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On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

Lawmaker pushing to include Medicaid expansion in budget negotiations

Expansion and business taxes remain bargaining-chip issues for moderate Republicans and Democrats

By | June 02, 2015

Frustrated by their inability to muster more than a handful of votes for any tax plan, Kansas Republican legislative leaders are asking rank-and-file members the “What will it take to get out of here?” question.

They’re getting a variety of answers as the session, on its 103rd day, inches closer to record territory as the longest in state history. In 2002, legislators met for 107 days.

Some committed fiscal conservatives are saying they must be given an opportunity to vote on a budget that cuts state spending more substantially than a tentatively agreed to $6.5 billion plan. They’ll likely get an opportunity to show their strength in the next few days. House and Senate negotiators are preparing several variations of the budget for test votes, including one that would impose across-the-board cuts of more than $350 million.

Holding out for Medicaid expansion

Other lawmakers are insisting that taxes be reinstated on more than 280,000 business owners and 50,000 farmers. Their profits — pass-through and passive income — were exempted from taxation by a 2012 law backed by Gov. Sam Brownback that also cut individual income tax rates.

A proposal to reinstate the business tax has strong support among moderate Republicans in the House despite Brownback’s pledge to veto any substantial changes to his signature policy, which he maintains will spur economic growth if given time to work.

Several House members who support reinstating some tax on business profits also continue to hold out for expanding Medicaid eligibility.

Rep. Tom Sloan, a moderate Republican from Lawrence, is one of them. He said he has provided House leaders with a plan that covers the estimated $68 million annual cost of expansion and generates an additional $39.1 million to help balance the state budget.

Photo by Andy Marso Rep. Tom Sloan, a moderate Republican from Lawrence, has provided House leaders with a plan that covers the estimated $68 million annual cost of Medicaid expansion and generates an additional $39.1 million to help balance the state budget.

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“You can fund Medicaid expansion without using state general fund money and, with the provider assessments that are proposed, actually help balance the budget,” Sloan said Tuesday.

The proposal increases an existing assessment on hospital revenues and imposes new surcharges on services provided by chiropractors, podiatrists, pharmacists, optometrists, mental health providers, and physical and occupational therapists. It also extends a nursing home “bed tax” that is set to expire.

Collectively, the proposed assessments on health care services would generate an estimated $106.4 million a year, according to estimates compiled by the Kansas Legislative Research Department.

Given all of the issues in play, Sloan isn’t confident that lawmakers will get an opportunity to vote on a package that includes the Medicaid expansion and business tax proposals even though he said such a combination could sway as many as 15 or 20 votes.

“It’s not been dismissed out of hand, which is about as far as I’d want to go in terms of a positive statement,” Sloan said. “It is being discussed.”

‘A difficult sell’

So far, Brownback and Republican leaders have been pushing for large increases in the state sales tax to close what is conservatively estimated to be a $406 million budget gap in the fiscal year that begins July 1. Sloan said he and other moderate Republicans would consider supporting a tax package that includes a smaller sales tax hike if it also includes the proposals they favor.

“There are people who say, ‘If we get a combination of a tax on those businesses that otherwise are exempt and we get Medicaid expansion, then the rest of the package might be bearable,’” he said. “But if all you’re doing is saying that Medicaid is off the table and business taxes are off the table, then there is no reason for most moderate Republicans or any Democrat to vote for it.”

Rep. Jim Ward, a Wichita Democrat and a leading advocate for Medicaid expansion, applauds Sloan’s efforts to keep the issue alive. But he said he and other members of the Legislature’s Democratic minority would have to think long and hard about supporting a bill that packages it with a sales tax increase.

“That will always be a difficult sell in the Democratic caucus,” Ward said. “It becomes one of those Faustian choices.”

Questions about the details

Some of the providers that Sloan is counting on to help fund his expansion plan either oppose it or have questions about it. 

Cindy Luxem, president and chief executive officer of the Kansas Health Care Association, said her organization, which represents the state’s for-profit nursing homes, supports Medicaid expansion but opposes Sloan’s funding proposal.

“The bottom line here is that we’d be telling providers who are already underpaid to step up to help fix a problem — the whole thing about balancing the budget — that they didn’t create,” Luxem said. “This is not the way to expand Medicaid.” 

“The bottom line here is that we’d be telling providers who are already underpaid to step up to help fix a problem — the whole thing about balancing the budget — that they didn’t create. This is not the way to expand Medicaid.” 

- Cindy Luxem, president and chief executive officer of the Kansas Health Care Association

Kyle Kessler, executive director of the Association of Community Mental Health Centers of Kansas, said his members strongly support Medicaid expansion. But he said he would need to review “the details of the financing plan” before deciding whether to support it.

Expansion population

Currently, the state’s privatized Medicaid program, KanCare, covers about 425,000 children and low-income, disabled and elderly adults. But that number includes relatively few non-disabled adults.

Adults with dependent children can participate in KanCare, but only if they have annual incomes below 33 percent of the federal poverty level, about $8,000 for a family of four. Non-disabled adults without children aren’t eligible for coverage no matter how poor they are.

Expansion would make all Kansans with incomes up to 138 percent of poverty eligible for KanCare: $16,105 for an individual and $32,913 for a family of four.

The U.S. Census Bureau estimates that 324,000 Kansans age 19 to 64 have incomes that would qualify them for Medicaid under expansion. Of those, about 131,000 are uninsured.

The Kansas Hospital Association has lobbied hard for expansion, telling legislators that a growing number of its members need it to offset cuts in Medicare and other federal programs.

— Dave Ranney of the KHI News Service contributed to this story.