If Missouri expands Medicaid health coverage for lower-income adults, could it create a crisis for public schools?
If Missouri fails to expand Medicaid, could it result in millions of Missourians' tax dollars going to health care in other states?
In the tense Medicaid debate at the Missouri Capitol, both assertions have been put forth as plain facts by opponents or supporters of a plan that could add as many as 300,000 adults to the Medicaid rolls. But they might best be labeled as hyperbole.
Medicaid is a joint federal and state program that currently provides health coverage to about 880,000 people in Missouri, or about one of every seven residents.
States set some of their own eligibility criteria, which vary greatly. In Missouri, coverage is available to children whose families earn three times the poverty level, about $58,600 annually for a single mother of two. Yet that mom cannot get Medicaid coverage for herself unless her income is less than about $3,700 annually. And adults aren't eligible at all unless they have children, a disability or are retirement age.
The big question in state capitols this year is whether to adopt a provision in President Barack Obama's 2010 health care law that expands Medicaid coverage for adults earning up to 138 percent of the poverty level, about $27,000 annually for a family of three. States that do so can get full funding for the first three years, starting in 2014, then an amount that gradually decreases to 90 percent federal funding by 2020.
Democratic Gov. Jay Nixon has embraced the Medicaid expansion. The Republican-led Legislature has repeatedly defeated it. But the battle is not over, because Republicans and Democrats are now talking about an alternative that seeks to reap the federal money while modifying Missouri's Medicaid system to more closely resemble private insurance.
Nixon said this past week that it's imperative for Missouri lawmakers to pass some sort of Medicaid expansion before their session ends in mid-May.
“If we don't move forward, $1.8 billion of Missouri's taxpayer dollars are going to be spent next year in other states to improve their health care system,” Nixon asserted.
Other Democrats have made similar claims. But they are not quite accurate.
Like people across the country, Missouri residents pay federal taxes. But there is no tax specifically earmarked for Medicaid. If Missouri fails to expand Medicaid – and thus fails to draw down more than $900 million in federal funds in 2014 – that money is not redistributed to other states. In other words, California gets no extra Medicaid money if Missouri says “no thanks” to its potential share.
Additionally, there is no requirement for Missouri's forgone Medicaid money to be spent on health care. The federal government could use the savings to lower its debt or spend it on national defense or other domestic programs.
The claim, “I think, is a way to say that we'll lose out on federal money coming back to the states,” said Sidney Watson, a Saint Louis University law professor who specializes in health law and health care access for the poor. But “I don't think it actually captures what's going on.”
Republican opponents of a traditional Medicaid expansion have argued that it would bust Missouri's budget in future years, forcing funding cuts to schools in order to pay a growing health care tab.
“If we do this, over the next 10 years, we will face a public education crisis,” Rep. Jeff Grisamore, R-Lee's Summit, warned during House debate last week.
But “crisis” may be too strong of a description.
Missouri currently provides more than $3 billion annually in basic aid to schools – an amount that has steadily increased, though not at the pace called for by a state formula.
Next fiscal year, the state's general revenues are projected to grow by $237 million – a roughly 3 percent increase over the current year – of which about $65 million is slated as a school funding increase in the budget plans put forth by both Nixon and the House.
If Missouri's revenues continue to grow at an average annual rate of 3 percent, it can expect a natural revenue increase of about $284 million for 2021, when the state is paying its maximum share of the Medicaid expansion.
Nixon's budget office forecasts that the Medicaid expansion would result in nearly $2.6 billion of federal money for Missouri in 2021, with the state's general revenue fund paying an additional $143 million. That would equal about half the state's natural revenue growth, still leaving room for some additional education spending. But that doesn't account for other cost savings and revenue increases that the budget office says would make the Medicaid expansion a virtual wash to general revenues.
To suggest the Medicaid expansion would create a crisis for education or break the state budget is “simply specious” and “ignores the numbers,” said Watson, who has testified in support of the expansion.