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ACA opponent says Brownback should reconsider stand on insurance exchange

Insurance industry consultant says state should partner with feds on exchange and use Medicaid expansion to bargain for block grant

By | December 04, 2012

Like Kansas Gov. Sam Brownback, Bob Laszewski is a staunch opponent of the Affordable Care Act.

Despite that, the Washington, D.C. consultant said at a meeting here today that Brownback is making a mistake by refusing to partner with the federal government to run the Kansas health insurance purchasing exchange that the law requires to be operational by 2014.

“Do the partnership. That is a no-brainer,” Laszewski said to about 100 legislators, lobbyists and health care providers at a meeting sponsored by the Kansas Health Institute, the parent organization of the KHI News Service.

Laszewski, whose client list consists mostly of health insurance companies, said it’s time for opponents of the law to stop fighting it and start doing what they can to ensure that it is implemented in a way that does the least harm to the industry and consumers. One way to do that, he said, would be to implement exchanges – new online marketplaces – that encourage competition among insurance companies rather than rely on regulations to moderate increases in premiums.

“Putting the insurance exchange up doesn’t mean you support the thing (the reform law), it means you are trying to minimize the damage,” Laszewski said, predicting that premiums in the individual and small-group markets would go up no matter who runs the exchanges.

Brownback last year blocked Kansas Insurance Commissioner Sandy Praeger’s attempts to establish a state-operated exchange, returning a $31.5 million federal grant in the process. Last month, the governor told Praeger, who also is a Republican, that he would not support her efforts to partner with the federal government to operate and fund the Kansas exchange.

“Kansans feel Obamacare is an overreach by Washington and have rejected the state’s participation in this federal program," Brownback said, explaining his decision.


Issue Brief: ACA Medicaid Expansion: Enrollment and Cost Estimates for Kansas Policymakers

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Praeger, who also spoke at the KHI meeting, said she would try once more before a Feb. 15 federal deadline to convince the governor and legislators that partnering on an exchange would be better than allowing the federal government to run it. Federal officials recently extended the deadline in an effort to accommodate states where governors had opposed or held out on state participation pending the outcome of the November national elections.

“There is still some opportunity for us to retain some control,” Praeger said. “Our department looks forward to working with the Legislature and the governor to see if that still is an option. The decision really rests with them.”

Praeger said partnering with the federal government would allow her department to retain authority to approve the plans marketed in the exchange and manage consumer protection efforts. She said it might also prevent federal officials from over-regulating the exchange.

The ACA calls on states to expand Medicaid eligibility to include adults earning up to 138 percent of the federal poverty level — $30,660 a year for a family of four. But the U.S. Supreme Court decision earlier this year that upheld the law also made the program expansion optional for states.

Implementing the expansion in Kansas would make more than 300,000 additional adults eligible for a program that today serves approximately 380,000 Kansans – mainly women, children, seniors in nursing homes and people with disabilities.

A KHI analysis handed out at the meeting estimated that about 240,000 additional Kansans would enroll in Medicaid if the expansion were implemented in 2014, including 122,185 adults and 117,886 children. According to the analysis, expanding Medicaid would cost the state an additional $519 million between 2014 and 2020.

The projected cost and enrollment figures in the KHI analysis are higher than those in a 2010 report prepared for the now-defunct Kansas Health Policy Authority and also higher than those in a state-by-state analysis prepared in 2010 by the Kaiser Family Foundation. But the costs projected in the KHI analysis were considerably less than those estimated in 2011 by the Kansas Policy Institute, a conservative think-tank based in Wichita, which has opposed the Affordable Care Act and its implementation. The Kansas Policy Institute also projected the program’s cost through 2023.

Currently, the state’s Medicaid eligibility criteria for adults are among the most restrictive in the nation. Only those with children are eligible and then only if they earn less than 32 percent of FPL – $5,900 a year for a family of four.

Brownback hasn’t said whether he plans to implement or recommend the expansion for Kansas. But he has said that he doubts the federal government would keep its promise to initially pay 100 percent of the cost of serving all those newly made eligible by the Medicaid expansion. Under current law, the federal commitment would be good for the first three years, drop to 95 percent in 2017 and then to 90 percent in 2020, where it would remain.

Kansas Insurance Commissioner Sandy Praeger (right) and Robert Laszewski — a nationally renowned expert on health reform and president of Health Policy and Strategy Associates in Washington, D.C.

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Medicaid leverage

Laszewski said covering currently uninsured Kansans in Medicaid would be significantly cheaper for taxpayers than providing them with tax credits to purchase private coverage in the exchange. And he said by agreeing to the expansion, Brownback and other Republican governors might be able to get federal officials to agree to their long-standing request to convert the program to block grants to states with fewer restrictions on how the money is spent.

“Put up or shut up, that’s what I say to Republican governors,” Laszewski said. “It gives you leverage to get what you’ve always said you wanted — autonomy. Go to the Obama administration and say, ‘OK, we’ll expand Medicaid but we’re not going to do it your way.’”

Currently, federal laws and regulations limit the extent states can change their Medicaid programs. The GOP governors want the federal government to continue to provide most of the funding for Medicaid. But they have said if they were allowed more freedom to innovate they could make the program less costly and more effective. Medicaid is one of the fastest growing portions of the budget in most, if not all, states.

Opponents of converting Medicaid to a block grant say they fear that state officials would cut costs by rationing services, creating barriers to enrollment or perhaps by forcing people from the program.

The Kansas Medicaid program costs about $3 billion a year. The state’s share of that is about $1.2 billion. The KHI analysis estimated that while Kansas would spend an additional $518.5 million between 2014 and 2020, federal Medicaid spending in the state over the same period would go up about $2.9 billion.

Note: An earlier version of this story said that the estimated federal spending between 2014 and 2020 would be $3.4 billion — but that would be the total spending increase, not just the federal share. The federal share is estimated to go up to about $2.9 billion.

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