Gov. Laura Kelly says blocking Medicaid expansion the ‘dumbest thing Kansas has ever done’

LAWRENCE — Democratic Gov. Laura Kelly said the biggest disappointment of nearly eight years in office was the Kansas Legislature’s refusal to expand Medicaid health coverage to the working poor.

Kelly repeatedly urged the Republican-led Legislature to broaden eligibility standards to include as many as 150,000 working adults who earned too much for traditional government-sponsored Medicaid and too little to qualify private-insurance subsidies. Political opponents of expansion argued extending benefits to adults 19 to 64 years of age making no more than $21,600 per year was too costly for the state or clashed with philosophical objections to deepening entitlement programs.

“I think it’s the dumbest thing Kansas has ever done,” Kelly said Thursday during an economic conference at University of Kansas. “Not only has it hurt the people who would have been eligible for insurance under the Medicaid program, but just financially we have left over $8 billion in Washington, D.C. We’ve seen it play out in the closure of some of our rural hospitals and certainly with so many of them today on the brink of it.”

Kansas stands among 10 states that turned aside expansion options within the federal Affordable Care Act. All states bordering Kansas embraced Medicaid expansion to improve health care service options.

Kelly said her administration could have hammered out a Medicaid expansion deal with the Kansas Senate led by President Ty Masterson, the Andover Republican running for governor. The problem, she said, was opposition by Kansas House Speaker Dan Hawkins, a Wichita Republican campaigning to become the state’s insurance commissioner.

“There’s one person in the state really responsible for the fact that Medicaid has not been expanded and that would be the current speaker of the House,” she said. “We got so close so many times, but he was absolutely determined not to allow Medicaid expansion to come to a vote because he knew it would pass. For his own reasons, he did not want Medicaid expansion. That’s why we don’t have it.”

In response, Hawkins said the governor was entitled to her opinion.

“Calling people names and assigning blame doesn’t change the facts,” he said. “Medicaid expansion would create significant new obligations for Kansas taxpayers based on hopes and dreams that the federal government will maintain their share of the burden. I’ve never believed that adding more people to a government program is automatically the same thing as improving access to health care.”

Kelly spoke for an hour with participants in the 2026 Kansas Economic Policy Conference about policy issues ranging from water resources to data centers, economic development and property taxes.

She expressed gratitude for her sustained popularity among Kansans as well as cherished and disliked aspects of being governor. She was frustrated by time spent on the campaign trail in 2022 as she sought reelection. Interacting with voters was never an issue, she said, but road trips drew her away from day-to-day responsibilities of the job. On the upside, Kelly welcomed opportunities to delve into details of the state budget.

“The budget is where everything happens,” Kelly said. “I love numbers. I really love math.”

Data centers and AI

Kelly said she followed ongoing debate in Kansas about proposals to build data centers and was comfortable decisions on those projects remained with municipal government officials. She said the Kansas Department of Commerce shared information on benefits and drawbacks of data centers, but the state wouldn’t be offering supplemental incentives to draw developers to Kansas.

A 2025 state law granted a 20-year state and local sales tax exemption for data centers tied to a minimum investment of $250 million. The Kansas Corporation Commission mandated new businesses, including data centers, using more than 75 megawatts of peak energy load per month to pay higher utility rates.

Advocates of data centers champion the potential of local economic growth as well as new property tax revenue. Critics say the state didn’t adopt sufficient safeguards against electricity cost surges or impose proper environmental regulations in terms of shielding the water supply.

“I know there’s a lot of noise out there,” Kelly said. “There are legitimate concerns about data centers. Water, particularly for rural Kansas, is a huge issue. Obviously, electricity and energy. Kansas has got their arms around that. It’s really become much more of a political issue than anything else. Once we get through this election cycle, we may see some of that die down.”

She said data centers were needed to drive the Kansas economy. Some of opposition to data centers resembled the community response to wind and solar farms, she said.

“Remember when wind wanted to come in and people were flipping out completely?” said Kelly, who urged data center developers to be transparent about their plans. “Stop just coming in and announcing you’re opening your doors. Work with these communities, just like they ended up doing with wind. They started going to the county commissioners and they started going to the people and having conversations.”

Kelly said she joined many Kansans who were uneasy with rapid development of artificial intelligence. She said Congress should take the lead in regulating AI.

“People are absolutely petrified of AI because nobody knows what it really means. You know, it’s scary,” the governor said. “I’m hoping with a new Congress that we will have some serious people there who will recognize that you can’t fool around with this stuff.”

Water, tax policy

Kelly said she was disappointed, but not surprised, the Legislature declined to embrace her recommendation to create a rolling 10-year strategic investment program for water resources. She said the plan should have a dedicated funding source just like the state’s 10-year highway program, which guaranteed annual investment in high-priority projects.

If the Legislature didn’t set aside funding, she said, issues with the quantity and quality of water would remain the state’s biggest challenge.

“We had wonderful water plans in the past,” Kelly said. “I would even say that my predecessor, Sam Brownback, put together a really, really comprehensive and good 50-year water plan that ended up sitting on the shelf because it’s not free. You’ve got to pay for it.”

She said the Legislature’s opposition to sustained funding could be personal.

“I’m hoping that’s exactly what it is. That they’re just waiting until I’m out of here,” she said.

Kelly said the Legislature’s debate on property tax reform was unproductive, because Republican bills were unfair to local units of government heavily reliant on property tax revenue. She said the solution would require a partnership between state and local government.

“It would have to be a trusted partnership,” Kelly said. “The way it could work is that the state pick up the burden of some of the things that our local units of government are paying for right now.”

The options could include corrections or mental health services, she said.

“There has to be some structure there that there’s a burden on the state but also a responsibility on the local units of government to actually flatten out if not decrease property taxes,” Kelly said.

Kelly said it would be reasonable, but politically challenging, for townships, cities, counties and other units of government to form regional coalitions to pool resources to better fund public services.

She said obstacles to consolidating schools ranged from parochial ideas about sports to unwillingness of state legislators to take risk.

“Consolidation has always been like a swear word, you know, in Kansas. It’s very, very difficult,” the governor said. “We’ve got what 700 cemetery districts or something ridiculous? It is crazy. It’s going to take some guts and willingness to spend some political capital and recognize you’re going to have to do some very unpopular things in order to keep the state moving forward.”