* Kansas governor sends back "early innovator" HHS grant
* Brings returned grants amount to some $90 million
* HHS likely would have to set up Kansas exchange
By Alina Selyukh
WASHINGTON, Aug 9 Kansas became on Tuesday the
second U.S. state to return a large federal grant meant to help
it create a prototype health insurance exchange as part of the
Obama administration's healthcare overhaul.
Republican Governor Sam Brownback said the state would give
back the $31.5 million it received from the U.S. Department of
Health and Human Services to become an early leader, along with
six other states, in establishing health insurance exchanges
that other local government could use as a model.
Exchanges are meant to provide an open marketplace of
competing insurance plans that allow uninsured people and small
businesses to band together to negotiate cheaper rates.
Kansas's move brings the total amount of the returned
exchange-related federal grants to almost $90 million as
Republican governors seek to block implementation of the
healthcare law supported largely by Democratic lawmakers.
Experts warn that many states are falling far behind
schedule for a smooth and timely roll-out of the reform.
States are facing a deadline of Jan. 1, 2013, to submit
detailed plans for their exchanges or see HHS come in and build
one itself. Returning grants increases the likelihood that HHS
would have to do the work.
"It could come around to hurt the state in the long run,"
said Sabrina Corlette, a research professor at the nonpartisan
Health Policy Institute at Georgetown University.
"The more states that say: 'Forget it, let's have the Feds run it,' the more likely the (federal government) is going to
have a one-size-fits-all solution. They're not going to be able
to customize it for 30 states."
In April, Oklahoma returned its $54.6 million early
innovator grant, the largest of the batch of seven issued in
total. Kansas followed suit on Tuesday after months of internal
wrangling between Insurance Commissioner Sandy Praeger and the
conservative governor and legislature.
"Every state should be preparing for fewer federal
resources, not more," Governor Brownback said in a statement.
"To deal with that reality, Kansas needs to maintain maximum
flexibility. That requires freeing Kansas from the strings
attached to the Early Innovator Grant."
Commissioner Praeger, also a Republican, learned of his
decision in an 8 p.m. phone call that came unexpectedly on
"I don't know why now," she said in an interview. "Right
now, we can't really move forward. Whatever we do going forward
is going to require the governor's office signing off on it.
It's not looking real optimistic."
FIGHT AGAINST HEALTHCARE LAW
Kansas also received $1 million for planning the exchange
like virtually all other states. Some $400,000 of that money
has already been spent with another $200,000 pending approval,
Praeger said, but both of those installments are meant for the
state's effort to update its Medicaid program.
Because the Medicaid effort is supported by the state's
executive branch and has to connect to the insurance exchange
whenever one is set up, Praeger had pinned on it some of her
hopes for having Kansas's own health insurance exchange.
"I'm disappointed," she said, but added that the steering
committee and other local policy efforts already underway to
customize the exchange for Kansans will nonetheless continue
and the state will keep its $1 million planning grant.
Along with most Republican governors, Brownback has long
rejected the notion of supporting President Barack Obama's
healthcare overhaul, despite the possibility of opening his
state healthcare systems to more federal scrutiny if he refused
to set up exchanges.
Kansas is also one of a number of states challenging the
very notion of the healthcare reform in court. [ID:nN07149800]
"There is a feeling among the more conservative elements
around the country that if they pursue any efforts to establish
exchanges, it will undermine their effort to get the law
repealed," Praeger said.
So far, just over a third of U.S. states have enacted
legislation or made other steps toward establishing an
exchange. Legislation is pending in three other states and the
District of Columbia.
The first wave of federal guidelines gave states
flexibility in setting up the exchanges' infrastructure. But a
number of crucial details have yet to be determined, including
enrollment and eligibility requirements and the essential
benefits that plans would have to provide.
(Additional reporting by Andrew Seaman)