A new study from the Kansas Health Institute concludes Medicaid expansion in Kansas would serve an additional 130,000 low-income adults and children with a first-year net cost of $47.4 million.
The study is expected to shape debate on Medicaid expansion in the coming weeks after the issue was relegated to the back seat during the first half of the Legislative session. Democratic Gov. Laura Kelly has made expansion a top priority while Republican leadership is opposed.
KHI's projections reflect a downward revision from past estimates in the number added through expansion and a higher price tag than other studies concluded. The study was set for Tuesday release.
“We’re happy to have folks kick the tires," said Kari Bruffett, a KHI policy executive and lead author of the study. "The idea is to stimulate the policy discussion.”
KanCare, as Medicaid is known in Kansas, already serves about 416,000 seniors, disabled adults and low-income families. Under the current terms, individuals must earn less than 38 percent of the federal poverty level to qualify. For a family of four, the cutoff is $9,785 in annual income. For a single adult, the amount is less than $5,000.
The Affordable Care Act allows states to extend coverage to those who earn up to 138 percent of the poverty level, which is $17,236 for an individual or $35,535 for a family of four.
The federal government covers 90 percent of the cost of the medical services for states that expand. Kansas is among 14 states that haven't expanded.
KHI, a nonprofit whose research has been used by expansion advocates and opponents, projects fewer people would sign up after expansion than previous estimates that pegged the number in the 150,000 range. Bruffett said the updated projections — 90,176 adults and 39,158 children — reflect an improved financial climate.
“There’s just fewer adults right now in the economy that are under 138 percent of the poverty level, and fewer of them are uninsured," Bruffett said.
Some states underestimated the impact expansion would have on the budget, but Bruffett said later states learned from those experiences. KHI calibrated its methodology by applying it to other states and found the projections were in the range of results.
The figures account for adults who already are eligible but may not know it, as well as those who already have insurance but would switch if state assistance were available. Per-person costs for children, adults and pregnant women are based on expenses by the current Medicaid population, using data from the Kansas Department of Health and Environment.
“Reasonable people can disagree on these estimates," said KHI president Robert St. Peter. "If everybody puts their assumptions and numbers they’re using on the table so everybody can understand it, then I think we can have a meaningful conversation about where the right answer might lie. But the estimates that are sort of created out of black boxes are very difficult to take seriously.”
For the first time, KHI takes into account the offsetting benefits of expansion. In addition to unlocking additional federal dollars for existing KanCare services, expansion would bring in more than $40 million annually in managed care privilege fees.
Over the next 10 years, the yearly net impact on the state budget would range from $47.4 million to $58 million, with a total cost of $520.8 million for the decade.
Those projections don't include an increase in tax revenues, which other organizations have used to lower the cost estimate. Bruffett said KHI didn't factor in those revenues because they are too difficult to isolate. However, she said, it is reasonable to expect a positive impact.
If the return on investment in federal and state funds were 2.5 percent, the study notes, Kansas would receive at least $18 million in annual tax collections as a result of Medicaid expansion.
That would lower the 2020 impact on the state budget to $29 million. The governor's budget anticipates a cost of $14 million for the first six months.
Kelly's spokeswoman, Ashley All, said the study "corroborates what we already know about the impact of Medicaid expansion."
"While the new report makes different assumptions and uses different methodology, the end result is similar," All said.
She said the state's investment is relatively small compared to the federal dollars that will provide relief for hospitals, clinics and communities across the state.
Michael Austin, of the Kansas Policy Institute, which opposes expansion, pointed to differences between the ways KHI and the governor arrive at similar cost estimates as evidence that predictions can't be trusted.
He said the "difference between KHI's analysis and Gov. Kelly's fiscal estimate on expansion legislation clearly shows the uncertainty of how Medicaid Expansion will impact taxpayers and the state budget."
April Holman, executive director of the Alliance for a Healthy Kansas, which advocates for Medicaid expansion, said the KHI study inflates the number of children who would gain access through expansion. However, she said, the organization would be pleased to see more children gain coverage.
“While the new KHI brief varies slightly from other estimates of the cost of KanCare expansion, it confirms a number of things that we already knew — including that the state will benefit from a variety of budget savings to offset the cost of implementing expansion," Holman said.