Kansas, like most other states, is facing a sharp loss of state revenue due to the economic impact of COVID-19. Yet, now more than ever, Kansas can’t afford not to expand Medicaid.
Despite facing a budget shortfall, Kansas forfeits $1.8 million in federal funds each day by choosing not to expand eligibility for KanCare, the state’s Medicaid program. In total, Kansas has lost out on $4.24 billion dollars in federal aid since 2014.
We can’t claim to be fiscally responsible and forfeit hundreds of millions of dollars annually. The economic impact of bringing those funds back to Kansas will speed our recovery and create new jobs.
Given the state’s budget constraints, fiscally responsible policy maximizes state general fund dollars by drawing down federal funds and generating new tax revenue.
Over next two budget years, expanding Medicaid would cost the state just $20.74 million in state general funds but would leverage $1.53 billion from the federal government. After accounting for upfront investments, cost savings and funds generated from a new hospital assessment, expanding Medicaid will only cost Kansas $2.08 million for fiscal year 2022.
Those numbers don’t tell the whole story, because these budget estimates don’t account for the economic impact, job growth and new tax revenue seen by states that have expanded Medicaid. New tax revenue created through expanding KanCare will pay for the annual cost — and then some.
How? The $1.53 billion dollars in federal funds Kansas would gain over the next two budget years would stimulate economic activity, boosting our struggling economy and creating more than 13,000 new jobs. The extra tax revenue from increased economic activity will more than cover the state’s costs to expand Medicaid.
We know this because over three dozen states have expanded Medicaid and benefited financially. For instance, Michigan’s new tax revenue associated with expanding Medicaid is projected to exceed costs by $162 million in 2021. In Louisiana, expansion created $178 million in new state and local tax revenue annually.
In Kansas, poll after poll shows overwhelming support for expanding Medicaid, not only because it makes economic sense, but also because it would improve the health of Kansans and protect hospitals. Its why, for the last seven years, tens of thousands of Kansans have urged the Legislature to expand KanCare.
Rural hospitals in non-expansion states are six times more likely to close than those in states that have expanded Medicaid and the pandemic will only amplify the problems facing vulnerable hospitals, making expanding KanCare more important now than ever.
Right now, uninsured Kansans, hospitals and health care providers, businesses and our state budget are struggling because of COVID-19 and the state’s failure to expand Medicaid. Bringing our tax dollars back will provide health coverage and economic security to our hardworking neighbors, protect our vulnerable hospitals and boost our economy, benefitting our state budget.
It’s time to expand KanCare. We can’t afford to wait another year.
David Jordan is the president of the United Methodist Health Ministry Fund in Hutchinson.