How a Democratic governor could expand Medicaid in Kansas

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With the election of a Democratic governor, the stage may be set for Kansas to expand Medicaid.

“We will be putting together a Medicaid work group and we will look at what other states have done with expansion and how they’ve approached that and what the fiscal impacts have been and we will propose something we can do within our budget,” Gov.-elect Laura Kelly told the Wichita Eagle a week after she defeated Republican Secretary of State Kris Kobach.


Kelly's election ends eight years of GOP control of the governor's office.

One of her predecessors, Democrat Kathleen Sebelius, resigned in 2009 to join the Obama administration as secretary of Health and Human Services, leaving the governor’s office to then Lt.-Gov. Mark Parkinson, who didn't run for a full term in 2010.

As HHS secretary, Sebelius was instrumental in winning passage of the Affordable Care Act, known as Obamacare.

Sam Brownback, the Republican who won the governor's office in 2010, opposed the expansion of Medicaid coverage to the working poor in Kansas. Sebelius and all former Kansas governors except Brownback campaigned for Kelly.

Kelly, 68, won election to the state Senate from Topeka by 98 votes in 2004 and became the ranking Democrat on two budget committees and a health and welfare committee that dealt with Medicaid expansion.

In its 2017 session, the Kansas Legislature tried in April to override Brownback’s veto of legislation expanding coverage for 150,000 low-income Kansans, but the vote fell three short of the total needed for an override.

The Republican-controlled Legislature that tried to override Brownback’s veto was measurably more moderate than those that Brownback had worked with previously. In 2016 Republican primaries, voters threw out a number of long-time legislative leaders who had aligned themselves with Brownback’s tax cuts that led to chronic revenue shortfalls.

Just two months after the failed Medicaid expansion, the legislature overrode the veto of a tax increase bill that largely undid Brownback’s tax cuts, providing the revenue-starved state budget with $1.2 billion over two years.

On Wednesday, Moody’s Investors Service released a report highlighting "credit-positive economic growth," in Aa2-rated Kansas, as demonstrated by greater-than-expected tax revenue growth, particularly the state income tax.

“The strong revenue performance is credit positive for the state because it will reduce the burden of increasing education funding,” analysts said.

Three days after the election, the state released an updated revenue forecast that indicated growing flexibility to improve reserves.

“As expected, it incorporates year-to-date fiscal 2019 revenue collection, which is trending almost 6% higher than budget,” Moody’s wrote. “In the four fiscal year months through October of this year, income taxes, which make up more than 50% of general fund revenue, are up almost 10% over the same period last year."

Shortly after repealing Brownback’s tax cuts, the state forecast an expected 21% increase in total income taxes for fiscal year 2018 that began July 1.

“We can’t forget where our state has been,” said Emily Fetsch, director of the Kansas Center for Economic Growth, after the election. “In the summer of 2017, a bipartisan majority came together to end former Gov. Sam Brownback’s catastrophic tax experiment. Our state had suffered greatly, undergoing nine rounds of budget cuts, three credit downgrades, and repeated sweeps from state highway and retirement funds.”

In 2019, Kansas will be one of 12 states whose governors and legislatures represent different parties. With Republicans solidly in charge of the Kansas state House and Senate, Kelly faces a legislature where the GOP can override her vetoes if it hangs together.

Hardcore anti-tax Republicans aligned with Brownback made modest gains in the 2018 GOP primaries for the state House, according to Ballotpedia. State Senate seats were not up for election this year.

Voters in other Republican-controlled states provided Kansas Republicans with political cover for expanding Medicaid on Nov. 6. when Idaho, Nebraska and Utah passed referendums to authorize expansion.

Utah will finance the state’s cost for expansion by increasing the state sales tax by 0.15 cents. The federal government pays for 90% of the expanded program.

In Nebraska, the cost of covering about 90,000 people will cost the state about $148 million over three years but would bring in $1.36 billion in federal health funding over the same time, according to a study by two University of Nebraska professors. Gov. Pete Ricketts, an opponent of Medicaid expansion, said he wants to pay for it by cutting state spending elsewhere.

In Kansas, supporters of Medicaid expansion see the move as a way to save rural hospitals that serve the state’s numerous but shrinking small towns and farm communities. Counties and their taxpayers bear the cost of indigent health care in the absence of insurance.

Before the Affordable Care Act became law in 2010, Medicaid primarily covered pregnant women, children, low-income seniors and people with disabilities. With the ACA, people with low-paying jobs but no health insurance were covered if their income was up to 138% of the poverty level.

The provisions was intended for all 50 states, but a subsequent U.S. Supreme Court ruling allowed states to opt out of the program. Only states with Republican governors and legislatures chose to opt out. Currently, 32 states and the District of Columbia have expanded access.

In vetoing Kansas legislation expanding Medicaid, Brownback cited the fact that President Trump and Republicans in Congress were attempting to repeal the entire ACA. While the Obamacare program survived, Congress last year eliminated the individual mandate requiring health insurance coverage or a tax penalty for not carrying it.

A recent academic study for the website Health Affairs found that the first two years of Medicaid expansion did not harm budgets in states that expanded the program. Expansion states, including Arkansas and Kentucky, saw net budget savings because of offsetting state spending with increased federal dollars.

Expanding Medicaid is projected to cost Kansas about $74 million in state funds in 2019, about 1% of the state’s $29 billion budget.

A decision not to expand Medicaid would cost the state $5.3 billion worth of federal funds over 10 years, according to budget experts.

Kelly won office with 47.8% of the vote to 43.3% for Kobach, the Kansas secretary of state. Independent Greg Orman peeled off more than 6% of the vote.

Kobach narrowly beat the sitting governor, Jeff Colyer, in the GOP primary. Colyer rose to the governor's office in January from lieutenant governor when Brownback resigned to join the Trump administration.

Kobach, who won Trump's favor and primary endorsement after echoing and amplifying the president's baseless voter fraud claims, was viewed as a more polarizing GOP candidate.

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State budgets Healthcare-related legislation Not-for-profit healthcare Laura Kelly State of Kansas Kansas
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