children and adults regardless of whether or not they are parents) who have incomes under 138% of the federal poverty level ($16,243, single person household; $33,465, 4 person household, 2015).  The intent of the ACA was to encourage states to adopt this arrangement.  The Supreme Court ruling in June 2012 determined that the encouragement mechanism (expand or withdraw from all Medicaid federal supports) was too forceful and therefore allowed states to choose if they want to participate or not in the expansion.

Kansas is one of 19 states that have yet to expand Medicaid. There is no end date as to when states can expand.  Alaska and Utah are in the process of expanding and the other 28 states and the District of Columbia have already expanded; Wisconsin has a unique arrangement to cover all adults under 100% FPL not funded through these Medicaid Expansion federal dollars. For a discussion of why states (and Kansas in particular) are not expanding see this blog.

Regarding how hospital closures play into a Medicaid Expansion: Kansas Governor Brownback and the Lt Governor Colye have been arguing that expanding Medicaid would not fix the economic situation of failing hospitals.  They assert that the financial hardship for hospitals is caused by decreasing Medicare payments to hospitals as part of ACA. However, as importantly, they raise a moral issue about who is deserving of receiving state-supported care as an argument against an expansion.

“Those who say Medicaid  Expansion would save the Independence Hospital are lying.  It wouldn’t.  Instead, this Obamacare ruse funnels money to big city hospitals, creates a new entitlement class, and fails to rightly prioritize service for disabled citizens.  Governor Brownback will maintain his commitment to provide care to vulnerable Kansans before able bodied adults. (for full statement see Governor’s office statement on hospital closure and Medicaid Expansion.)

A point by point response from the Kansas Hospital Association can be found here. The response clarifies the reasons for Kansas hospital financial hardship, notes how these are more complicated than Medicare payment structure changes, and uses evidence on the impact on hospitals from other states that have expanded their Medicaid programs to suggest that Medicaid paying patients do help a hospital’s fiscal bottom line.

At its simplest, hospitals depend on a cash flow from paying patients. Medicare, Medicaid and private insurers are all part of the mix. Patients who are uninsured are still hospitalized, often times for illnesses that would have been better treated in community settings before they got severe enough to warrant hospitalizations. Those uncompensated hospitalizations impact smaller hospitals more since there is a higher rate of uninsurance in rural and smaller communities. That means those smaller hospitals are more reliant on public payers such as Medicare and Medicaid. The argument is that with more patients eligible to have their hospitalizations paid for by Medicaid there would be an additional payer in the mix and more income flowing to meet the hospitals’ expenses. And on a related and very important matter, Medicaid paying for community care for these uninsured community residents would help to decrease unnecessary hospitalizations at the outset.

Who would be eligible for Medicaid in Kansas? A report released in 2014 from the Kansas Center for Economic growth contradicts the notion that those who would be Medicaid eligible in the expansion are able-bodied adults who should be working.  In fact, most of those who would be newly eligible for an expanded Medicaid program have at least one family member who is working.  However, their jobs are often part time, and pay less than 100% of the FPL, the criteria for being eligible for premium tax credits in the Health Insurance Marketplace to help pay for insurance.  That is, these folks are too poor to qualify for assistance in paying for premiums.  This may seem odd but the ACA had a plan for those folks.  It’s called the Medicaid Expansion.  The ACA intended for those too poor to qualify for premiums assistance to be insured through state Medicaid programs.

The report goes on to detail the types of occupations, and the wages in those occupations, where working class people are most likely to be uninsured and eligible for Medicaid if the state chose to expand within new federal guidelines.  The report makes additional economic arguments for the wisdom of the expansion.  “Medicaid expansion would go a long way toward increasing economic security for uninsured workers.  It also would be an asset for small businesses—which will benefit from healthier and more productive employees—and the economy as a whole—which will benefit from the flow of federal dollars into the state.” The Kansas Center for Economic Growth report makes the case the expanding Medicaid would be good for Kansas local economies, especially rural communities, and the state as a whole.

Previous blogs on Medicaid that might also be of interest are on: March 13, 2015; April 23, 2014, July 13, 2013; May 23, 2013; May 8, 2013