Topeka ? Gov. Kathleen Sebelius on Thursday urged expansion of health insurance coverage, saying it would save Kansans and employers in the long run.

But while Sebelius pushed for more insurance, state health officials said new federal rules were depriving coverage to thousands of low-income Kansans.

“We’re all looking at ways that we can make the dollars we use go further,” Sebelius said in a speech to more than 700 people at a Topeka Chamber of Commerce luncheon.

“Sixteen cents of every dollar you spend on health care right now – if you purchase health insurance – goes to provide care for those who don’t have insurance,” Sebelius said.

“You are paying for that each and every day,” she said.

Sebelius has proposed spending $4 million in state funds to expand coverage to about 2,000 children from birth to age 5.

Meanwhile, health policy officials told lawmakers that federal requirements were squeezing thousands of low-income Kansans.

Starting last July 1, the federal government required that all applicants for Medicaid and HealthWave – two federal and state funded programs that provide health coverage to the poor – provide documentation of citizenship and identification. The rules were aimed at illegal immigrants.

Since then, nearly 24,000 people have dropped off the Kansas rolls.

Andrew Allison, deputy director of the Kansas Health Policy Authority, said more than 16,000 of those have fallen off the program “while waiting to be re-enrolled as a result of the large backlog of cases the new requirements have created.”

Allison added: “While we understand that the new law targets illegal immigrants, we must point out that the impact of the law in our state is mostly falling on eligible citizens.”

He said the situation may ultimately cost the health care system more.

State officials said they will meet with members of Congress next month to request help in solving the problem.