Kansas rejects $31.5m federal grant for health insurance exchange

Kansas Governor Sam Brownback is rejecting a $31.5 million federal grant intended to support his state’s implementation of federal health care reform requirements. In an announcement Tuesday, the Governor cited the federal deficit as his reason for rejecting money the state applied for just last December. The money was supposed to support integration of state health insurance databases in to an exchange and increase the use of electronic medical records.

The grant was awarded based on merit, Kansas and six other states were noted as innovators for their plans when the grants were awarded in February. All states are required to implement a health insurance exchange by 2013, states that do not meet this deadline will have an exchange managed at the federal level by the Health and Human Services Department.

According to the Governor there are too many strings attached to the federal money which will keep the state from being flexible during uncertain economic conditions. State officials said they will be looking into other ways to manage this process without the help of federal funds.

However, some in the state legislature that oppose the Governor’s move note that the state is already low on cash. Those that oppose the move were also careful to point out that the creation of a health insurance exchange has nothing to do with other, more controversial parts of federal health care reform.

Kansas joins Oklahoma as the only other state to reject funds intended to create a health insurance exchange. Oklahoma was awarded their grant as part of the six early innovators. They originally received $54 million dollars. Both Governors have faced increasing pressure from Republicans to return the funds.