America’s health care system is broken. The care we receive is the best in the world, but it is also the most expensive. Spiraling costs are like an economic black hole, gobbling up public and private resources that could be put to better use.
Effective reform would ideally produce a system built around cost transparency and which efficiently responds to market signals. It would also acknowledge the basic concepts of supply and demand. Wholesale reform is desperately needed, and the logical place for that to happen is at the federal level. But until that day comes, Kansans must make the best of the flawed current system.
As chairman of the Kansas Rural Revitalization Committee I scheduled three days of hearings on the challenges and opportunities facing health care in rural Kansas. The committee heard testimony from hospital administrators, physicians, dentists and other providers, such as community mental health centers. The consistent theme was the urgent need for Medicaid expansion.
Expanding Medicaid eligibility would provide direct benefit to Kansans who make more than 100 percent but less than 138 percent of federal poverty level. But presenters made it clear that expansion offers other benefits to rural Kansas. At a time when 86 percent of Kansas hospitals have negative operating margins and are saddled with large losses due to uncompensated care, expansion would increase their profitability and viability.
There is an economic development aspect as well. Two things critical to a community’s continued existence are a good public school and a functional health care system. If local health care is nonexistent, or its future is in doubt, recruitment of new businesses, employees, or families becomes impossible. And if increased profitability makes hospitals less dependent on county subsidies, property tax relief becomes a real possibility.
Opponents claim adopting expansion won’t solve the problems of Kansas hospitals, even though several have already closed, and others are teetering on the brink. I agree. Rural health care must be reinvented to do the job more cost-effectively and efficiently. But that can’t happen quickly because any innovation will require lengthy negotiations with private insurers and federal bureaucrats. Expanding Medicaid can bring immediate relief and provide a lifeline to a more innovative and appropriate health care system.
Opponents assert it primarily benefits individuals who aren’t working, who prefer to live off the government rather than being productive members of society. There may be instances where that would be true. But the new enrollees would be those making less than $17,236 as an individual or $29,435 for a family of three. Over 80 percent of Kansans receive health insurance via their employer or some government program. But for the 20 percent who must purchase their own insurance, the cost is climbing rapidly, and is out of reach for individuals whose incomes are below these levels.
Many expansion beneficiaries are the working poor who don’t receive health insurance at work. They serve in food service, make beds at hotels and scramble to make ends meet with two or three part-time jobs. They are young entrepreneurs who have taken a chance on a business which has not yet achieved profitability. Or it’s someone who wants to take that step but cannot accept the risk, so they stay in a job that isn’t ideal merely to get health insurance. Individual entrepreneurship is a cornerstone of our free-market system. But crushing insurance costs are stifling the dreams of too many would-be Kansas entrepreneurs. Expanding Medicaid creates opportunities for them and for the Kansas economy.
Contrary to the claims of some, expansion will not wreck the state budget. A fee on Medicaid contractors plus cost savings in other state programs reduce the annual net cost to approximately $57 million. That is a very reasonable investment for the improvement it would create for the health of Kansas. But the impact goes beyond that. Economist Dr. John Leatherman, of Kansas State University studied the economic effects of roughly $650 million new federal dollars injected annually into the Kansas economy. His conservative estimate is that it would generate at least $30 million annually in new state tax revenues, and nearly that much again in additional revenue to local governments. That makes the net fiscal impact zero.
Medicaid expansion has now been discussed for six years. By being one of the laggards, Kansas has benefited from the experience of the early adopters. Time is up and there is no excuse to delay further.
In March, the Kansas House passed a proposal to expand Medicaid. It is now time for our colleagues in the Senate to do the same.
Kansas State Rep. Don Hineman is a Republican from Dighton.