As state makes cuts, federal bills propose Medicaid expansion

Thursday, November 12, 2009 | 12:01 a.m. CST

JEFFERSON CITY — Some Missouri officials say proposed health care legislation could create an unfunded mandate and even has some calling to abandon the state's participation in Medicaid.

The U.S. House passed its version of the bill shortly after Gov. Jay Nixon announced $32 million in cuts to Missouri's Medicaid program. Both the version passed Saturday by the House of Representatives and the separate version approved by the Senate Finance Committee would require an expansion of Missouri's eligibility rates for Medicaid.

Missouri has one of the lowest Medicaid eligibility rates of any state in the country, requiring a family of four to earn less than $4,400 a year for the parents to receive coverage. The federal poverty level for a family of four is $22,050.

The Senate version of health care reform would require Missouri to expand its eligibility from 20 percent of the federal poverty level to 133 percent. Under these provisions, that same family of four could earn up to $29,326, and the parents would still qualify for Medicaid. The House version raises eligibility to $33,075 for a family of four.

In addition, the Senate bill calls for the federal government to cover 95 percent of the costs from new enrollment. Currently,  the federal government reimburses the state about 60 cents for every dollar it spends.

If the Senate bill passes, the Department of Social Services expects 255,000 new Medicaid enrollees from Missouri.

The most recent budget analysis by the Missouri Social Services Department estimated the increased cost to the state at about $91 million if the Senate version is adopted with the federal government paying the other $1.7 billion. Some in state government have questioned that number, saying it is too low. Today, Missouri spends about $7 billion on Medicaid costs for about 850,000 residents.

"Ninty-one million (dollars) is a lot of money in this budget climate," said Missouri Representative Chris Kelly, D-Columbia, the ranking Democrat on the House Budget Committee. "The question is, are we willing to do something else to raise the money, like a cigarette tax, or will we consider massive cuts in other areas?"

The $32 million in Medicaid cuts are just one part of the $634 million Gov. Jay Nixon has cut from the budget this year. Both Nixon and state Budget Director Linda Luebbering said further cuts may be necessary.

"Even if it's $50 million, we can't afford it. Or if it's $20 million, we can't afford it. We don't even have $1 million for this," said Sen. Jason Crowell, R-Cape Girardeau. "We don't have $1 to put forth towards an unfunded mandate."

Crowell isn't alone in his concerns that the federal government may not come through with funding. 

House Budget Committee Chairman Allen Icet, R-St. Louis County, said he has seen the federal government stop short with payments before. Icet said that with some past federal bills requiring both a state and federal contribution, the federal government has stopped supplying funds after a couple of  years.

"I assume this would be the same," he added.

Others said they would have a hard time turning down such a good federal match.

"The idea of getting 95 percent return on a 5  percent investment is a good deal," said House Democratic Leader Paul LeVota, D-Jackson County. But LeVota said he has concerns that the Republican-controlled legislature would not approve the expansion if there was any way to opt out of it.

"I think with the current makeup of the legislature and shortsighted view these guys have on health care, they would try to opt out of it," LeVota said. "I think they would try to opt out on $2 billion in assistance from the feds and covering 200,000 Missourians' health care for political reasons."

Senate Budget Committee Chairman Gary Nodler, R-Joplin, said he expects "strong support for opting out of this," in both the House and the Senate.

"I would say if there's an opt-in, we will probably not opt-in," said House Republican Leader Steven Tilley, R-Perryville. "The last thing we need to do is expand and grow a program."

Some said their hesitancy comes from a belief that expanding the program will cost more than $91 million. An earlier report by the state Social Services Department had estimated the cost of an expansion at somewhere between $316 and $338 million. Department spokesman Scott Rowson said that estimate was calculated before the federal government offered to pay 95 percent of the transition.

But, Crowell said, "I think it's without question an underestimation by the department because we don't know what the (final) bill is going to be."

Even with the different estimates floating around, one obvious question that remains unanswered is the future of the economy.

 "There are too many unknowns with what's going to happen with the economy, what's going to happen with our state budget, our revenues," said State Budget Director Linda Luebbering. "Knowing right now what would happen three years from now if we have to cover those people, it's just not possible. And like I said, 'Could we afford it right now?' No. We all know that; we just went through another round of expenditure restrictions. But can we afford it in 2014? I don't know."

Reporter Jeremy Essig contributed to this story.

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