The Republican Response to Medicaid Expansion: Kansas Edition

Carefully crafted to mislead Kansans and deny those able-bodied 'takers' affordable health insurance

—analysis & opinion by the editors of Working Journalist Press—
September 8, 2014

Republicans created the current Medicaid expansion gap when they took portions of the Affordable Care Act to the U.S. Supreme Court in an attempt to kill the entire law. All they actually accomplished was to gain the right in states that they control, like Kansas, to deny their poorest citizens access to health care even when the costs are fully paid with federal taxes returned to the state by the federal government!

Governor Brownback has refused to accept the Medicaid expansion offered by the federal government in the form of a return of Kansas-paid federal tax dollars--i.e. taxes that every working Kansan pays to the Federal Treasury each year. These returned tax dollars would have provided health insurance to Kansas' working poor at literally no cost to the state in 2014, 2015, and 2016. Affected working poor in Kansas are those with incomes less than the federal poverty line but more than the ridiculously low Kansas Medicaid eligibility level.

Medicaid expansion gap

What kind of freeloaders are we talking about here? Well, a family of three making between $5,148 ($429/month) and $19,790/year ($1,649/month), or any single person making less than $11,670/year ($973/month) are examples of the working poor that make too little to receive the direct federal tax credit subsidy to buy private insurance and are also ineligible for the current Kansas Medicaid program known as Kan-Care. The Affordable Care Act was designed to directly provide health insurance to these low income Kansans through the Medicaid expansion.

The Medicaid Expansion Gap

The ideology-driven actions of many Republican governors—including Sam Brownback—who have refused to expand Medicaid in order to provide health insurance to their state's poorest workers has resulted in a perverse situation where the poorest citizens have to pay the full cost of their health insurance premiums while the middle class workers get to purchase significantly subsidized health insurance.

The difference is that the administration of health insurance subsidies for the middle class is done directly by the Federal government, while the health insurance solution for the working poor was supposed to be an expansion of Medicaid administered by the state government, but fully paid for by the federal government in its early years. The law provides for the states to eventually be called upon to fund (at most) 1/10 of the cost.

After Republican governors tried to get the entire health care law declared unconstitutional through a variety of legal challenges, they were successful only in blocking the requirement that states expand Medicaid, even though the costs were fully paid for by the Federal government through 2016. Instead, the Supreme Court ruled that the choice to participate in the Medicaid expansion was a state level decision, since the states actually administer the Medicaid program and would be required at some point to pay a small portion of the cost. As a result of this ruling, acceptance of the federally funded Medicaid expansion became an opt-in choice for governors to make. Democratic governors and some sensible Republican governors opted-in and their working poor now have access to health insurance at no cost, with middle class workers, receiving a subsidy to buy private insurance. In those states that accepted the Medicaid expansion, the Affordable Care Act is working as designed.

Essentially, this Supreme Court ruling let the ideologically-driven Republican-led states refuse to extend health care coverage for their working poor, while the federal government was still able to subsidize health insurance for middle class workers. This creates some strange perverse outcomes in the law as designed.

For example, Liz, a 50 year old female Kansas worker making $27,000 per year was able to purchase an excellent health insurance plan from Coventry Health Care through the Healthcare.gov Marketplace. With the federal tax credit reducing her portion of the monthly premium of $283 to $24 per month, the affordable cost enabled her to get insurance again after being unable to afford private market insurance for the past 5 years after losing employer provided coverage when she was laid off from a school district job in 2008.

The perverse part of the Republican refusal to accept Medicaid expansion in Kansas is that if Liz were to lose her current job five months into the year and was not be able to find a new one during the remaining 7 months of the year, since her income for the year would have fallen to $11,250, she would no longer qualify for the federal tax credit insurance subsidy for the year. Not only would she lose her insurance, but she could theoretically owe repayment of the tax credit subsidy she received for the first six months of the year when she was insured.

The ACA, before being sabotaged by most of the Republican governors, including Sam Brownback, would have handled her situation, by moving her health insurance to healthcare coverage provided under the Medicaid expansion and she would have continued to receive healthcare services at no additional cost to her until her employment and income situation improved. As it is now in non-expansion states like Kansas under the job loss scenario described, in order to continue her health insurance, she would have to pay the $283.00/month full cost of her insurance premiums going forward. She also would in theory have to reimburse the IRS for using the $1,300 tax credit she had been advanced by the federal government for the first 5 months premium subsidy, but which she was now no longer entitled to receive due to her lower income level. It is unclear at this time whether the IRS will attempt to recover the advanced tax credits paid to insurers on the taxpayer's behalf from the taxpayer when they file their tax returns at the end of the year in this situation.

"We just can't afford it!" Really???

$350 million has already* been left on the table by Governor Brownback in 2014 (18535).

*$350 million is for the entire year of 2014. Full year refusal of Medicaid Expansion funding has been locked in by the Kansas Legislature since reversal of decision could not come before 2015 Legislative session.

Kansas will never get those dollars back. Each year the Republican controlled Kansas Legislature refuses to take the Medicaid expansion dollars, Kansas falls further behind other states and some number—currently projected to be as high as 330—of sick and injured Kansans will needlessly die. Why does it have to be this way in Kansas?

The semi-official (talking-point) reason given by Republicans for not accepting the federal Medicaid expansion dollars is that after 2016, the state would be asked to pick up part of the cost. Specifically, the Affordable Care Act requires states to pay a mere 5% of the expansion cost from 2017 to 2019, and only 10% of the cost going forward from 2020. This talking point is usually delivered in non-specific terms like "Kansas will have to start picking up part of the costs after 2016," (immediately followed by an earnest expression on the speaker's face) and the punch line, "We just can't afford it!"

Let's examine this unaffordable Kansas 'cost' that the ever so 'fiscally responsible' Republicans cite as their reason for not expanding Medicaid health insurance in their states. For the purposes of illustration, we will use current year numbers for Kansas and not account for inflation, population changes, etc. in future years since the concept is the same. Simple arithmetic says that 10% of $350 million spent on healthcare for the working poor is a mere $35 million dollars per year of actual cost to the Kansas treasury. Remember this co-pay doesn't even begin until 2020. Spending $350 million additional medical dollars each year in the state of Kansas is projected to add 4,400 jobs to the Kansas economy and provide health care coverage for between 78,000 and 100,000 Kansans falling into the Republican-created Medicaid expansion gap.

So after accepting the Medicaid expansion's repatriation of Kansans' federal tax dollars after 2016 in a 9 for 1 contribution ratio ($315 million federal vs. $35 million Kansas), the increased economic activity will pay for most if not all of the Kansas share. Consider the increased income tax receipts from the 4,400 new jobs, plus the added Sales and Use Taxes on the purchase of medical supplies and drugs, the increased property tax revenue on new healthcare facilities and the economic multiplier (churn) effect of $350 million additional dollars per year being spent in Kansas. These state and local government revenue enhancers from the increased health care expenditures would likely pay for most, if not all, of the $35 million Kansas portion of the expanded Medicaid cost. The beneficial economic effects of the Medicaid expansion described above do not even include a whole host of other positive economic outcomes for the business community in the form of improved worker productivity (less time lost to health issues), and a materially larger state economy, etc.

So, an essentially pre-paid-for program that would fully bring Kansas' working poor into the health care delivery system, while increasing economic activity in Kansas and simultaneously growing jobs is, according to Republicans, too costly?

Clearly that talking point is... bull pucky. So Governor Brownback, what is the real reason you don't want to accept the Medicaid expansion dollars available for Kansans?

Brownback: 'Get a Job, not a Handout'

In a June interview with a "journalist" from the Daily Signal (16533), a web site affiliated with the Koch brothers funded Heritage Foundation, Sam Brownback gave us an illuminating glimpse into his real reasons (paraphrased) for opposing the Medicaid expansion: 'The poor don't deserve health care if they are able bodied...they need to just go get a job! We should only focus state resources on the physically and mentally disabled. Oh, yeah and the mothers with children. The able-bodied will have no incentive to work if we give them handouts.'

Brownback explains why Kansas is not expanding Medicaid

Kansas Governor Sam Brownback:"...we're trying to push people who are able-bodied right now to get a job...That is a far more likely route out of poverty than having a bunch of government programs where you're giving handouts to able-bodied individuals."

Here is the transcript, not paraphrased.

When conservative interviewer Genevieve Wood asked Gov. Brownback why he did not make the same decisions as some other Republican governors to expand Medicaid using the full federal funding available, the Governor expressed his true feelings about helping those struggling in Kansas to afford health care:

Sam Brownback: "There's a lot of pressure to do it [expand Medicaid]... There's this presentation that this is free money from the federal government."

{...now the Governor first side-steps the direct question of why he chose not to accept the Medicaid expansion dollars...}

"The route we've taken is to address the Medicaid population we currently have. When I came in, people were being dropped off the Medicaid, and this is Medicaid for people that have a physical or mental disability or single-parent with child, so you've got a needy population that's right here and we weren't getting everybody taken care of there, so I said let's take care of the Medicaid population that we have now. So that's what we've really focused on doing and we've expanded services and we've taken more people and they need the services, rather than expanding the Medicaid block that Obamacare wants and seeks for us to do."

{...After just making the ridiculously illogical argument that expanding Medicaid to cover additional low income Kansans using new federal funding would somehow diminish the state's ability to care for current disabled Medicaid recipients, now comes the real philosophical reason Brownback and other extremist Republicans oppose Medicaid expansion...}

Genevieve Wood: "Well,... and the block they've talked about... Tell me if I'm right about this... that would be expanded to able-bodied adults..."

Sam Brownback: "Able-bodied, single, no dependents..."

Genevieve Wood: "... and [who] don't necessarily have to work. Is that right? Just because you're able-bodied doesn't mean you use your body to go get a job..."

Sam Brownback: "Right! And you could... And we're trying to push people who are able-bodied right now to get a job so when they come to Kansas to apply for public assistance, we say fine, if you're able-bodied, we're requiring that you apply for work. And our workforce participation has never been higher in the state of Kansas. And we've got a number of people that aren't on public assistance because now they're working! That is a far more likely route out of poverty than having a bunch of government programs where you're giving handouts to able-bodied individuals."

Ideological Temper Tantrum Will Cause Unnecessary Kansas Deaths

It would be nice if Republicans and Libertarian ideologues (Sam, this means you!), stop wasting tax dollars needed in Kansas for a ridiculous ideological temper tantrum. Republicans are supposed to make good business decisions. It takes simple grade school math reasoning skills to see that refusing to accept full (100%) federal funding now because 'later' Kansas will have to find one Kansas dollar in order to get 9 matching federal dollars (10% KS, 90% federal) is outright fiscal malpractice. Maybe that's why many Republican office holders have no problem reducing school funding in order to pay for tax cuts for business owners... so future Kansans will also be so educationally deficient that they continue to swallow the false math and faulty economic judgments of their elected Republican officials.

In April, Republican legislators doubled down on their ideological refusal and passed a law taking the decision to accept federal Medicaid dollars out of the Governor's hands by requiring that it must first be approved by a vote of the right-wing controlled Kansas legislature, many of whom have sworn to destroy such "socialized medicine".

The Affordable Care Act was designed to transition healthcare for the nation's poor from receiving their primary health care at hospital Emergency rooms to receiving primary care at doctors' offices at much less cost with better results. The Medicaid expansion was also designed to shift the funding of such care from hospital subsidies for indigent care to the Medicaid expansion. Under the law, as passed, everyone could have insurance, so reimbursements for treating the uninsured could be reduced if not eliminated.

When Republicans tried to kill the Affordable Care Act by taking it to the Supreme Court, they only succeeded in blowing a hole in the part of the law which provided coverage to the working poor. Fully funded Medicaid expansion would require state governors to 'accept' the federal dollars. Republican governors, through their Supreme Court lawsuit, won the right to commit fiscal malpractice and refuse the federal funding.

The law's cuts in the funding for indigent hospital care which were by design rolled into the Medicaid dollars that Kansas Republicans are refusing to accept, means that the hospitals still have to provide emergency treatment to the uninsured by law, but have no way to recover those costs. When rural hospitals are forced to close as a result of this funding idiocy, real living, breathing Kansans will inevitably die because it takes too long to reach a hospital still in business.

Current estimates by Harvard University researchers are that the failure to expand Medicaid in Kansas this year (already set policy) will result in an estimated 113 to 330 unnecessary deaths in 2014 (16540).

Change in uninsured rate in Kansas is worst in the nation...by far!

So how is Kansas doing in comparison to other states?

In the map below (16519), green indicates that the state has reduced the percentage of its population that is uninsured, with the shade of green indicating the degree of improvement. Orange to red indicates the few states that saw the rate of uninsured rise over the past year, with red being the worst.

Kansas uninsured rate increases more than 5 percentage points from 12.5% to 17.6% between 2013 and 2014.

Kansas uninsured rate increases more than 5 percentage points from 12.5% to 17.6% between 2013 and 2014. Kansas is alone by an order of magnitude in that colossal policy failure.

Kansas uninsured rate increased more than 5 percentage points from 12.5% to 17.6% between 2013 and 2014 (16802). Kansas is alone by an order of magnitude in this colossal health care policy failure.

Why is Kansas the only red state on this map? Hint: Maybe it is because Kansas now has one of the most ideologically right-wing state governments in the country.

—Editorial Board, Working Journalist Press, LLC.

Sources Cited

(16519) | Young, Jeffrey "In States Where It's Wanted, Obamacare Is Working Well." Huffington Post. 8/5/14. Web.
[http://www.huffingtonpost.com/2014/08/05/states-obamacare_n_5650606.html]

(16533) | Trinko, Katrina "Sam Brownback Explains How Obamacare's Medicaid Expansion Hurts States." The Daily Signal. 6/3/14. Web.
[http://dailysignal.com/2014/06/03/interview-brownback-discusses-medicaid-expansion-hurts-states]

(16540) | Dickman, Sam; Himmelstein, David; McCormick, Danny; Woolhandler, Steffie "Opting Out Of Medicaid Expansion: The Health And Financial Impacts." Health Affairs. 1/30/14. Web.
[http://healthaffairs.org/blog/2014/01/30/opting-out-of-medicaid-expansion-the-health-and-financial-impacts/]

(16802) | Witters, Dan "Arkansas, Kentucky Report Sharpest Drops in Uninsured Rate: Medicaid expansion, state exchanges linked to faster reduction in uninsured rate." Gallup.com. 8/5/14. Web.
[http://www.Gallup.com/poll/174290/arkansas-kentucky-report-sharpest-drops-uninsured-rate.aspx]

(18535) | Witters, Dan "How much has Kansas left on the table by not expanding Medicaid?" HowMuchHasKSLeftOnTheTable.com. 8/5/14. Web.
[http://www.howmuchhasksleftonthetable.com]