Missouri bill requires separate approval for segregated Medicaid expansion costs

(The Center Square) – Missouri voters in August approved a constitutional amendment that expanded Medicaid despite fierce opposition by the Legislature’s GOP majority and Republican Gov. Mike Parson.

Now, state lawmakers must execute the will of the people and enact legislation funding the $165 million state share of the $1.6 billion plan to extend Medicaid to approximately 275,000 uninsured Missourians before it goes into effect on July 1.

Amendment 2, approved by a 53-percent margin, expands Medicaid eligibility under the 2010 Affordable Care Act (ACA), which provides a higher federal funding share for states that extend Medicaid to adults earning up to 138 percent of the federal poverty level.

State Auditor Nicole Galloway estimates expanding Medicaid under the ACA could cost the state at least $200 million or save it as much as $1 billion annually by 2026.

But it will require upfront investment and some Republicans have vowed not to fully fund it, restrict its growth by imposing work requirements and create stringent enrollment-verification processes among other things.

House Budget Chair Rep. Cody Smith, R-Carthage, who in January called Medicaid expansion “a knockout blow to the state budget,” on Feb. 1 filed House Bill 20, which would segregate Medicaid expansion appropriations from other spending bills and require it be separately approved.

Under HB 20, Missouri is contributing $103.5 million in general revenue and $51.5 million in other state funds to garner $1.4 billion in federal matching funds for the $1.6 billion Medicaid expansion.

Parson’s $34.1 billion fiscal year 2022 budget request sets the cost of Medicaid expansion at $1.9 billion, including $120 million in general revenue.

Overall, the budget proposal calls for $14.1 billion for Medicaid, including $2.7 billion in general revenue, according to budget documents.

HB 20 extrapolates costs attributed to the estimated Medicaid enrollment of the newly eligible in appropriation bills for mental health, senior care, hospitalizations and other services covered by Medicaid, prompting questions about HB 20’s intent.

Rep. Peter Merideth, D-St. Louis, said requiring lawmakers to approve funding for Medicaid expansion mandated by state voters creates potential for all sorts of legal problems and is unnecessary.

Another bill related to Missouri’s pending Medicaid expansion, Senate Bill 1, filed by Sen. Dan Hegeman, R-Cosby, would extend the Federal Reimbursement Allowance (FRA) for another year.

The FRA is primarily funded by state hospitals. MO HealthNet uses FRA funds to earn higher returns in federal matching dollars.

The FRA extensions will allow the Missouri Department of Health (DOH) to collect approximately $1.28 billion in Hospital Tax in Fiscal Year 2022 (FY22), which begins July 1, and in FY23. Hospital tax revenues will, in turn, draw approximately $2.391 billion in federal funds each year to the state.

SB 1 has passed through the Senate Appropriations Committee and is set for perfecting debate on the floor Thursday.

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