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Missouri Medicaid avoids deep cuts in state budget

Missouri state Sen. Kurt Schaefer, a Columbia Republican and chairman of the Senate Appropriations Committee, has decried the growth in Medicaid costs.
Missouri state Sen. Kurt Schaefer, a Columbia Republican and chairman of the Senate Appropriations Committee, has decried the growth in Medicaid costs. File photo by The Associated Press

For weeks, Senate Appropriations chairman Kurt Schaefer seemed determined to make major changes to Missouri’s Medicaid program.

In the end, the federal health insurance program for the state’s poorest citizens emerged largely unscathed.

Leading up to the Missouri Senate’s vote Thursday to approve its version of the state’s $27 billion budget, Schaefer repeatedly railed against projected Medicaid cost increases.

He called the increases unsustainable. He floated the idea of cutting back on funding dedicated to pharmacy benefits, or turning over management of pharmacy to private companies.

He instructed the state’s Medicaid director to provoke a lawsuit with the federal government over what he believes are unfair and unsustainable mandates.

He even suggested at one point that someday Missouri may need to give up on the program altogether and drop out.

“That might happen when we can’t afford it,” said Schaefer, a Columbia Republican running for attorney general.

Yet the budget for the Missouri Department of Social Services approved by the Senate on Thursday trimmed only about $57 million from the more than $7.9 billion proposed by the governor for Medicaid.

“We cut back where we could,” Schaefer said. “The difficulty is they are entitlements, and the dollars are what the feds say you have to pay.”

This year’s debate was a major shift from last year, when Schaefer slipped a provision into the budget shifting about 200,000 Medicaid recipients to privatized managed-care plans.

His rationale was similar to his rhetoric this year: He wanted to do something to cut costs.

The idea made its way into the budget after Schaefer fended off a six-hour filibuster by its opponents.

Currently, three managed-care companies — Centene Corp., Aetna Inc., and WellCare Health Plans Inc. — provide services in about half the state’s 114 counties to children and pregnant women. These for-profit companies oversee health benefits for Medicaid recipients and are paid a fixed amount per member each month.

In fiscal year 2016, the state budgeted about $1.8 billion for managed-care services, although $1.1 billion of that came from federal funds.

In the rest of Missouri — outside the Interstate 70 corridor — traditional Medicaid reimburses providers directly for whatever services they perform.

Thanks to the changes pushed by Schaefer in last year’s budget, once the state awards new contracts, managed-care coverage will be extended statewide, while continuing to exempt the elderly, blind and disabled.

The contracts are now out for bid.

A few months after last year’s vote, Schaefer received a $10,000 campaign donation from Centene, $1,000 from Aetna and $2,500 from a Florida subsidiary of WellCare. And last month, Yancy Williams, Schaefer’s longtime chief of staff who resigned in the fall to become a lobbyist, was hired to lobby for the Missouri Association of Health Plans, an organization representing the state’s managed-care companies.

Sen. Rob Schaaf, a St. Joseph Republican and longtime critic of managed care, said the only people clamoring for more managed care are the managed-care companies that stand to make huge profits. There is no evidence that managed care saves money, he said, and any savings it does produce stems from “the rationing of care.”

He pointed to a report by the Department of Social Services that says managed-care enrollees in Missouri were more likely to use the emergency room and performed worse than traditional Medicaid recipients on five out of six clinical quality measures.

Schaefer said he’s trying to stop “out-of-control growth of Medicaid,” noting that five years ago, Medicaid pharmacy costs were around $900 million. They are expected to top $1.8 billion next year. Supporters of managed care argue it is more cost effective and helps guarantee better health outcomes.

“We have to do something to slow this train down,” Schaefer said.

During budget committee deliberations, Sen. Kiki Curls, a Kansas City Democrat, noted that Missouri is “already the hardest state in the country to qualify for Medicaid.” Missouri covers adults only if they have custody of children, are disabled or are seniors. A single mother with two children would have to earn less than $2,300 a month to qualify.

Schaaf tried to amend the budget Thursday to roll back the managed-care extension. It was soundly defeated 27-2, with only Schaaf and Republican Sen. Bob Onder of St. Charles County in support.

Both Schaaf and Onder are physicians.

Schaefer said traditional Medicaid is like giving someone a credit card with no limit and sending them to a restaurant.

“You can tell them, ‘Only spend $100,’ but when they spend more you still have to pay the bill,” he said. “Managed care is like sending someone to a restaurant with a credit card with only $100 on it. That’s all they can spend.”

Another controversial piece of the Department of Social Services budget is language seeking to block Planned Parenthood and any other clinic that counsels women to have abortions from receiving any money through Medicaid.

Senate Democrats tried to undo that provision, arguing that federal courts have already blocked similar efforts in other states. They also said the method Republicans used to target Planned Parenthood — inserting language in the title of the Department of Social Services budget — violates the state’s constitution.

“What we have done here is clearly an unconstitutional effort to legislate through the budget,” said Sen. Jason Holsman, a Kansas City Democrat.

To get around potential problems in federal court, Republicans also voted to give up $8 million in federal money for Medicaid and replaced it with state funds. They say doing that means they no longer have to abide by the federal law that entitles Medicaid beneficiaries to receive care from any qualified provider they choose.

In the end, an amendment that would remove the Planned Parenthood provisions from the budget failed on a party-line vote.   

“All this is going to do is keep low-income women from getting the care they need,” said Sen. Jill Schupp, a St. Louis County Democrat.

Lawmakers hope to get the 13 bills that make up Missouri’s budget to Gov. Jay Nixon by April 21 so that he’ll have to sign or veto them during the legislative session. Otherwise, he’d be able to wait and take action this summer.

Jason Hancock: 573-634-3565, @J_Hancock