KHI News Service

The undoing of the Kansas Health Policy Authority

A five-year experiment soon to end

By Mike Shields | June 20, 2011

Kansas legislators liked the idea of the Kansas Health Policy Authority back in 2005, when the House and Senate each voted unanimously to create the new agency that came to control the majority of state government’s health care spending.

But by the time Gov. Sam Brownback took office this past January, the health policy authority had no real allies left in the Legislature.

Brownback’s executive reorganization order (ERO 38) merging the agency with the Kansas Department of Health and Environment and dissolving without fanfare the quasi-independent board that had governed it came and went with no opposition in the House or Senate.

EROs take effect unless rejected within 60 days by either chamber. Brownback has issued more of them than any previous Kansas governor. The merger of the health policy authority with KDHE becomes official July 1.


History of Kansas EROs

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Ray Davis

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Support disappeared

“Support for the (health policy) authority in the House and the Senate disappeared when the (former) Speaker of the House (Melvin Neufeld, R-Ingalls) was defeated in the primary and the state senator that was our primary sponsor (Jim Barnett, R-Emporia) decided to run (unsuccessfully) for Congress,” said Ray Davis, a member of the Kansas Health Policy Authority’s governing board almost since it was formed in 2006.

“So, there wasn't a significant amount of support. There was rather a good deal of lack of support in the Legislature. Not because we went too far, but because we represented a change in thinking that most of the real conservative members of the Legislature didn't appreciate.”

Davis is a professor emeritus of public administration at the University of Kansas. He has worked on health policy issues since at least the Nixon administration. He is the father of Rep. Paul Davis, the Lawrence Democrat who is the House minority leader.

The agency was launched in 2006, the year after then Gov. Kathleen Sebelius, a Democrat, submitted an ERO to the Legislature that essentially would have moved administration of Medicaid and the State Employees Health Benefit Plan under the Department of Administration in a way hardly different from Brownback’s move to place the health policy authority at KDHE.

Under one roof

The idea behind bringing the separate programs under one roof seemed simple and plausible enough at the time. Put one entity in charge of virtually all state health care spending — totaling about $2 billion a year — and everyone would benefit from the economies of scale and efficiencies that would result.

But Republicans in the Legislature worried that consolidation would put too much power in one place, especially with a governor from the opposite party running the executive branch.

They modified the Sebelius order, advancing her administration’s idea of creating a single agency but shifting its governance to a quasi-independent board with nine voting members to be appointed by the governor and legislative leaders.

They also wrote into the law provisions that made the board the clearinghouse of state health policy recommendations for presentation to the Legislature and the governor.

KHPA experiment will soon end

Driving down costs

The unwritten but hoped-for goal among some key lawmakers was that the agency would significantly curb or reduce state Medicaid spending which has doubled in the past decade. Other lawmakers hoped wider reforms in the private health care market also would occur as the state agency set the pace and showed the way to effectively drive down medical costs.

Neither really happened. Instead, just about every time agency officials brought a major Medicaid cost cutting idea to the Legislature it was rejected, generally because the idea met stiff opposition from lobbyists.

For example, when KHPA officials proposed shifting to a preferred drug list for mental health drugs, which account for one of the fastest growing segments of Medicaid spending, they ran into a legislative brick wall erected by drug company lobbyists and advocates for providers of mental health services. In this year's legislative session, lawmakers actually wrote into law a prohibition against implementing a preferred mental health drug list for people on MediKan, a state-funded program that assists people awaiting Social Security disability benefits. Brownback subsequently vetoed that provision.

Likewise, when the health policy authority called for a statewide smoking ban and increased taxes on tobacco products, the proposals were widely criticized and then spurned by legislators.

The statewide smoking ban that the Legislature ultimately approved in 2010 occurred in the one year that the health policy authority did not include it among its annual recommendations. By then an endorsement from the board was almost seen as counterproductive to gaining legislative approval for a proposal.

Too focused on Medicaid?

Neufeld agreed that when he and Barnett left the Legislature, so too did support for the health policy authority. But, he said, most other legislators hadn’t known what they were voting for when they initially created the agency. And once it got going, it never reached its full potential.

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Melvin Neufeld

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“I think part of what happened to the health policy authority was they got too focused on Medicaid,” Neufeld said. “If you remember, the (authorizing) legislation was for it to work on health care, not to emphasize Medicaid. The real emphasis was to try to fix the health system in Kansas and move it forward and a large part of the dissent was it just became another Medicaid agency and wasn't progressive on looking at things the Legislature was going to do. I went over several times and said: you've got to get back on mission and not spend all our time worrying about Medicaid.

“At the start, there was quite a bit of talk about using SEHBP (the state employee’s health plan) and to drive behavioral changes in the health system,” Neufeld said. “But after a while, they just kind of forgot that and went to Medicaid.”

But the health policy authority board at best got mixed messages from the Legislature. Senate President Steve Morris, R-Hugoton, on more than one occasion urged the board to make reducing Medicaid costs its top priority. And the law made it clear, the board’s charge was to develop policy recommendations on its own based more on expected health outcomes than the political considerations that drive elected officials.

Avoiding ideology

“The board made a determined effort to try to stay away from being political or ideological,” Davis said.

In 2007, the board publicly discussed a variety of health reform options it would recommend to the 2008 Legislature, including the possibility of a single-payer health care system in Kansas (because actuaries concluded that would save the state more money than any other plan).

Another considered option would have made health insurance mandatory for children younger than age 19, with state subsidies available to purchase it. The subsidy dollars would have come from increases in tobacco taxes.

Both those ideas had considerable merit when viewed strictly from the standpoint of cutting long-term health care costs. But Kansas isn't Singapore, so even ideas that actuaries believe would save Kansans billions of dollars over time must sooner or later face the wringer of electoral politics.

Those board discussions preceded the national debate on health reform and the subsequent Tea Party reaction to the 2010 Affordable Care Act, but they didn’t sit well even then with conservative Republicans in the Kansas House and Senate. Conservatives have since captured the Governor’s Office and now also control the Kansas House. The Kansas Senate is still ruled by a coalition of moderate Republicans and Democrats.

Despite the growing testiness with the health policy authority in 2008, the Legislature did approve a premium-assistance program that evolved from a board proposal. But the following year, lawmakers reneged on funding it, saying they hadn’t understood fully what they had approve the previous year in Senate Bill 81.

With pressure from legislators growing, Marcia Nielsen, first executive director of the agency, resigned in June 2009. And by August that year, some lawmakers were already publicly predicting the health policy authority would be abolished or its board eliminated once Brownback was elected governor.

For better or worse, had the Legislature enacted any of the major proposals discussed or recommended by the health policy authority, Kansas would have had a considerable head start on several of the major reforms included in the Affordable Care Act that are scheduled to begin in 2014.

Among them is a health insurance exchange or "connector," intended to serve as a one-stop, online shopping place for those seeking health insurance through private or government plans. An effort is underway by the Kansas Insurance Department to develop plans for an exchange.

But if Barnett and the health policy authority board had been listened to, Kansas would already have an exchange of some sort.

Another look at Medicaid

Now, the Brownback administration, in an effort led by Lt. Gov. Jeff Colyer, is looking for ways to cut Medicaid spending by $200 million in time for fiscal 2013, which starts July 1, 2012.

A series of public forums on the topic are scheduled. The first is set for Wednesday in Topeka.

Davis said he believes the work and findings of the health policy authority board is being ignored or pushed aside as a new administration begins examining anew the same old problem of a too-costly health system.

"I may be too touchy on the subject, but the series of hearings that the lieutenant governor is managing strike me as not being terribly interested in the public's awareness of what's been going on in the past," Davis said, recalling similar forums and public meetings the health policy authority held across the state as it considered various reform proposals.

The board stopped doing any serious business almost as soon as Brownback was elected and made clear he intended to abolish it.

There are still a couple weeks to go before it is officially abolished, but so far there has been no ceremony marking its passage into history; no thank-you letters to the volunteers who served on it; not even a debriefing or concluding report that allowed board members to pass on what they thought they had learned to the Kansas public, to the Legislature, or to those now in charge of the executive branch.

“One of the things that I regret as we began shutting things down was that we as a board never had a chance to sort of sit down and say what do we want to leave behind from this whole process, what sort of analysis or what kind of overall assessment,” Davis said.

“And I think the reason for that was the management staff — Andy Allison and the others — did what was responsible for them and that is they were responsive when the new governor said I'm thinking of going in a different direction. That’s a responsible action by state employees: Tell me what you want and we'll do it.

“On the other hand, the authority board had somewhat of a different responsibility and that responsibility was to assess what do we take from this process that we've gone through and have invested a considerable amount of time and effort in."

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KHPA experiment will soon end