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Formula may boost federal share of Missouri's Medicaid budget

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JEFFERSON CITY • Some good news for Missouri’s Medicaid budget comes wrapped in a bad-news package.

In the next fiscal year, Missouri is slated to see the biggest percentage increase in the federal matching rate for Medicaid of any state.

Instead of 62.03 percent, the federal government is expected to pay 63.45 percent of the cost of Missouri’s health care program for the poor.

The new rate, which is not yet final, could translate into an extra $100 million for state coffers.

The downside: The boon results from a formula that gives more money to states where per capita personal income lags the national average.

“I don’t know whether to be glad or sad,” quipped state Sen. Rob Schaaf, a physician and a Republican from St. Joseph.

In fact, the complex federal formula makes it hard to make any sweeping statements. State budget officials and health care economists said Monday that they were still puzzling over reasons for the shift.

To understand the Medicaid financing scheme, you have to know a little about the federal medical assistance percentage, or FMAP.

Each state has an FMAP, which is supposed to reflect how much a state can afford to pay for Medicaid. The minimum federal match is 50 percent, which means a state gets a federal dollar for each state dollar spent.

The percentages are adjusted annually, based on the last three years of national income data.

States began trying to figure out their likely rates for 2015 when the U.S. Bureau of Economic Analysis released the latest round of income data on Sept. 30. The 2015 FMAP rates will be based on 2010, 2011 and 2012 data.

The report showed Missouri’s per capita personal income grew 3 percent in 2012. That was slightly below the national average of 3.4 percent but far from the worst record.

Showing the least growth were the District of Columbia, South Dakota, Arizona, Kansas and Nevada.

So why is Missouri likely to get the biggest bump in the Medicaid match rate? It’s not entirely clear.

The Bureau of Economic Analysis has made some technical tweaks in the way it tracks income.

Missouri’s budget director, Linda Luebbering, said the state’s new FMAP also may stem from revisions that were made in other states’ income for 2010 and 2011. Missouri’s earlier numbers were not revised as much as other states’ figures were, she said.

Luebbering noted that the FMAP moves around each year. The projected 1.42 percent increase in Missouri’s rate will put the state back where it was in fiscal 2012, she said.

The states with the next-largest FMAP increases for 2015 are: Nevada, 1.26 percent; Arizona, 1.23 percent; and Colorado and Georgia, each 1.01 percent, according to the Health Affairs blog.

The FMAP change is likely to provide fodder for the Missouri Legislature’s debate over whether Missouri’s taxes are inhibiting growth. Republican legislative leaders are preparing for Round 2 with Democratic Gov. Jay Nixon, who vetoed this year’s income tax cut.

Patrick Ishmael is an analyst at the Show-Me Institute, a St. Louis-based think tank that advocates for lower income taxes. He said Monday that the “upward revision of FMAP funding for Missouri is a symptom of longstanding state economic issues.”

All of this is separate from another hot-button issue: the proposed Medicaid expansion, which the Missouri Legislature has rejected so far. Under the Affordable Care Act, the federal government would pay 100 percent of the costs for newly eligible participants in the expansion group the first three years, scaling down to 90 percent after that.

Missouri’s Medicaid program provides health care for about 861,000 low-income people – mainly the elderly and disabled, pregnant women and some families with children.


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Virginia Young is the Jefferson City bureau chief for the St. Louis Post-Dispatch.

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