Small-town hospital closure spurs new interest in Kansas Medicaid expansion
Topeka ? The impending closure of a hospital in southeast Kansas is prompting some Republican state lawmakers to consider allowing some form of Medicaid expansion as allowed under the federal Affordable Care Act.
“I’ve never been amenable to just an expansion of the Affordable Care Act,” Senate Vice President Jeff King said Tuesday. “But as we look at states like Indiana that take a real state-centric approach to addressing the health care needs of their poor, I think that’s something that Kansas needs to strongly consider.”
Last week, Mercy Hospital in King’s home town of Independence announced it will close its doors Oct. 10. The hospital cited several factors in its decision, including declining reimbursement rates from Medicare, the federal health insurance program for the elderly.
King’s support for some kind of expansion plan may be important because, so far, the only Medicaid expansion bills introduced in the Legislature have been in the House, where GOP leaders have refused to let them be debated and voted on by the full chamber.
Lower Medicare reimbursement rates were one of the key financing provisions of the Affordable Care Act, also known as “Obamacare.” The lower reimbursements from Medicare were supposed to be offset by the expansion of Medicaid, which would reduce the amount of uncompensated care hospitals deliver.
As of July, 30 states and the District of Columbia have implemented some kind of Medicaid expansion plan.
But in states like Kansas that have chosen not to expand Medicaid, many hospitals have suffered, especially those in small communities.
Tom Bell, president and CEO of the Kansas Hospital Association, said the closure of the Independence hospital may be the first of several in the state.
“I wouldn’t be surprised if it happened again,” he said. “Every hospital in every community right now is having a discussion about the future: ‘What’s our facility going to look like going forward?’ and plugging in the additional revenue (from Medicaid expansion) is part of the process.”
Bell said expanding Medicaid under the Affordable Care Act would have meant an additional $1.5 million a year for Mercy Hospital. And he said while that, by itself, may not have been enough to keep the doors open, “I have to think that would have been a significant part of their discussions.”
The Medicaid program in Kansas, known as KanCare, covers about 424,000 people, mainly low-income children and families, seniors and disabled individuals.
For families with dependent children, the income limit is about one-third of the federal poverty level, or $9,216 a year for a family of four. Working-age adults without children cannot receive Medicaid in Kansas.
Under the Affordable Care Act, states can extend Medicaid to all individuals with incomes up to 138 percent of the poverty level, or $32,913 a year for a family of four.
For the first three years, 2014 through 2016, the federal government pays 100 percent of the cost of covering those who would become newly eligible through the expansion. That would gradually ratchet down to 90 percent on an ongoing basis.
Under the regular Medicaid program, the federal government pays about 56 percent of the cost in Kansas while the state pays the remaining 44 percent.
The Kansas Hospital Association estimates that the lower reimbursement rates under the federal law are costing Kansas hospitals $132 million a year, and the cost of uncompensated care is estimated at nearly $1.2 billion a year.
If Kansas were to expand Medicaid, KHA estimates it would result in a net gain of $231 million a year in federal reimbursements, and it would cut the cost of uncompensated care by 33 percent.
During the 2015 legislative session, three Medicaid expansion bills were introduced in the House, but GOP leaders would not allow any of them to be debated and voted on by the full body.
One was introduced by the Vision 2020 Committee, which is chaired by Rep. Tom Sloan, R-Lawrence. It would have levied a fee on health care providers to pay the state’s share of the cost of expansion.
Sloan said the Senate may have to act first before any bill can be considered in the House.
“If the Senate took the lead, we would follow,” Sloan said in an email Tuesday. “Senate leadership is important because they are perceived as being more closely tied to the Governor.”
King cited programs in a handful of other states where local officials have crafted their own unique plans. In Indiana, for instance, the state offers different benefit packages to people based on their health status and compliance with healthy-behavior requirements.
In Arkansas, the state uses Medicaid dollars as premium assistance to buy insurance from private companies that offer what the state calls Marketplace Qualified Health Plans.
“I think those two both give us models, along with Representative Sloan’s concept on the provider tax, that can be a way forward for Kansas,” King said.