Medicaid’s Check-Up: Part 5

At this point in my Medicaid blog series, it should be abundantly clear that the program is in dire need of reform. But as I mentioned in previous posts, Medicaid is financed as a partnership between states and the federal government. This means that Missouri can only reform its Medicaid program as much as the federal government will allow. Fortunately, recent discussions at the federal level have stirred optimism that opportunities for states to enact reform could be on the way.

Congress is expected to debate a budget reconciliation package later this spring that primarily extends tax cuts passed in 2018 but also may include some federal Medicaid spending reforms. Here are a few ideas that have been discussed (keep in mind this is a non-exhaustive list, and all details are subject to change):

• Reduce “enhanced” federal match: As I explained in earlier parts of this series, the federal government is currently paying 90% of all Medicaid costs for able-bodied adults in the expansion population but only 65% for everyone else (aged, blind, disabled, etc.). Congress is considering reducing its expansion share to something closer to what is paid for the traditional population.
• Rein in financing gimmicks: In recent years, states have ramped up their use of Medicaid financing gimmicks to help pay for rising healthcare costs. Missouri is more reliant on provider taxes than almost any other state in the country. Congress is considering changing this arrangement to reduce the amount of money states can earn with these gimmicks.
• Work requirements: Show-Me Institute researchers have been writing about the potential of implementing Medicaid work requirements for more than a decade. But the federal government has rarely allowed them, and after a few court cases several years ago, it was determined that congressional action was needed for them to move forward. While it’s unclear who would be included in the requirements, how exactly they’d work, or whether they would be possible in Missouri, it’s certainly worth watching what Congress decides to do on this topic.

In the coming weeks and months, I’ll be keeping a close eye on whether Congress follows through with any of these reforms. It’s never too early to begin thinking about, if enacted, what they could mean for Missouri. There’s no doubt that the federal government reducing its spending on Medicaid could have an enormous impact on our state’s budget. But as with most things, the devil will be in the details. It will be particularly interesting to see if the federal government affords states any additional flexibility to deal with potential Medicaid changes.

In the next post of this series, I’ll discuss some of the steps Missouri’s lawmakers can take today to reform Medicaid and prepare for any opportunities in the future that could help get the state’s program back on a sustainable fiscal track.