Democratic Gov. Laura Kelly and GOP Senate Majority Leader Jim Denning outlined Thursday a bipartisan compromise for expanding Medicaid to thousands of low-income Kansans potentially fueled by enough political energy to break an impasse and make Kansas the 37th state to embrace the Obama-era health reform law.

Their proposal cast during two months of behind-the-scenes negotiations would link elements of Medicaid legislation passed by the 2017 Legislature and vetoed by Gov. Sam Brownback, a bill adopted in 2019 by the House, a proposal shared by Denning in October and ideas long championed by the governor. It would extend health coverage to as many as 150,000 people and apply to Kansas families with incomes up to 138% of the federal poverty level, or $29,435 for a family of three. Their bill called for implementation by Jan. 1, 2021.

"This process is far from over, as there are still several critical steps to be taken by the Kansas Legislature," Kelly said. "Compromise is hard. It is messy. It is slow. And, it is worth it."

Denning, an Overland Park Republican, said the spirit of compromise resulted in a "really good, complete plan for Kansas" that enlarged the Medicaid footprint while seeking to reduce by 20% insurance premiums paid by people struggling to afford private health care policies. The deal also would enable rural Kansas hospitals to reform delivery systems and seek a better Medicare payment rate, he said.

Denning said the plan would trigger a request of federal officials to permit Kansas hospitals with more than 16 beds to receive Medicaid payment for care of people with mental health and substance abuse diseases. The bill would enable Medicaid coverage for treatment of certain county jail inmates, he said.

"It's a lot easier to get to 'no' than it is to get to 'yes,' but this is what governing looks like," Denning said. "There's lots of robust health care solutions inside this compromise bill. We'll try to get it across the Senate floor first and then the House."

Under the 2010 federal law, 90% of Kansas' expansion costs would be covered by the U.S. government. Kansas would offset its obligations by assessing a $35 million annual hospital surcharge endorsed by the Kansas Hospital Association. The blueprint earned backing of the Alliance for a Healthy Kansas, the state's largest Medicaid expansion coalition.

The Kelly-Denning proposal immediately introduced in the Senate had 22 co-sponsors, with 11 Republicans and 11 Democrats on board. More than two dozen Republicans and Democrats, from both the House and Senate, stood with Kelly and Denning for the announcement at the Capitol.

Some conservative legislators who objected to Medicaid expansion sought a rigid work requirement for able-bodied adults without children that was left out of the Kelly-Denning agreement. A tobacco tax to support expansion sought by Denning was dropped. Another point of contention could be absence of a provision locking out individuals who failed to make the monthly premium payment attached to participation in expanded Medicaid.

Senate President Susan Wagle, a Wichita Republican running for U.S. Senate, said she was disturbed the new proposal didn't effectively moderate the cost of health insurance, including out-of-pocket deductibles. She described Kansas' health system as "broken" and concluded "socialized government health care is not the answer."

Bob Page, president and CEO of the University of Kansas Health System, said the concept drafted by Denning and Kelly would improve access to health care and offer stability to Kansas communities. He said the legislation would deepen medical coverage, reduce uncompensated care and incentivize hospitals and clinics from Great Bend to Hays and Topeka to Kansas City, Kan. to focus resources on evolving patient needs.

"As communities change, we must continue to re-imagine how quality health care can be delivered most effectively across our state. Expanded health care coverage is one part of a broader solution," Page said.

The governor made Medicaid expansion a top policy priority during her 2018 campaign and expressed confidence the reform would take root this year in the Capitol.

A coalition of Democrats and moderate Republicans in 2019 secured passage of the House bill expanding Medicaid, which was modeled on a plan that cleared the Legislature in 2017 and vetoed by Brownback. When the 2019 House bill reached the Senate, Denning and other GOP members refused to bring it to a vote. Instead, the Senate majority leader vowed to work on a Republican version of expansion and facilitate a vote by the Senate in the legislative session starting Monday.

More than 200 legislators, state officials, activists, lobbyists and medical professionals packed the second floor of the Statehouse and cheered announcement of a compromise by Denning and Kelly.

"We're happy," said Mike Oxford, a disabled activist from Douglas County. "We're here to celebrate a moment of progress. We look forward to seeing a good, clean bill get passed into law."

Political feuding in Kansas on Medicaid expansion has simmered since the Brownback administration. The former GOP governor aggressively opposed Kansas investment in Medicaid expansion under the Affordable Care Act signed by Obama.

April Holman, executive director of Alliance for a Healthy Kansas, said the legislation aimed at increasing access to health care was the result of work by legislators, business leaders, providers of health care and political activists.

"While this proposal includes some elements that may affect affordability, it is a strong plan for closing the health care coverage gap that can gain support on both sides of the aisle," Holman said.

Tom Bell, president and CEO of the Kansas Hospital Association, said a key element of the pact submitted to the Legislature was a requirement that Kansas seek federal permission for a "reinsurance" program, or subsidy, for people in Kansas struggling to pay for insurance through the private marketplace. The proposal calls for Kansas to invest $35 million annually from a statewide hospital fee in the reinsurance portfolio.

"This agreement is clearly the most significant progress we have seen in the Medicaid expansion debate in Kansas," said Bell, who works on behalf of 123 community hospitals in Kansas. "It represents real compromise and is undoubtedly the best, and maybe the only, way to get this through the Legislature."

The proposal from Kelly and Denning would create an advisory committee at the Kansas Department of Health and Environment to support rural hospitals as they assess alternative delivery models and strategic partnerships. KDHE would work with a collection of health organizations to measure and report on levels of uncompensated care incurred by Kansas hospitals.