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Medicaid expansion will benefit Missouri's bottom line, new reports argue

Medicaid expansion will benefit Missouri's bottom line, new reports argue

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JEFFERSON CITY — Expanding the state’s Medicaid program would be a net positive for Missouri’s budget, according to two recently released reports.

The new analysis comes as Republicans, including Gov. Mike Parson, have argued the state has no way to afford a larger Medicaid program without cutting other priorities or raising taxes. The two studies, from a Missouri-based think tank and a national health care consulting firm, respond indirectly to these claims.

Expanding Medicaid would lead to $100 million in annual general revenue savings by fiscal year 2024, according to the Missouri Budget Project.

“This net increase in the general revenue budget would make funds available that could be used for other priorities, including education,” the think tank’s report states.

The results don’t differ much from a similar 2015 study, but the new analysis is meant to clear up recent misunderstandings about what expansion would actually mean for Missouri, said Traci Gleason, vice president for external affairs.

It’s based on a review of recent academic research and a 2019 Kaiser Family Foundation analysis of states that did expand Medicaid.

The Budget Project’s estimate of $100 million in savings hinges on the assumption that some people already on Medicaid will draw additional federal dollars, offsetting the overall impact on Missouri.

Medicaid is a joint state-federal welfare program that provides coverage for many low-income people, including children, seniors and those with disabilities. The 2010 Affordable Care Act expanded it to all adults under 65 who make less than 138% of the federal poverty line, though a 2012 U.S. Supreme Court ruling made expansion optional for the states.

In Missouri, the federal government covers about 65% of Medicaid costs, while the rest comes from the state. But populations covered under Medicaid expansion would have 90% covered by federal funding.

Pregnant women and people with disabilities already on Medicaid would qualify for this new rate, saving the state more than $235 million, according to the report.

Also, $35 million in state-sponsored medical services, such as inpatient hospital visits for state prisoners, would fall under Medicaid expansion. Finally, the report estimates Missouri would generate $50 million in new tax revenue from the health care industry.

The cost of additional people entering the program would be about $221 million on top of about $840,000 in administrative costs.

Second report

Meanwhile, the second report argued that costs to Missouri can be offset by careful planning. It echoes many of the Missouri Budget Project’s findings and also points out that no state has reversed its decision to expand Medicaid because of “out of control” cost increases.

“We believe a well-designed program can be crafted to become a positive for the budget,” said Matt Powers, one of the authors.

The report, from Health Management Associates, looked closely at the outcomes of expanding Medicaid in Arkansas, Indiana and Ohio. The authors interviewed state officials who rolled out the changes and reviewed previous research.

Other states, including Nebraska, Virginia and Montana, saved money after expanding Medicaid, according to the report. But it also notes that during some of the years studied, the federal government was paying a higher percentage, not the 90% Missouri would receive.

Powers said this caveat didn’t materially change the finding that Missouri’s budget would be better off.

The Health Management Associates report was commissioned by the Missouri Hospital Association and the Missouri Primary Care Association, which have both backed a petition to put Medicaid expansion on the November ballot.

The Missouri Hospital Association has donated $500,000 to a campaign backing the petition drive, according to filings with the Missouri Ethics Commission.

Candidates differ

With the growing chance that expansion could go before voters in November, both candidates for Missouri governor have also made their stances on the issue clear.

Parson said in November that he’ll expand Medicaid if Missourians vote for it. But he also said during his State of the State address that this would come at the expense of other budget priorities, like education and infrastructure, and would require a “massive tax increase that Missourians cannot afford.”

When asked Thursday what data backed up his comments, Parson said he was drawing on his years of experience.

“Every time a government program comes into existence, it normally will always expand and cost money,” he said at a lunch with the Missouri Press Association.

He also said Medicaid costs already are increasing and there’s no guarantee that people will fall under the 90% funding match from the federal government.

“The reality is a lot of people won’t get that,” he said.

Parson’s budget proposal for the next fiscal year, which begins July 1, recommends an increase in spending on Medicaid to $11.7 billion from $11.1 billion in the current year. The budget would include $2.5 billion from general revenue.

State Auditor Nicole Galloway, who has promised to support Medicaid expansion if she is elected governor, said Thursday that other conservative-leaning states have seen budget savings.

“I think that this argument about raising taxes or gutting education is a false choice,” she said.

Editor's note: This story has been updated to correct the approximate percentage of Medicaid costs paid by the state of Missouri.

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