ANALYSIS: State Republicans oppose federal Medicaid expansion, citing high costs

Monday, January 18, 2010 | 12:01 a.m. CST; updated 8:39 a.m. CST, Monday, January 18, 2010

JEFFERSON CITY — Missouri Republicans are raising concerns about federal health care legislation, claiming its mandatory Medicaid expansion would have a "drastic" and "devastating" effect on the state's finances.

But some of their rhetoric may exceed reality.

Some Republican officials claim a Medicaid expansion could cost Missouri $250 million a year. Others put the tab at $450 million. Still another at close to $1 billion.

According to the Missouri Department of Social Services, which oversees the Medicaid health care program for the poor, Missouri's cost of the proposed expansion could be closer to $100 million. And even that may not hit until 2017.

Missouri's Medicaid program, known as MO HealthNet, already covers low-income children and parents, pregnant woman, seniors and the disabled. But it does so at differing levels.

A single parent of two children can earn no more than $292 a month — or about 19 percent of the federal poverty level — to qualify for Medicaid, even though her school-age children could be covered if she earns five times that amount. The elderly or disabled can qualify with incomes of up to 85 percent of the poverty level, which equals about $767 a month for an individual.

Bills passed by the Democratic-led U.S. House and Senate, which still are negotiating a final version, would expand Medicaid by covering adults without children and raising the income eligibility thresholds. The Senate bill would cover anyone earning up to 133 percent of the poverty level; the House version up to 150 percent.

Under the Senate bill, the Medicaid expansion would begin in 2014 and the federal government would pay the full tab until 2017, when Missouri would be expected to pay 5 percent of the cost of newly eligible Medicaid recipients.

Under the House bill, the Medicaid expansion would start a year sooner and the federal government would cover the full cost only through 2014. After that, states would pay 9 percent of the cost of new Medicaid enrollees.

Republican Lt. Gov. Peter Kinder and GOP legislative leaders have been warning that the Medicaid expansion could bust Missouri's budget.

Kinder released "an open letter" to Democratic Gov. Jay Nixon last week asserting that Missouri's cost could be as high as $450 million a year. Kinder chief of staff Rich AuBuchon said later that Kinder got the figure from House Budget Committee Chairman Allen Icet, who got it last fall from the Department of Social Services.

But the agency no longer uses the $450 million estimate. That's because it was based on a previous version of the federal legislation and assumed states would have to shoulder a greater proportion of the expansion costs than is currently proposed.

Kinder shared his concerns about the Medicaid costs with Senate Republicans in a private meeting one week ago. Senate leaders emerged to raise their own concerns.

Senate President Pro Tem Charlie Shields, R-St. Joseph, put Missouri's cost from a Medicaid expansion at between $250 million and $450 million a year. "It would be devastating," Shields said.

Senate Majority Leader Kevin Engler, sitting besides Shields during a media interview, upped the cost estimate further on the assumption the federal government would ratchet back its share of the Medicaid tab in a few years. "We're talking about like a billion dollars that it's going to cost" the state, said Engler, R-Farmington.

In an electronic newsletter later in the week, Engler put the cost at anywhere from $250 million to "half a billion dollars." He described that as an "exorbitant amount" that would force Missouri "to make drastic cuts to education or raise taxes."

Engler's office said the estimate came from the Senate Republicans' communications staff, which said its source was the nonpartisan staff of the Missouri Senate Appropriations Committee. The appropriations office said it calculated a $250 million estimate with figures from the Kaiser Family Foundation based on the number of uninsured, the average cost of covering people on Medicaid and the proportion Missouri would pay under the federal legislation. The appropriations office said it wasn't the source for larger estimates.

Yet even the Senate appropriations figures are greater than those cited by the Missouri Department of Services.

Department projections provided last week to The Associated Press show the U.S. Senate bill would expand coverage to 255,000 adults at a cost to Missouri of $99.2 million in 2017, then would increase by 4.5 percent annually. The Medicaid expansion in U.S. House bill would cost Missouri about twice that amount, said agency spokesman Scott Rowson.

But Rowson acknowledged there could be additional costs if publicity surrounding the health care legislation encourage people who already are eligible for — but not enrolled in — Medicaid to do so. If all 108,000 such children and 29,000 such parents chose to enroll in Medicaid, that could cost Missouri up to $127.8 million.

Republicans have been harping on the costs of the Medicaid expansion in hopes of forcing the Democratic governor to either embrace the federal health care legislation or stand up against a major policy goal of Democratic President Barack Obama.

So far, Nixon has done neither.

Nixon spokesman Jack Cardetti said Friday that the governor is monitoring the federal health care bill.

"It's unclear right now what the costs will be in the final version of the bill," Cardetti said. "Once there is a final version, we will analyze it closely and move forward accordingly."

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