Key Findings -

The cost of Medicaid expansion in Kansas is projected to average just over $50 million annually between 2016 and 2020. Based on publicly available data and the experiences of states that expanded in 2014, it appears that Kansas should be able to generate sufficient savings and revenue gains to cover the costs of expansion during this time period – in other words, expansion should be budget neutral. Expansion, in fact, may generate savings and new revenue in excess of the costs of expansion.

Background -

In 2012, the United States Supreme Court ruled the provisions of the Affordable Care Act (ACA) that required states to expand their Medicaid programs could not be enforced, making a state’s decision to expand voluntary. However, the financial incentives for states to expand coverage remain. As of November 2015, 30 states and the District of Columbia have expanded their Medicaid programs. To date, Kansas has not and accordingly the State is unable to tap into enhanced federal matching funds. These funds are available to support Medicaid coverage for “childless adults” with incomes below 138% of the Federal Poverty Level (FPL) ($16,243 per year); today, with limited exception, “childless adults” in Kansas are not eligible for Medicaid unless they are pregnant, disabled or over 65. Expansion would also extend Medicaid to parents with incomes above 33% of the FPL ($6,630 per year for a family of three, Kansas’ current eligibility level for parents) and below 138% of the FPL ($27,724 per year for a family of three). The vast majority of adults who would gain coverage are in working families.

This paper reviews the implications of Medicaid expansion for the Kansas State budget, drawing on the State’s fiscal impact analysis, publicly available data on Kansas Medicaid costs and the experiences of states that expanded in 2014.2 Because the State’s analysis did not consider where expansion would generate savings and new revenue, we focus particularly on these savings and revenue opportunities. This paper does not consider the broader economic and employment consequences of the infusion of federal funds.