Missouri voters approved expanding Medicaid by about 7 percentage points in August, and now it’s up to the Legislature to put a program in place during its 2021 session, which begins next month.
But, the Republican-dominated Legislature vocally opposed expanding the public health option for low-income Missourians, and lawmakers are expected to introduce measures to limit who can access coverage in an effort to keep costs lower.
State Rep. Mary Elizabeth Coleman, R-Arnold, said “everything is on the table” when considering how the program will look in Missouri. This includes whether expansion is funded at all.
“I expect there will be voices who feel like there was no funding mechanism that was attached to the drafting of the amendment, so therefore the Legislature isn’t bound to pass it,” Coleman said.
That will be a difficult hill to climb for conservatives, said Chuck Hatfield, an attorney specializing in government-related issues.
When voters approved Amendment 2, they expanded the population eligible to receive coverage to anyone 19 to 64 with an income level no higher than 133% of the federal poverty line. For 2020, this was an annual income of $17,600 for an individual and roughly $36,000 for a family of four. Hatfield said the way the constitutional amendment was written means the Legislature funds the entire Medicaid program or none of it.
“The law seems pretty clear that the Legislature can’t go in and say, ‘Well we’re only going to fund part of the Medicaid program,’” Hatfield said. “You have to fund it all or you can’t fund any of it. If there is an effort to avoid complying with the constitution, I think cooler heads will prevail.”
Hatfield also pointed to Republican Gov. Mike Parson committing to implement the program as reason to believe lawmakers will ensure it’s funded. Parson did not support expansion, and in his State of the State address he called it a “tax increase Missourians could not afford.” But he said he will follow through on what voters agreed to.
“We’ll fully support Medicaid,” Parson said. “I’ve said that since Day One: once that vote came in, that we would support that. We’re going to have to pay for it out of the general revenue.”
Back to the ballot?
There’s also the option of putting expansion back on the ballot. Going against the will of the voters would not be new for the General Assembly. Most recently, Missourians saw this in November with a new ballot initiative to repeal the so-called Clean Missouri amendment that was overwhelmingly approved in 2018.
“Missouri’s ability to amend the constitution is pretty broad,” Hatfield said. “We could consider this every two years if that’s what the General Assembly wants to do. It’s about the politics of it, not whether it’s legal.”
Coleman, who is a staunch opponent of expansion, said she anticipates having the same conversations during the session as those heard leading up to the vote. She said it’s going to come down to money for the program, which she believes the state does not have without taking it from other areas, like education and transportation.
“It’s very unclear what the actual hard-dollar costs are going to be,” Coleman said. “We saw wild estimates that vary dramatically.”
The ballot language voters approved said that the state is estimated to have “one-time costs of approximately $6.4 million.” It also said that the annual net fiscal impact could range from costing the state at least $200 million to saving $1 billion.
Budget Chair Cody Smith, R-Carthage, said that expansion created “a budgetary predicament” for Missouri, and that there will need to be extensive conversations about how to fund it.
“Because Amendment 2 had no accompanying funding mechanism, resources must be diverted away from existing budget priorities,” Smith said.
However, outgoing state Rep. Kip Kendrick, D-Columbia, the ranking minority member of the Budget Committee, said he does not anticipate the costs associated with expansion to be as high as some are suggesting.
“I don’t think they’re anywhere near the $200 million, actually we’ve heard $300 million in costs,” Kendrick said. “But I do expect a cost anywhere from $10 million, I would think up to $75 million, in a new decision item in general revenue. But that levels out and quickly becomes a net positive on revenue, especially considering the economic impact of having all that money drawn down to the state.”
As Kendrick alluded to, expansion comes with a 90/10 match from the federal government. This means 90% of costs associated with expansion are covered at the federal level, and states that have already expanded Medicaid have been able to offset some of their program costs to become a revenue generator for their budgets.
According to a study conducted by the Institute of Public Health at Washington University, expanding Medicaid could save the state $39 million in the first year, and by 2024 the state could save a total of $932 million. In the worst-case scenario, however, it could cost the state an additional $42 million.
Other states’ experiences
While several states have seen budget savings, the fiscal effects vary widely because each state’s Medicaid program is different. Coleman said she’s concerned that with more people qualifying for Medicaid, the cost for private insurance will increase. In an effort to ensure only those who need assistance are enrolled, Coleman said work requirements will almost certainly be a part of the conversation.
“This was sold to Missourians as a way to provide health insurance for the working poor and so making sure that people are working in order to get that benefit, I can’t imagine we’re not going to be talking about that as well,” Coleman said.
Even if the Legislature approves work requirements in Missouri, it’s not a sure thing that they’d stick. Arkansas was the first state to pass them in 2018. It resulted in 17,000 adults losing coverage in a three-month time span, with no significant changes in employment. A New England Journal of Medicine study found that an overwhelming majority lost coverage because of confusion about the reporting process or lack of awareness. Because of this, a federal judge put a stop to the work requirements. Federal courts also have struck them down in Indiana, Michigan and New Hampshire.
State Rep. Sarah Unsicker, D-Shrewsbury, is a proponent of expansion, but she said taking a closer look at and reforming the Medicaid program is past due.
“Missouri spends a lot more on Medicaid recipients than most other states,” Unsicker said. “Our total spending on participant benefits is ranked third in this country per recipient. We are spending a lot more on coverage, and I don’t know where that money is going.”
The legislative session is scheduled to begin Jan. 6, and Medicaid expansion is expected to be a major topic throughout.
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