Kansas to return $31M healthcare grant

Kansas is returning a $31 million grant to help implement the federal healthcare reform law.

Gov. Sam Brownback (R) announced Tuesday that his state would return its "early innovator" grant. Tea party activists have criticized Brownback for accepting the money, saying his decision validated the healthcare law and undermined the lawsuits against it.

"Every state should be preparing for fewer federal resources, not more," 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."

The healthcare reform law directs states to set up insurance exchanges — new marketplaces for buying coverage. And it provides early innovator grants for a handful of states to begin building the logistical systems to run an exchange and share that progress with other states.

Brownback defended the grant just last month. He said Kansas didn't have to use the money to implement the healthcare law.

"What I thought we could do is use the innovator grant not to do Obamacare — I am not supportive of us doing Obamacare — but to use that to do an exchange that provides a market mechanism … It's not required that we use it to comply with Obamacare," he said in response to criticism of the grant.

The Health and Human Services Department said Brownback's decision is a setback for his constituents.

"We are disappointed that Kansas has given up an opportunity to be a leader in the development of technology for state exchanges, which could have benefitted the citizens of Kansas as well as those in other parts of the country," an HHS spokesman said.

Kansas had said it would use its grant to link its Medicaid system to the state's insurance exchange — one of the biggest logistical undertakings that states face as they move toward setting up exchanges.

It also said it would study a regional exchange that would combine part of Kansas' exchange with Missouri's, though that approach fell out of favor after a closer look.

Kansas is the second state to return an early innovator grant. Oklahoma returned its $54 million grant in April.

The seven states that received early innovator grants were the only ones to apply.

— This post was updated at 4:15 p.m.

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