Issue Brief – 2015 Kansas Legislative Recap

Political Landscape

Following the November 2014 elections, Republicans held supermajorities in both the Senate and House. Conservative Republican Governor Sam Brownback was re-elected, promising to continue his signature income tax plan and maintain his focus on economic growth, K-12 education funding, and reforming the public employees’ retirement system.

Overview

Much of the media attention during the 2015 session focused on fiscal issues following the implications of the 2012 tax cuts signed into law by Governor Brownback, which represented the largest tax cut in Kansas history. Shortfalls in tax revenue through fiscal year (FY) 2015 required Governor Brownback to implement cuts in the approved budget before the Legislature returned in January 2015. The 2015 Legislature adopted a budget early in the session that accepted current-year reductions and replaced the K-12 education funding formula with fixed, inflation-adjusted amounts for each school district, or block grants. The final weeks of the session saw legislators gridlocked over tax policy in order to fill the remaining $400 million gap between 2016 revenue estimates and the $6.2 billion budget.

The session ended after a record 113 days, with the Legislature passing a bill that largely closed the budget gap by raising state sales tax from 6.15 to 6.5 percent, raising cigarette taxes by 50 cents per pack, creating a new tax of 20 cents/mL on e-cigarette fluid, and eliminating a number of income tax deductions. The budget bill won some additional votes by eliminating income taxes for the poorest Kansans, though a proposal to lower the food sales tax did not make it into the final bill.

Health policy bills were featured prominently in legislative discussions during the 2015 session, both as stand-alone issues and tied with debates over the budget. The key themes in these bills are likely to return in future sessions.

Major Themes

Medical Marijuana

As other states approve or consider legalization of marijuana for medical use, bills on this issue received committee hearings for the first time in Kansas. Bills allowing legalization of medical marijuana and legalization of hemp preparations for seizures were introduced in the Senate and House. The latter included provisions to limit cannabis to preparations with three percent or less of tetrahydrocannabinol, or THC, widely known as the psychoactive substance in marijuana. While that bill (HB 2282) failed to pass in committee, a number of legislators have indicated that the issue will be a priority in 2016. The Kansas Health Institute (KHI) provided neutral testimony in two instances regarding the impact of medical marijuana legalization and has conducted a health impact assessment on the topic that will be released this fall.

Medicaid Expansion

Moderate Republicans and Democrats in the Kansas Legislature pushed for Medicaid expansion, and the topic had its first hearing in the Vision 2020 Committee. That discussion was followed by a two-day hearing in the House Health and Human Services Committee in March, held in response to a threatened floor vote on Medicaid expansion during an early budget debate. KHI provided neutral testimony during the well-attended hearings, which included over 150 pieces of written testimony in favor of expansion from major provider associations, health foundations, consumer advocates and others. A number of opponents—including think tanks advocating for fiscal restraint—also testified. Proposals put forward would have allowed for expansion of Medicaid eligibility to all adults up to 138 percent of the federal poverty level, or an annual income of about $33,000 for a family of four. Critics of the legislation contended that expansion would have hit the state budget hard after 2016, when states assume some of the costs for the newly eligible population after the federal match decreases. Nonetheless, Kansas will likely continue debating whether or not to join the 29 states that have already expanded Medicaid eligibility.

KanCare

Following the 2013 privatization of state Medicaid services through KanCare, the Kansas Legislature invested time studying the effects of the program on state spending and health outcomes. Bills were put forward in this session to change the structure of KanCare oversight and give the Kansas Department of Health and Environment (KDHE) more flexibility to control prescription drug access and cost. This included a proposal from KDHE related to the use of mental health drugs for Medicaid enrollees.

As the third year of the state contracts for KanCare managed care organizations (MCOs) ends before the 2016 session, legislators are likely to review the goals and outcomes of KanCare to continue to shape the program.

One of the bills that passed in 2015, Senate Substitute for HB 2042, changed the structure of the KanCare Oversight Committee by allowing the Senate President to appoint two members, at least one of whom must come from the Senate Committee on Ways and Means. The Speaker of the House must also appoint a member from the House Appropriations Committee.

Senate Substitute for HB 2281 was one of the last bills passed in 2015, and makes several changes to the authority of the Insurance Commissioner, such as granting him power (under certain conditions) to terminate the privilege fees paid by health maintenance organizations (HMOs), which include the KanCare managed care organizations.

The bill increased HMO privilege fees from 1.0 to 3.31 percent of all premiums collected through 2017 and 2 percent thereafter. These funds will be deposited in the new Medical Assistance Fee Fund to reduce the amount of State General Fund needed as the state match for Medicaid. The increase in the privilege fee is expected to raise $106.3 million and reduce state general fund expenditures by $47.8 million in FY 2016.

Senate Substitute for HB 2149 also passed, allowing the state Medicaid program to manage the use of prescription drugs that treat mental illness in order to control costs. The bill deletes current law that prohibits the state from imposing any limits on access to these medications and creates a specific process for the Medicaid Drug Utilization Review Board and a new panel of experts to make recommendations for how these drugs are used among Medicaid members. The bill is estimated to save Kansas about $33 million in Medicaid costs during FY 2016.

Scope of Authority and Practice

A number of bills regarding licensing and practice authority among health care professionals received hearings in the 2015 session. In particular, a few proposals would have enabled advanced practice registered nurses (APRNs) to practice on their own.

One bill (HB 2225) was passed to clarify the status of physicians that are paid through medical retainer agreements under state insurance regulations. Senate Substitute for HB 2225 clarified that these agreements, used by ‘concierge’ physicians who give direct patient care, do not qualify as health insurance and cannot be regulated by the state’s insurance department.

The 2015 session also included a hearing on a bill that creates a new type of provider license (registered dental practitioner) which expands the types of services dental hygienists can provide after receiving advanced training. Registered dental practitioners have been championed by advocacy groups over the last five years to address the shortage of dental services in rural and frontier counties, though they are opposed by dentist groups. Advocates will continue to push for this and other forms of expanded scope of practice to increase access to care.

Alcohol/Tobacco

Early in the session, Governor Brownback proposed an increase in the liquor tax to 12 percent from the current rate of 8 percent, though both the Senate and House versions of the relevant bill failed to pass in committee. One bill concerning alcohol, HB 2223, was passed to allow infusion of liquor and alcohol sampling by alcohol retailers and altered standards for citations and licensure.

In addition, several bills were introduced to allow liquor sales in grocery and convenience stores. KHI provided neutral testimony on the health effects of this bill and has conducted a health impact assessment on the topic. A later version of the proposal allowing counties the option to vote on the measure was discussed in committee, but no action was taken. This issue will likely come up again next session.

Early in the session, Governor Brownback proposed an increase on cigarette taxes to $2.29/pack, up from the previous rate of $0.79/pack. Public health organizations applauded the proposal, while critics said the large jump would hit consumers’ pockets and drive sales across the border, especially to Missouri—where cigarettes taxes are lowest in the nation at 17 cents/pack. The final tax bill passed in June (Senate substitute for HB 2109) raised the tax to $1.29/pack and added a new tax rate ($.20/mL of fluid) for e-cigarettes.

Looking Ahead

With the 2016 legislative session occurring during an election year, the state is likely to address a number of politically charged topics. In addition to continuing discussions on the issues described here, there are some new topics that are likely to come up next session.

E-Cigarettes

Electronic cigarettes (e-cigarettes) have grown in popularity since they entered the United States market just a few years ago, with recent data suggesting that use among American teens tripled between 2013 and 2014. E-cigarettes are vaporizers commonly filled with flavored nicotine; proponents suggest they aid tobacco cessation, while opponents label them as an easy way for youth to develop nicotine addictions.

In 2015, the Kansas Legislature passed a bill (Senate Substitute for HB 2109), which taxes e-cigarettes at $0.20 /mL of fluid, effective July 1, 2016. E-cigarette retailers have spoken out against the legislation, and the policy will likely be debated in the 2016 session before the law goes into effect. KHI is conducting research on this topic to help inform the 2016 legislative discussions.

Food Sales Tax

Though this issue did not receive formal hearings during the 2015 session, legislators repeatedly debated proposals to lower the sales tax on groceries during budget debates in the final weeks of the session, with some advocating for complete sales tax exemption on fresh fruits and vegetables.

Several versions of HB 2109, the tax policy bill approved by the governor, included provisions to lower food sales tax to 4.95 percent beginning July 1, 2016; however, the final bill did not include this provision. This creates an opportunity for legislators to lower the tax during the 2016 session, before the next election cycle.

With the increase in the sales tax approved during the last days of the 2015 session, Kansas now assesses the second highest state sales tax (6.5 percent) on food in the nation, second only to Mississippi (7.0 percent).

Affordable Care Act

As implementation of the Affordable Care Act (ACA) continues, Kansas legislators have introduced several bills in response to changing insurance markets and rates. One such bill, SB 309, was introduced late in the 2015 session to assess a 3.5 percent surcharge on ACA-compliant health insurance premiums to offset the cost to state agencies of implementing the ACA. With the recent U.S. Supreme Court ruling in King v. Burwell, upholding federal marketplace subsidies, the 2016 session will likely bring additional ACA-related bills as legislators continue to see how the law affects Kansans.