Missouri’s application for the federal Rural Health Transformation Program (RHTP) reads like a blueprint for major reform. It promises a “bold and comprehensive vision” that will “fundamentally shift the healthcare experience” for rural Missourians. That kind of language suggests that the state is ready to address long-standing structural barriers to care—and to the credit of those who wrote the application, it does identify many of the right problems.

A portion of the federal funding approved in the One Big Beautiful Bill last summer was designed to help states expand access, improve outcomes, and rethink how care is delivered in rural communities that have long struggled with provider shortages and limited infrastructure. As I’ve written many times before, Missouri, with large rural regions and persistent access challenges, is an obvious candidate for that kind of transformation.

But when you get to Appendix 1 (page 56), where Missouri outlines its actual policy commitments, the tone changes.

Take certificate of need (CON) laws. Instead of proposing reforms, the state spends its time disputing outside criticism, arguing that a report from the Cicero Institute “inaccurately claims” Missouri’s CON program is overly restrictive and that critics “overstate Missouri’s regulatory reach and understate its flexibility.” The focus shifts away from change and toward claiming the current framework really isn’t that bad.

The same pattern shows up on scope of practice (which procedures certain healthcare professionals are allowed to perform). Rather than committing to specific changes, the state says it will “reassess our current scope of practice laws” and “identify the optimal legislative and regulatory changes” at some point in the future. The emphasis remains on further review rather than action.

These are only a few of many examples that make the contrast in this application so striking. The front half lays out a vision built on “innovation,” “transformation,” and system-wide change. But the appendix, where commitments actually matter, falls back on the status quo.

It is true that the federal government bought into that vision. Missouri was awarded significant funding through this program, with the expectation that the state would follow through on what it proposed to improve access in rural communities. The application suggests that the state understands the problem. The commitments, however, raise questions about whether state leaders are serious about implementing real solutions.

As Missouri begins spending the RHTP funds it receives over the next five years, taxpayers should pay close attention to how closely the state’s actions align with its stated vision.

The post Missouri Talks Reform on Rural Health—Then Walks It Back appeared first on Show-Me Institute.

David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to discuss the expiration of enhanced Affordable Care Act subsidies, new federal proposals aimed at lowering healthcare costs through cost sharing, employer coverage reforms, and prescription drug transparency. They also break down the latest installment of David Stokes’ Free Market Guide for Missouri Municipalities on parks and recreation, the role of user fees and outsourcing, national polling on public school open enrollment and why parents strongly support it, what they are watching as the 2026 legislative session approaches, and more.

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Link to the national survey: yeseverykidfoundation.org/new-national…2-education/

Produced by Show-Me Opportunity

The post ACA Subsidies, Parks Policy, and Open Enrollment in Missouri appeared first on Show-Me Institute.

Over the past several months, I’ve written about the many changes coming to Missouri’s welfare programs as a result of the One Big Beautiful Bill (OBBB). One of the most impactful changes involves the Supplemental Nutrition Assistance Program (SNAP). In short, if Missouri doesn’t get its SNAP payment error rate below 6%, state taxpayers will start paying for a portion of the program’s benefit costs (the federal government currently covers 100% of benefits), which could potentially increase the state taxpayer cost to $400 million per year. A similar change is coming to Medicaid.

Despite accounting for roughly one fifth of total U.S. healthcare spending, Medicaid has until now lacked stringent federal accountability for payment errors. Just last year, more than $31 billion in improper payments were made across the program according to the U.S. Department of Health and Human Services (HHS). The OBBB requires HHS to reduce state Medicaid matching payments (more here on how Medicaid is financed) starting in 2030 when improper payment rates exceed 3% of total Medicaid expenditures.

Missouri should be particularly concerned about this change. In 2022, when the state’s Medicaid program was last audited by the federal government, its improper payment rate was 4.2%, which already exceeded the new 3% threshold. And there’s little reason to believe things have improved since then. Just last month, I wrote about the recent state audit showing that Missouri lacks systems to check enrollees against death records and that thousands of recipients went years without having their eligibility verified.

The financial implications for Missouri could be substantial. With more than one in five Missourians now on the program and Medicaid already consuming a massive portion of the state budget, even a small reduction in federal matching payments could force state taxpayers to cover millions more in costs.

The good news is that Missouri has more time to address this than it does for SNAP. The bad news? Given the state’s track record on technology modernization and the sheer volume of problems that need fixing, there’s plenty of reason for skepticism about whether Missouri will rise to the challenge.

While the OBBB’s focus on program integrity might be a nuisance for state bureaucrats, there’s no doubt that a corrective measure is long overdue. Taxpayers shouldn’t be burdened with millions (or perhaps billions) in new Medicaid costs because our state can’t get its improper payments under control.

The post Medicaid’s Wake-Up Call appeared first on Show-Me Institute.

Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to explain what was actually at stake in the recent federal government shutdown. They break down the debate over extended Affordable Care Act subsidies, why health insurance costs keep rising, how COVID-era provisions distorted the marketplace, and what Congress may do next.

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Timestamps

00:00 Understanding the Government Shutdown
06:31 The Debate Over ACA Subsidies
09:10 Impact of the Affordable Care Act
13:24 Proposals for Health Care Reform
17:53 The Future of Health Care Costs

Transcript

Susan Pendergrass (00:00)
Well, this is going to be a very timely and interesting conversation with the Show-Me Institute’s own Elias Tsapelas. You are the Director of State Budget and Fiscal Policy, two things that are front and center right now, but I really wanted to just have you on to talk about a little bit of stuff around the recent government shutdown.

And I just want to say upfront, if I understand this correctly, the federal government can’t pay its bills unless it’s got an approved budget to pay the bills, right? And the fiscal year runs October 1st to September 30th. And if you don’t have a new budget for the next year, you can’t pay your bills. So it’s up to the Senate, the House, and the President to agree on a budget. And this past September, as has happened before, they could not agree, and Democrats were holding out, and that caused the government to shut down. What were Democrats saying they were holding out for?

Elias Tsapelas (00:52)
Well, I guess I should start with just a little caveat that some of what the Democrats were saying they were holding out for was not precisely what was on the table. So no matter what happens, health care premiums are going to be going up, that’s just a fact, because health care costs are up. Health care costs are going up everywhere. Hospitals, Medicaid, we see it everywhere.

Susan Pendergrass (00:56)
You know, fix it up for me. Why?

Elias Tsapelas (01:20)
What they were holding out for were these extended or expanded ACA subsidies, Affordable Care Act subsidies. We’re talking about the marketplace here. This is typically for people making between 100 percent and 400 percent of the federal poverty limit. For example, a couple of two: 100 percent of the federal poverty limit is about $21,000 per year, 400 percent is about $85,000 per year. That’s roughly the range you’re looking at.

Now, some small employers do purchase plans through the marketplace, but the big piece here is that the ACA provides subsidies for people. And the way it works, essentially, is that people pay a proportion of their income. If your income is 100 percent of the federal poverty limit, you’re going to pay roughly 2 percent of your income. Now, there are extended subsidies that change that calculation. But the point being, the law set out that if you make this amount of money, you’re only going to pay this much on health insurance, and the government is going to subsidize the rest. You are not sensitive to costs at all, because your costs are tied to your income.

Susan Pendergrass (02:54)
So, for example, if you earn $4,000 a month, theoretically, and I don’t know the numbers, the government would say you won’t pay any more than $300 in insurance premiums?

Elias Tsapelas (03:05)
Yep. And so that is a percentage that you pay scaled off how much income you have from that 100 to 400 percent. That is a core piece of how the Affordable Care Act worked, and everyone paid a portion based on the base subsidies.

Now, what the debate was about, or what Democrats were holding out for, was expanded subsidies, which came about during COVID as part of the American Rescue Plan, ARPA. And it did a couple things, but they were subsidies on top of regular subsidies. So this was not, “If this doesn’t happen, everyone is going to be paying unsubsidized plans.” This was an additional type of subsidy. These additional subsidies were set to expire at the end of the year, at the end of December. ARPA gave four years of subsidies.

Susan Pendergrass (04:04)
Because it was COVID related, temporary, and they said, “We’ll cover more of your premium through December 31, 2025.”

Elias Tsapelas (04:14)
Yes, I think part of the calculation was that people were going to like it so much that it would be hard to get rid of. And it’s certainly the case: if these subsidies go away, people will be paying more.

Susan Pendergrass (04:15)
Ahem.

Elias Tsapelas (04:27)
But that is not to say there would be no subsidies at all. These extended subsidies did a couple things. For people between 100 and 150 percent of the federal poverty limit, quick caveat: in Missouri, if you make under 138 percent, you’re on Medicaid, so you don’t pay anything, but in many states without Medicaid expansion, people go on the marketplace. What these expanded subsidies did is: if you made between 100 and 150 percent of the federal poverty limit, you paid zero percent of your income. You got a plan for free.

You would still have some cost sharing, and the sliding scale up to 400 percent that the normal subsidies used was lowered, so people under regular subsidies who made 400 percent of the federal poverty limit were paying about 10 percent of their income. With the expanded subsidies, you’d only pay 8.5 percent, and the subsidies no longer stopped at 400 percent. They would go all the way up. You would never pay more than 8.5 percent of your income.

Susan Pendergrass (05:30)
Okay.

Elias Tsapelas (05:42)
But typically, people above 400 percent of the federal poverty limit don’t want to buy ACA plans because 8.5 percent of income is expensive. Still, a decent number of people were impacted. It costs a decent amount of money. The Congressional Budget Office says extending these expanded subsidies costs about $350 billion over 10 years. Very expensive. But there are a lot of issues here, which Republicans are pushing back on as they negotiate whether to extend these by the end of the year.

Susan Pendergrass (06:31)
So now we’re in this argument of whether we extend COVID subsidies or not. And like you said, Republicans seemed willing to say maybe a year, or maybe we’ll vote on it in December. Essentially the Democrats didn’t get any of what they asked for, right?

Elias Tsapelas (06:48)
Yeah. A key piece is that when Democrats passed this in ARPA, no Republicans voted for it. There’s a variety of reasons, but a big one is that it exacerbates problems with the Affordable Care Act. People buying health insurance are seeing higher prices, high deductibles, high copays, so people don’t want to buy it. These additional subsidies got more people into the market, but at a very expensive cost. And because people are not cost sensitive, their share is tied to their income, the subsidies scale regardless of what insurance companies charge. That creates unintended effects. There were allegations of fraud. And a larger discussion: if we’re going to spend $350 billion per 10 years, is there not a better way to get healthier people to buy health insurance? Is there a better way to help people?

And the people most impacted are those around 400 percent of the federal poverty limit, not very low income people. Higher income people. And often near retirement folks who aren’t working anymore but aren’t yet on Medicare. They need health insurance, they have health needs, and insurance gets very expensive. That was something the Affordable Care Act tried to deal with. But doubling down on continuously funding this subsidy system is something Republicans didn’t want to do.

Susan Pendergrass (09:10)
Yeah. So we had Brian Blase of Paragon on the podcast, and he absolutely did not want those COVID related subsidies extended. He claimed that the Affordable Care Act caused health related expenses to go up. Do you know how that works?

Elias Tsapelas (09:45)
There are a couple things going on. One big thing Brian talks about is likely enormous fraud from the expanded subsidies. Bloomberg had a good article about what happened in Florida. As soon as the federal government offered zero premium plans for people between 100 and 150 percent of the federal poverty limit, background: Florida hasn’t expanded Medicaid, so people enroll on the marketplace. What happened is that it became a business for insurance brokers to get people enrolled. Brokers make money off enrollments, and people don’t care if they aren’t paying premiums.

So you had an enormous increase in people supposedly making between 100 and 150 percent of the federal poverty limit. Census data suggests far fewer people actually make that income. Tons were getting health insurance for free, and many weren’t using it. You’d expect higher usage. There are reasons to think there was widespread fraud.

More broadly, ACA plans must cover many things people don’t need, which drives up costs. And the marketplace risk pool is heavily made up of sick people, fewer healthy people, which makes insurance expensive.

So the bigger discussion is: how do you get healthier people into the market? How do you offer plans people want? Republicans are taking a stand that doubling down on the ACA model, with subsidies disconnected from costs, won’t work long term.

Susan Pendergrass (13:24)
Correct me if I’m wrong on this, but didn’t Senator Thune or somebody suggest just sending people $5,000?

Elias Tsapelas (13:30)
I don’t know if it was exactly that amount, but yes, there have been proposals essentially saying: maybe there will need to be a one year extension of subsidies because new plans start soon and it would be hard to roll out big changes in a month. But some ideas, from Senator Cassidy, Senator Thune, and others, propose approving the same amount of money but sending it directly to people instead of insurance companies. For many people, subsidies are worth over $30,000 a year. If people got $30,000, they might not spend it all on an ACA plan costing that much. They might buy a cheaper plan, use out of pocket spending, or seek non ACA compliant plans. There are ideas: HSAs, short term plans, specialized plans. A key piece is giving the money to people, not insurance companies, so someone has an incentive to reduce costs.

Susan Pendergrass (15:47)
Yeah. Well, the shutdown ended. Nothing really changed, right?

Elias Tsapelas (15:52)
Yeah. Congress will have to work a lot in the last month of the year. I’m a little disappointed. There were almost some very interesting budget related court cases that could have come from the shutdown. One argument was whether the government must fund food stamps, or SNAP, during a shutdown, whether they must give out money not appropriated. Some judges said yes. That raises major questions: can courts tell the executive branch to spend money Congress didn’t appropriate?

Susan Pendergrass (16:54)
I think they were told that they don’t, right, in the end?

Elias Tsapelas (16:59)
The Supreme Court basically said courts needed to wrestle with the issue. It got resolved before a final answer. We don’t know for now. Judges were on different sides. Democrats pushed back noting that in previous budgets, they fought to fund things, but the executive branch simply didn’t spend the money. There’s a lot of interesting stuff: can courts force funding, can the executive disregard congressional appropriations? I’m upset that didn’t get resolved. But the ACA issue is big enough that Congress has its hands full.

Susan Pendergrass (17:53)
Some folks said that because of the SNAP benefit question, we were just getting to the point where Americans were paying attention to the shutdown and then it ended. And what’s interesting is the amount of misinformation and hard to follow information. I saw headlines about someone’s insurance premiums going from $300 to $2,600. I don’t know if any of that was right, but it got a lot of play.

Elias Tsapelas (18:28)
I don’t think it was covered especially well in terms of what was being argued, because the government shut down far before these subsidies expired. There was a lot of muddying of the waters. Some people thought if subsidies weren’t extended, no one would have subsidies, even though the people most impacted would just go from paying 8.5 percent of income to 10 percent. Not nothing, but not catastrophic.

Health care costs are going up broadly. Medicare enrollees are getting renewal notices. Everything is going up. ARPA was designed to be temporary. If it were supposed to be permanent, Congress could have made it permanent. Whether Democrats thought it would be continued forever or just help temporarily is unclear. But if Congress comes up with something that makes health insurance better, I’m all for it. There are tough decisions. Congress has struggled with ACA reform for a decade.

Susan Pendergrass (20:20)
I think we know the answer to that. At the federal level, when they want to do big splashy things, ARPA, the ACA, the Tax Cuts and Jobs Act, they make expenses short term to reduce the fiscal note, assuming someone will renew them later. Same thing with the Tax Cuts and Jobs Act. They assume future lawmakers will extend them. So it’s not unreasonable that ARPA had temporary provisions assuming they’d get extended. I guess not this time.

Elias Tsapelas (21:12)
People’s health care costs going up is a big issue. People won’t be happy regardless. But returning to issues that should have been addressed when the ACA passed is important. The marketplace is dysfunctional and too expensive. Hopefully Congress finds something better. And I don’t want to minimize issues for people close to retirement. That’s a big issue: people between 55 and 65, not on Medicare yet, often have significant health needs. If you tell a 60 year old who isn’t working that coverage is $40,000 a year, that won’t work.

Susan Pendergrass (21:53)
Yeah. That’s right.

Elias Tsapelas (22:23)
More options will be good. That is an important group that needs to be addressed.

Susan Pendergrass (23:07)
Well, thanks for explaining it so clearly and helping our listeners understand what was actually on the table. It’s a complicated topic, but we’ll watch it unfold over the next year, and hopefully you’ll come back and explain what’s happening as it unfolds.

Elias Tsapelas (23:23)
Hopefully something does happen, so there is something to explain. That would be the best case scenario.

Susan Pendergrass (23:25)
That’s right. All right, well, thanks so much, Elias. Really appreciate it.

Elias Tsapelas (23:31)
Thank you.

Produced by Show-Me Opportunity

The post What the Government Shutdown Was Really About with Elias Tsapelas appeared first on Show-Me Institute.

Unfortunately, that shocking finding is only one piece of the bad news included in the report. The same audit also revealed that thousands of people have remained enrolled on Missouri’s Medicaid program for up to ten years without the state checking whether they’re still eligible. Federal law requires annual eligibility reviews, but Missouri’s outdated IT systems somehow blocked the state’s Department of Social Services from checking the information of around 10,000 recipients for up to a decade. To be fair, some of these individuals might still qualify for benefits, but many probably do not. The point is that the state doesn’t know one way or the other.

The issues outlined in the audit are a perfect illustration of the many problems with Missouri’s Medicaid program that I’ve been writing about for years. This is an enormously expensive program that is riddled with waste and relies on outdated computer systems that are only making things worse.

Given Missouri’s budgetary uncertainty, it’s even more important that Medicaid benefits only go to people who are eligible for them. Eligibility reviews aren’t just bureaucratic hurdles with no purpose. Circumstances that make people eligible to receive welfare benefits change all the time. They find a job. They get married. They might even die. It’s essential that the state’s computer systems know this information as soon as possible to ensure that tax dollars aren’t being misspent.

Perhaps the worst part of the audit report is the recognition that these troubling findings aren’t new problems at all. Previous reports highlighted both the “death match” issue as well as the recipients who weren’t getting their eligibility checked. Some might remember that Medicaid eligibility redeterminations were a hot topic while they were paused during the COVID-19 pandemic, but it’s important to point out that these issues predate 2020, so we can’t just blame the pandemic.

This is another reason why some of the reforms I outlined from the One Big Beautiful Bill are so needed. Modernizing the state’s computer systems and improving eligibility verification so that errors like these don’t happen should be a top priority. Medicaid is far too expensive, and its costs are growing at far too an alarming rate for this level of waste to continue. What’s the point of having eligibility rules if they aren’t going to be enforced?

The post Checking Medicaid’s Pulse appeared first on Show-Me Institute.

Created, at least in part, to help states deal with the reining in of Medicaid provider taxes, the fund guarantees each state $500 million (half of the $50 billion divided by 50 states), but the other half ($25 billion) is going to be awarded based on a scoring system the federal government recently rolled out. Most notable among the recently published scoring criteria are points for enacting many of the free-market healthcare reforms my colleagues and I have been writing about for years.

The scoring system doesn’t just assess demographics or the number of rural hospitals, though they are a big part of the rubric. It also awards states points for policy changes that reduce red tape and open the door for better care. Some of these items include repealing certificate of need (CON) laws, expanding scope of practice for nurses and other healthcare professionals, improving short-term health insurance options, and making telehealth more accessible. Missouri has debated each of these ideas for years, and made some progress, but now enacting these meaningful reforms has additional monetary stakes.

Despite recent incremental progress on the free-market healthcare front, there’s still a lot that Missouri could do. Our CON laws are some of the worst in the country. They stifle healthcare competition by forcing providers to receive permission, often from their competitors, before adding new hospital beds, building new facilities, or even purchasing certain types of equipment.

Scope of practice restrictions are another self-inflicted wound I’ve written a lot about in the past. Missouri gives advanced practice registered nurses less autonomy than in many other states. Our state already has a shortage of healthcare providers, and removing those restrictions would help improve healthcare access, make Missouri jobs more competitive, and ultimately lower costs—all without sacrificing patient safety.

On the telemedicine front, Missouri has made progress by expanding services to audio-only technologies earlier this year but has the potential to go much further. More flexible rules on prescribing and treating patients could dramatically expand access for families, especially for those in rural communities.

At the end of the day, many of the reforms incentivized by the OBBB are policies Missouri should have adopted years ago, but the federal funding offers lawmakers a new reason to finally take action. If Jefferson City seizes this golden opportunity, Missouri can both improve the state’s healthcare policy and score some additional resources that could help in these tough budgetary times. That sounds like a rare win-win to me.

The post Reform First, Dollars Second appeared first on Show-Me Institute.

At first glance, some might assume this drop is simply a byproduct of the state’s post-pandemic Medicaid redeterminations. But as I’ve written before, I fear that explanation doesn’t add up. Permanently disabled recipients aren’t people you expect to lose coverage once their eligibility is established, given that they’re unlikely to re-enter the workforce. Instead, the data and a new quote suggest a different story: PTD shifting.

As I’ve explained in more detail here, PTD shifting is the process where individuals who would normally enroll in Medicaid due to their disability instead enroll as a healthy adult in the Medicaid expansion population. Why would they do this? For recipients, it makes sense because gaining access to Medicaid coverage through expansion is a much easier process. They don’t need to prove their disability; they just need to be able to show that their income qualifies. And for the state, it makes even more sense because the federal government pays 90% of the healthcare costs of someone enrolled in Medicaid expansion but only about 65% for disabled individuals.

People with disabilities often have a variety of healthcare needs, which in turn means paying for their coverage is quite expensive. If some of these costs can be shifted to the federal government, it could yield huge savings for the state. The problem, of course, is that this is explicitly not allowed. Federal law requires that individuals enrolling in the Medicaid expansion population be “newly eligible” for services, meaning they couldn’t otherwise qualify for the non-expansion part of the program. While I have no proof this is what Missouri is doing, this is a trap I’ve feared our state could fall into since before we adopted Medicaid expansion.

My concern was reinforced in a recent article quoting Timothy McBride, the former chair of the MO HealthNet Oversight Committee. When talking about Missouri’s changing Medicaid enrollment, he stated:

Essentially, the recipients chose one door or another when choosing to enroll, and it’s a much easier path to sign up for the expansion than sign up through disability, since it can take one year or longer to become qualified for Medicaid as permanently disabled.

If his observation is true, and the federal government finds out that Missouri is effectively off-loading disabled enrollees into the Medicaid expansion population to save state money at the expense of federal taxpayers, the consequences could be severe. We’re talking hundreds of millions, if not billions of dollars, that could need to be repaid to the federal authorities.

Missouri’s lawmakers should take this warning seriously. The drop in PTD enrollment is no longer just an accounting curiosity—it’s a signal that our state may be running afoul of federal law. Ignoring this problem now could lead to both a fiscal and legal crisis later.

The post Medicaid in Trouble? appeared first on Show-Me Institute.

Several weeks ago I started my deep dive into the many healthcare reforms included in the One Big Beautiful Bill (OBBB), specifically focusing on Medicaid. This week, I’ll discuss three of the bill’s provisions that are intended to improve program integrity and reduce waste.

1. Increasing Redetermination Frequency: Instead of the current practice of checking each recipient’s eligibility once per year after they enroll in Medicaid coverage, the OBBB requires states to start doing so every six months. This provision isn’t solely about cutting costs, though Medicaid’s out of control spending should be reined in. It’s also about making sure that taxpayers are only covering the high cost of healthcare for those that really need it.
2. Reducing Retroactive Eligibility: In the past, Medicaid would cover medical bills for new recipients up to 90 days prior to their joining the program. The OBBB shortens this window to 30 days in an effort to incentivize those who are truly eligible for the program to maintain their enrollment or enroll while they are healthy. If successful, this provision should improve program integrity and help lower costs by treating recipients earlier, before their ailments become more costly.
3. Reversing Recent Actions: Toward the end of the Biden administration, several new Medicaid rules and regulations were promulgated that would significantly increase the program’s costs without much evidence of benefiting the health of recipients. The OBBB rolls back many of these rules, specifically one that would drastically raise the cost of nursing home care.

Taken together, the reforms contained in the OBBB represent a forward-thinking evolution of the Medicaid program. By focusing on clearer eligibility requirements, more practical retroactive coverage, and a scale back of burdensome regulations, these changes could strengthen Medicaid, making it more sustainable and better equipped to provide essential healthcare services for those who depend on it.

In my next blog post on the OBBB topic, I’ll dive into some of the healthcare reforms that will impact the entire sector, not just Medicaid.

The post More Big Beautiful Medicaid Changes appeared first on Show-Me Institute.

Susan Pendergrass is joined again by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, for Part II of their conversation on the sweeping federal legislation known as the “One Big Beautiful Bill.” They unpack what the bill means for Missouri taxpayers, including changes to the standard deduction, tips and overtime, education savings accounts, and higher education policy. They also dig into the bill’s broader fiscal impact, from the growing federal deficit to the implementation challenges facing state governments.

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Timestamps

00:00 Exploring the One Big Beautiful Bill
04:58 Tax Implications for Missourians
10:20 New Savings Accounts for Children
12:07 Changes in Higher Education
18:09 Federal Deficit and Debt Concerns

Listen to Part I Here

Episode Transcript: One Big Beautiful Bill Breakdown, Part II with Elias Tsapelas 

(Download Here)

Susan Pendergrass (00:00)
So I guess it turns out that the One Big Beautiful Bill was too big for us to talk about in one podcast. Elias, thanks for coming back. I realized after we stopped recording that there’s so much in there we didn’t even discuss. We barely even really got into it. So let’s talk about more of the One Big Beautiful Bill because it’s huge—hundreds, at least hundreds of pages long. And I can’t believe the people who voted on it read it through carefully. Now, as you’re going through it and learning things, I’d love for you to explain some of it to me.

Starting with—how does the no tax on tips and overtime work? I’ve heard a lot about this. I know it was a campaign promise. So is it true that if you’re waiting tables now and you get a few hundred bucks a night in tips, you don’t have to pay tax on it now?

Elias Tsapelas (00:51)
In theory, yes. Now, it’s not clear if it’s going to be something that impacts Missouri tax liability. It sort of impacts the federal tax code a little differently than the increased standard deduction and some of the other changes. So it might change some federal tax liability, but unless Missouri’s legislature changes some stuff, it’s not going to immediately impact Missouri taxes.

Susan Pendergrass (01:16)
But why—do you have to itemize to do it?

Elias Tsapelas (01:19)
No. Basically, Missouri has rolling conformity with the federal government. Missouri takes its gross income from the federal government, and the tax on tips and overtime piece isn’t going to impact the gross income calculation. So it may or may not become an issue in Missouri.

There’s also a big open question here about how much income tip workers are actually claiming, and how much that will change if you say it’s not taxed—because if they weren’t declaring it before, we don’t really know what the change will be.

Susan Pendergrass (02:05)
Yeah, so if you walk home with a wad of cash, you’re not necessarily going to add it up and write it down and claim it.

Elias Tsapelas (02:09)
It still might not be worth declaring all of it. But if Missouri brings it into the state income tax code, it could cost quite a bit of money. There are quite a few tax provisions here—especially on corporate tax—where we really don’t know how much it’s going to cost, but it’s probably going to be significant. There’s full expensing, depreciation, all kinds of things that are going to change both federal and Missouri tax liability. And then there was the standard deduction change we mentioned last time.

Susan Pendergrass (02:47)
Okay. So one thing that does impact Missourians is our tax credit scholarship program, where you can donate to a scholarship-granting organization like the Archdiocese of St. Louis, and they give out scholarships. Right now, you can get a Missouri state income tax credit for that—up to half of how much you owe the state. And now there’s a new program where you can take a federal credit of up to $1,700 for donating to these organizations.

You can’t get credits for both on the same donation, but you could donate up to half your tax liability and get the Missouri credit, and then separately donate $1,700 and get the federal credit. I know there’s a lot of rulemaking still to come, and I also know this program doesn’t start until January 2027. So it won’t affect people’s returns until April 2028. But—how do you think that’s going to work? Do you have any idea based on what you’ve read?

Elias Tsapelas (03:54)
Well, Missouri has to opt in first, right? I think the first step is getting the rules out and seeing which states opt in. I would assume Missouri will. The hope is that this becomes something more people understand and take advantage of.

In Missouri, even though we have tons of tax credits that people do use, it takes a while to build it into tax preparation tools like TurboTax. So you kind of have to know what’s going on. Maybe once the federal piece is in place—and there are also changes to the child tax credit—that’ll help.

Susan Pendergrass (04:24)
Spread the word. How’s that changing?

Elias Tsapelas (04:51)
Some of the temporary provisions from the 2017 bill are now made permanent. One of the things the One Big Beautiful Bill does is take temporary changes and make them permanent. We’ll see in a few years how many of these stay.

Susan Pendergrass (05:10)
So the child tax credit is now permanent?

Elias Tsapelas (05:13)
Yes. The changes made in 2017 are now permanent. It’s higher now, and there’s more of it that’s refundable. There’s still an income threshold to get the maximum amount. I think there are going to be a lot of tax credit changes. The bill also got rid of a lot of renewable tax credits. So there are a lot of changes to tax policy for both businesses and individuals. I think people will need to start thinking about their Missouri taxes a little differently, at least for the next few years.

Susan Pendergrass (05:59)
Another piece is the savings accounts for children—kind of like IRAs for kids. I’ve read that anyone born after January 1, 2024, or maybe anyone currently under age 18, is eligible. The IRS has to open the accounts, and you need a Social Security number. For kids born between January 1, 2024, and 2026, the government deposits the first $1,000.

Elias Tsapelas (06:52)
Yeah. What I was trying to figure out is how these differ from 529 plans. I think these will be harder to withdraw from. They do come with tax benefits for employers and others contributing, but taxes will have to be paid when the money comes out.

Susan Pendergrass (07:25)
Yes—capital gains. With 529s, the money goes in pre-tax and comes out tax-free if used for education. These accounts are less flexible. You can take money out for education, a house, or a business, but otherwise there’s an early withdrawal penalty plus capital gains. It feels gimmicky, since the government only deposits $1,000 until 2028 when the program expires.

But for many low-income kids, this could be their only savings. It’s meant to help those who wouldn’t have a 529. They were originally going to be called “Invest in America Accounts,” but they’re now called “Trump Accounts.”

Elias Tsapelas (08:50)
I’m curious to see if the $1,000 is the only money ever deposited into these accounts for most people. It may not be worth putting in more, but even with tax obligations, it’s still free money.

Susan Pendergrass (09:27)
Right. You turn 18 and have $10,000—it’s not nothing. But some worry that a future Democratic president with control of Congress could expand the program—like depositing $500 annually for anyone under 18. It starts to look like a form of universal basic income. But I suspect it’ll go away—it feels gimmicky.

Elias Tsapelas (10:16)
I’m curious if the government will make it easier to use for college or similar expenses. There are a lot of higher education changes in the bill too. As someone with student loans, I’m getting emails every day about them.

Susan Pendergrass (10:33)
Yeah. So tell me—what are the changes to higher ed?

Elias Tsapelas (10:43)
Well…

Susan Pendergrass (10:46)
I’ve heard it might hurt community colleges, but I don’t know why. Do you?

Elias Tsapelas (10:49)
There are new caps on loan amounts and some income-based repayment plans are being eliminated. For example, the SAVE repayment plan created by the Biden administration has been tied up in court. Interest collection is resuming, but payments aren’t due yet. Borrowers need to switch plans, but the old ones are gone. The new plan tries to prevent negative amortization, but it’s still unclear how well that will work.

Grad students will be able to borrow less. The government wants loans repaid more quickly. After five years of paused payments, there’s a huge administrative burden now to unwind all of this.

Susan Pendergrass (12:11)
I know—since the pandemic.

Elias Tsapelas (12:17)
Exactly. There’s going to be a big process for certifying income and re-establishing payments. Colleges are nervous—lower borrowing limits could change students’ decisions. And I don’t know if the federal government is prepared to roll all of this out smoothly. I still need to re-set my auto-withdrawal.

Susan Pendergrass (12:56)
Yeah. It feels like we have to wait six months or a year to see what actually happens. Even the work requirements for SNAP and Medicaid were pushed out beyond the midterms. So while people are celebrating or panicking, a lot of this is still TBD.

Elias Tsapelas (13:26)
Yeah. And when people talk about “cuts,” especially to Medicaid, they’re mostly referring to ten-year projections. But a lot of the actual cuts are back-loaded. The benefits hit first—then the cuts. And some of those cuts may never happen. There’s also a big expansion of health savings accounts. People with bronze marketplace plans or direct primary care arrangements could use them, but rules still need to be written.

Susan Pendergrass (14:38)
I read there might be fewer subsidies, maybe higher premiums?

Elias Tsapelas (14:44)
Depends. There’s going to be a bill later this year to debate extending the enhanced COVID-era subsidies. But those subsidies created a kind of shadow market—shady dealers signing people up for plans they didn’t even know they had. About 2 million people were enrolled in multiple subsidized marketplace plans last year. So now there’s a push to reintroduce some “skin in the game.” But we’ll see what ends up mattering or going into effect.

Susan Pendergrass (16:04)
And our senator is already trying to undo parts of the bill he voted for.

Elias Tsapelas (16:08)
Yeah, especially the provider tax piece. That would help rein in spending, but the cuts don’t go into effect for several years—giving time for backtracking. If none of the pay-fors happen and only the expensive parts do, this bill just becomes even more costly.

Susan Pendergrass (17:08)
What does this bill, even optimistically, do to the federal deficit?

Elias Tsapelas (17:15)
I still need to see estimates, but we’re looking at adding at least $4 trillion to the deficit. Possibly more, depending on what’s made permanent.

Susan Pendergrass (17:53)
I thought Republicans cared about balanced budgets. This feels irresponsible. What do you think?

Elias Tsapelas (18:08)
It’s a lot easier to say you’re for fiscal responsibility than to actually do it. With Medicaid, people say cut waste—but cutting funding means cutting payments to hospitals, doctors, and nurses. And those tax cuts were always going to be extended. Every person taking the standard deduction is getting a bigger deduction. That costs money.

The real long-term budget problems are in Medicare, Medicaid, and Social Security—none of which were addressed. So someone will have to get back to those eventually.

Susan Pendergrass (19:48)
Yeah. Social Security’s trust fund is going to run dry soon—maybe within 10 years. The numbers are so big, it starts to feel imaginary. People can’t wrap their heads around what it would take to have a balanced budget. Both parties just keep giving stuff away, so you’d be foolish to sit on the sidelines.

Elias Tsapelas (20:24)
Yeah—it’s just different groups they’re giving to. This bill was very expensive. And I think future efforts will make it even more so by eliminating what little cost savings exist.

Susan Pendergrass (21:03)
The SALT deduction, for example—capped at $10,000 in 2017, now up to $40,000. That’s a $30,000 swing. For Californians, that’s huge.

Elias Tsapelas (21:27)
Yeah, and the benefit mostly goes to higher-income people. Even in Missouri, some homeowners might benefit—but it mostly helps the coasts. And it gives high-tax states more room to raise taxes, since the federal deduction cushions the blow.

Susan Pendergrass (22:19)
Exactly. Crazy stuff. Well, I think we’ve covered a lot. I won’t make you come back again, but there’s so much detail—it’s not really what either side thinks it is.

Elias Tsapelas (22:45)
I agree. Especially with Medicaid and SNAP. And states will carry a big burden implementing this. Some will do it well, some will fight every piece. There’s going to be a lot of news as this all rolls out.

Susan Pendergrass (23:46)
Totally. Not directly related, but recently I’ve met people surprised by the real ID requirement. It’s been around for 10–15 years, and Missouri resisted it. Some states just don’t want to jump into federal programs.

Elias Tsapelas (24:04)
Yeah—I’ve seen signs about it at TSA forever. Always “effective in 3 months,” then postponed. But it finally happened.

Susan Pendergrass (24:11)
Right. And this summer, people are finally getting real IDs. Missouri was one of the last to implement it. So I don’t expect the state to jump on many of these changes either. But there’s still plenty of time to talk about it all again.

Elias Tsapelas (24:28)
Yes.

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The post One Big Beautiful Bill Breakdown, Part II with Elias Tsapelas appeared first on Show-Me Institute.

Back in May, when the concepts for the bill were still being discussed, I wrote about several of the proposals that I thought might be included. As a jumping-off point for a more in-depth discussion of the many reforms included in the OBBB, I thought it would be helpful to first compare what made it across the finish line to the ideas I discussed in my earlier post.

• Rein in financing gimmicks: As I’ve discussed at length, states have recently been drastically increasing their reliance on Medicaid provider taxes in response to rising healthcare costs. The OBBB freezes state provider tax rates where they are today, prohibits states from adopting new ones, and begins lowering the maximum allowable rate from 6% to 3.5% over a period of years (excluding those for nursing homes and intermediate care facilities). Missouri’s current rate for its hospital provider tax is 4.2%, so this change could have an effect on the state’s budget in several years once the OBBB is fully implemented.
• Work requirements: Instead of offering states the opportunity to try work requirements for their respective Medicaid programs, as has been proposed in the past, the OBBB goes one step further by requiring states that have adopted expansion to establish “community engagement requirements” for their able-bodied enrollees. These requirements largely exempt populations that aren’t considered working-age able-bodied adults, such as pregnant women and parents with dependents under the age of 14.
• Reduce “enhanced” federal match: Decreasing the federal government’s skewed payment structure for the Medicaid expansion population was one of my only expected reforms that didn’t make it across the finish line. While this change was excluded, the OBBB does eliminate the temporary increase in federal payment share that has existed for several years, which was an effort to entice states to adopt expansion. It also reduces the federal payment rate for states that cover illegal immigrants under their Medicaid programs.

All told, the OBBB includes at least a dozen additional healthcare changes that will impact Missouri in one way or another that I haven’t mentioned above. It’s also important to keep in mind that much of the OBBB will not go into effect immediately and will be implemented in phases over the next decade. For many of the changes included in the bill, it’s far too early to confidently predict the effect they may have on Missourians or the state’s budget.

Over the coming weeks and months, I’ll dive deeper into some of these provisions as more information related to Missouri comes to light. Time will tell whether Missouri’s government is ready or capable of successfully implementing the reforms on the horizon.

The post Medicaid Reform Incoming appeared first on Show-Me Institute.

Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to break down the sweeping new federal legislation known as the “One Big Beautiful Bill.” They discuss what it really means for Medicaid recipients, food stamp programs, state budgets, and Missouri taxpayers.

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Timestamps

00:00 Understanding the One Big Beautiful Bill Act
06:44 Medicaid: Changes and Implications
11:23 SNAP Benefits: New Regulations and Effects
14:18 Tax Implications for Missourians
19:09 Future of Medicaid and State Budgets

Episode Transcript: Understanding the One Big Beautiful Bill with Elias Tsapelas (Download Here) 

Susan Pendergrass (00:00)
Okay, here we go. You ready? Elias Tsapelas, we are going to talk about IT—the big IT—the One Big Beautiful Bill Act. I don’t feel like I understand it. I suspect there’s a lot of people reading the news that don’t understand it, but you seem to understand a lot of it. So thanks for coming to talk to us about it today.

Elias Tsapelas (00:19)
No problem. I think there’s a lot of misconceptions, especially about what’s happening with the welfare programs in the bill. So I’m happy to dive into those.

Susan Pendergrass (00:27)
Yes, yeah. I’ve definitely seen claims that this is going to basically strip health care from millions and millions of people and that kids will be hungry. And I don’t want to minimize that. But we had Brian Blase on the podcast, and I thought I had an understanding of it that didn’t exactly line up with that narrative. So let’s just start there. People are saying that tens of millions of people are going to lose health insurance under the One Big Beautiful Bill Act. Explain that to me.

Elias Tsapelas (01:01)
Well, the first thing people need to understand about Medicaid is that it’s gotten tremendously more expensive in recent years. The Biden administration made a lot of changes during COVID—changes to how the program works and its future trajectory. Even after the One Big Beautiful Bill goes into effect, we’re basically just putting the program’s costs back on the trajectory it was on in 2021. This isn’t going back to the Stone Age—it’s more like going back five years.

A lot of this stems from efforts to eliminate waste, fraud, and abuse. And while there’s certainly some of that, what many people don’t realize is that most states, including Missouri, now contract with private health plans to cover people on Medicaid—particularly the Medicaid expansion population, which consists of healthy adults.

Susan Pendergrass (02:11)
Okay, so let’s just pretend we know nothing. Medicaid is a program that covers health insurance costs for low-income and disabled individuals?

Elias Tsapelas (02:24)
Yes. About 50% of kids in Missouri are on Medicaid. The program covers around two-thirds of all nursing home costs and over a third of all births in the state.

Susan Pendergrass (02:34)
So low-income pregnant women can get Medicaid coverage, and their children can as well. Who exactly is in the “expansion population”?

Elias Tsapelas (02:47)
Good question. And just to clarify—yes, Medicaid also covers a lot of very disabled individuals who private health insurance wouldn’t. But the expansion population refers to healthy adults making up to 138% of the federal poverty limit. These are not permanently disabled people. They’re generally able to work.

Before 2021, someone like me—unmarried and childless—couldn’t qualify for Medicaid in Missouri, even if I lost my job. Medicaid expansion changed that, and with it came a lot of problematic incentives. One issue is that states are paying health plans monthly for enrollees, but there isn’t always a process to verify whether those people are still eligible.

Susan Pendergrass (04:53)
Let me just stop you there. So the state is paying monthly premiums for people who might not even know they’re on Medicaid? And they might have a job now and no longer qualify, but the state hasn’t gone back to check?

Elias Tsapelas (05:40)
Exactly. Ideally, people would notify the government when they get a job, but most don’t, and the IT systems don’t really catch that. Previously, states just paid the bills as they came in. If someone didn’t go to the doctor, there was no cost. Now we’re paying premiums whether they use care or not, which adds up quickly.

Susan Pendergrass (06:40)
So what’s in the One Big Beautiful Bill? Are states required to recertify people?

Elias Tsapelas (06:45)
Yes. One big provision is that states must check eligibility at least twice per year. The Congressional Budget Office projects significant enrollment losses just from checking more often. That’s raised concerns about red tape, but the goal is to ensure people who are no longer eligible aren’t still receiving coverage.

Susan Pendergrass (07:13)
Can Missouri do that? Do we have the systems in place?

Elias Tsapelas (07:20)
I’d like to think so, but I’m not sure. During COVID, states weren’t allowed to check eligibility at all for over three years. Missouri spent an entire year catching up when that ended. Right now, about 1.2 million people are on Medicaid in Missouri, including 350,000 in the expansion group. So yes, it would mean more IT strain.

Another major part of the bill is requiring “community engagement” or work requirements for the able-bodied expansion group.

Susan Pendergrass (08:24)
So that’s people under 65 who aren’t disabled? How do they know who’s supposed to work?

Elias Tsapelas (08:32)
There are carve-outs—new moms, parents with kids under 14, people over 65, etc. The idea is to target people who could be in the workforce. There are also alternative ways to meet the requirements, like volunteering. And it’s worth noting: the SNAP program (food stamps) has had work requirements since the 1990s.

Susan Pendergrass (10:25)
Then why are people saying this will “kick people off”?

Elias Tsapelas (10:33)
Because people will have to meet work or volunteer requirements, and the state will recertify them more often. The question is: how many people will get caught in red tape? That depends on how well states implement the changes. Most of the bill’s provisions are phased in over time to allow states to adapt.

Susan Pendergrass (11:34)
Let’s talk about SNAP benefits. People are saying this will take food away from families. What’s actually changing?

Elias Tsapelas (11:46)
The federal government will now penalize states with high error rates in SNAP administration. Missouri’s overpayment error rate is about 10%, and some states are worse—Alaska’s is nearly 25%. Under the bill, if your error rate is over 6% for two years, the state will have to start covering some of the cost. So Missouri may have to pay a portion of benefits if it doesn’t improve.

Susan Pendergrass (14:06)
How does the bill impact taxes for Missourians?

Elias Tsapelas (14:14)
The standard deduction is going up—by $750 for single filers and up to $6,000 more for seniors. There’s also a new deduction for car loan interest and temporary exemptions for taxes on tips and overtime. Since Missouri’s tax code follows the federal code, that could mean less state revenue, too.

Susan Pendergrass (15:41)
So what will this cost Missouri?

Elias Tsapelas (15:46)
It depends. If we reduce our SNAP error rate, the cost isn’t too bad. But a bigger issue is the provider tax cap dropping from 6% to 3.5% over a few years. Missouri is at 4.2% now, so we’ll need to lower it. That tax generates about $1.5 billion per year for hospitals.

Susan Pendergrass (17:09)
How does the rural hospital fund come into play?

Elias Tsapelas (17:24)
The bill creates a $50 billion Rural Hospital Fund to be distributed over five years. States will get a portion based on how rural they are. The hope is this fund offsets the provider tax losses—at least through 2030. But after that, the fund ends. So there’s concern about what happens long-term.

Susan Pendergrass (19:18)
Senator Josh Hawley mentioned he supports the bill but hopes to fix the provider tax issue in five years.

Elias Tsapelas (19:29)
That seems to be the thinking—pass it now and revisit the unpopular parts later. A lot of the tax and spending changes are temporary, which is partly how they got the bill to comply with budget rules.

Susan Pendergrass (20:30)
This reflects what voters asked for—smaller government and more state responsibility. It reminds me of the Department of Education cuts. Missouri will have to decide which programs to keep and how to fund them. But I was surprised the expansion of the MOScholars tax credit program made it in.

Elias Tsapelas (22:35)
Yes, Medicaid will continue to dominate the state budget if we don’t address it. Every year it’s, “How much more is Medicaid going to cost?” Then we build the rest of the budget around that. This bill will force Missouri lawmakers to reevaluate some of those assumptions and perhaps reconsider whether managed care is working.

Susan Pendergrass (25:02)
That’s going to be interesting to watch. Thanks for breaking it down, Elias. This bill is being talked about a lot, but I think a lot of people are still unsure what it really does.

Elias Tsapelas (25:16)
No problem. I think we’re all looking forward to seeing what happens next.

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Senate Bill (SB) 79 will (if Governor Kehoe signs it), among other things, expand the definition of “telehealth” or telemedicine to include audio-only and audiovisual services. On its face, SB 79 may not seem like the biggest or most impactful change, but it addresses a major problem with Missouri’s telemedicine laws that has been needlessly restricting access to care for years.

A few months ago, I wrote about several ways in which healthcare access for Missouri residents could be improved, and abandoning the requirement for video in cases where it isn’t medically necessary was one of the policies I highlighted. There are still large parts of Missouri without reliable broadband internet access, and not everyone has a phone or computer capable of transmitting video. Further, not every medical treatment requires a visual examination (for example, mental health services). Given our state’s well-documented shortage of healthcare providers, any effort to improve healthcare access without sacrificing safety or quality of care is welcome.

It’s easy to forget that back during the COVID-19 pandemic, Missouri ranked among the national leaders in telemedicine access. Various laws and regulations were waived for emergency response purposes, allowing patients to access their providers virtually with more ease than ever before. In turn, telemedicine grew tremendously in both functionality and popularity, among patients and providers alike—until the emergency ended and many of the unnecessary regulatory burdens telemedicine previously faced were allowed to return.

After several years of telemedicine reform nearly reaching but failing to cross the finish line, SB 79’s passage feels like a long time coming. As states across the country continue improving their licensing laws to expand healthcare supply and account for changing technology, Missouri could no longer afford to keep reform on hold. And while the bill doesn’t address all of the areas in which I think Missouri’s telemedicine laws could be improved, it does represent a small, important step in the right direction.

Going into next year, there is still plenty of work to be done to improve Missourian’s access to care. Hopefully, SB 79 is a signal that our lawmakers are dialing up more expansive healthcare reforms for 2026.

The post Missouri Finally Dials in Telemedicine Reform appeared first on Show-Me Institute.

In this episode, Susan Pendergrass is joined by Brian Blase, president of Paragon Health Institute, and Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to break down the health care provisions in the “One Big Beautiful Bill.”

They focus specifically on the bill’s Medicaid provisions, including efforts to enforce eligibility checks, freeze the growth of provider tax schemes, and reduce improper enrollment. Blase and Tsapelas also discuss the reality behind claims that millions will lose coverage, the true cost of Medicaid expansion, and the perverse incentives that allow states to game the federal reimbursement system.

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Here’s an overview of some of the legislation passed this session (some of which is still awaiting the governor’s signature):

$50 MILLION FOR MOSCHOLARS PROGRAM

• First public investment in the K–12 scholarship program, with $50 million approved in the state budget
• Could triple the number of students served, expanding access to private school, homeschooling, and
specialized support

TELEHEALTH AND HEALTH CARE REFORMS: SB 79

• Improves telehealth access by allowing both audio-only and audiovisual services on any HIPAAcompliant
platform
• Expands health benefit offerings by allowing certain organizations to offer health plans to members,
sometimes referred to as farm bureau or association health plans, without many of the burdensome state
and federal restrictions that apply to traditional insurance offerings

PROTECTING PROPERTY RIGHTS: HB 595 AND HB 343

• Prohibits cities and counties from requiring landlords to participate in voluntary federal housing
programs such as Section 8 housing vouchers
• Bans caps on security deposits and restrictions on tenant screening criteria like income, credit, and
criminal history

CAPITAL GAINS TAX EXEMPTION: HB 594

• Exempts 100% of long-term capital gains from Missouri state income tax for individuals
• Applies to all individual income reported as capital gains for federal tax purposes, starting tax year 2025
• Designed to encourage investment and entrepreneurship by reducing the tax burden on productive
activity

EXPANDING LICENSE PORTABILITY: SB 150

• Expands access to temporary occupational licenses across most licensed professions in Missouri by
repealing the harmful compact exemption, ensuring that more professionals moving to Missouri can
start working without unnecessary delays
• Provides expedited occupational licenses to law enforcement spouses moving to Missouri, allowing
those licensed in another state for at least one year and in good standing to receive a Missouri license
within 30 days of applying

Download a copy of the report here.

The post 2025 End of the Legislative Session Report appeared first on Show-Me Institute.

For several years now, my colleagues and I have been writing about the benefits of price transparency in healthcare, and the fierce opposition the idea has faced in Jefferson City. Naively, I assumed that informing patients of the cost of healthcare services before they were provided would be uncontroversial. After all, what other expensive goods or services do consumers purchase without knowing what they’ll pay beforehand? But after several price transparency bills received hearings last year the points of contention became a little clearer.

During public testimony on House Bill (HB) 1837 last year, the Missouri Hospital Association stated that complying with the bill’s price transparency requirements would be financially burdensome. This was confusing because HB 1837 simply added state-imposed penalties if hospitals didn’t comply with federal transparency requirements that are already on the books. As I’ve written previously, back in 2019, the Trump administration issued an executive order requiring hospitals to publish a list of standard charges for 300 common procedures in a user-friendly, shoppable display. This was a requirement that has since been extended to health plans and was kept in place throughout the entire Biden administration.

But as I’ve also explained at length, Missouri hospitals have been reluctant to comply (at least in spirit) with the federal requirements. In the years since, state legislators across the country have begun filing bills to encourage greater compliance. At first, the Missouri bills languished in committee without receiving public hearings. Then, last year, bills received hearings in both chambers of the legislature and were even voted out of committee. Unfortunately, this year, the subject didn’t receive a hearing in the House and wasn’t successfully voted out of committee in the Senate.

It’s hard to know what changed since last year that led to the policy losing support among Missouri’s legislators, but I think it’s safe to assume that hospitals still oppose the effort. Going into next year’s session, I’ll continue highlighting the benefits of price transparency and the importance of policymakers taking action to help rein in skyrocketing healthcare costs. While it may be true that price transparency isn’t a silver bullet for all that ails America’s broken healthcare system, it’s a step in the right direction that shouldn’t be delayed because certain providers claim they can’t afford it. Missouri patients can’t afford the wait.

The post A Step Backward for Transparency appeared first on Show-Me Institute.

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.

The post Medicaid’s Check-Up: Part 5 appeared first on Show-Me Institute.

The post The Final Weeks of the 2025 Session appeared first on Show-Me Institute.

What’s Happening in Jefferson City?

Get the inside scoop on the Missouri legislative session and policies that could directly impact the lives of Missourians at the Show-Me Institute’s Insider’s Hour! Join CEO Brenda Talent, Director of State Budget and Fiscal Policy Elias Tsapelas, and Senior Fellow Patrick Tuohey for a discussion on tax and education policy and the latest efforts to improve government efficiency.

Wednesday, March 26

Carriage Club

5301 State Line Road

Kansas City, MO 64112

Doors open: 4:30 p.m.

Discussion and Q&A: 5:15 – 6:00 p.m.

Ticket Price: $20.00 (includes light snacks and beverages)

Get your Tickets Here

The post March 26: Insider’s Hour in Kansas City appeared first on Show-Me Institute.

As I’ve discussed in earlier parts of this series, the Medicaid program is financed as a partnership between states and the federal government. For traditional Medicaid recipients (parents, children, elderly, disabled, etc.), states pay approximately one third of all medical costs and the federal government picks up the remaining two thirds. But for Medicaid expansion enrollees (healthy adults), the federal government increases its share to 90%. And for both populations, this financing arrangement is open ended. This means that no matter what the total cost of care may be, if the recipient is eligible for Medicaid and is receiving a covered service, the federal government will pay the established share.

Now, let’s consider what these financing arrangements might incentivize, and how they could relate to the troubling outcomes described earlier in this series.

Several years ago, in my Medicaid primer, I dove into great detail explaining some of the problems with Medicaid’s open-ended funding structure. The federal government’s willingness to pay the majority of all Medicaid costs with no limits distorts the program’s true costs for states, which are ultimately responsible for administering the program. This arrangement not only fails to incentivize states to search for total cost savings but also effectively incentivizes them to shift costs to the federal government .

Perhaps the best example of this dubious incentive is Medicaid provider taxes (explained here). These “taxes” are a federally approved way for some healthcare providers to exploit Medicaid’s financing arrangement to generate additional federal reimbursement for themselves at “minimal” cost to state taxpayers. If it sounds too good to be true, that’s because it is. Lawmakers in states like Missouri have repeatedly been willing participants in this scheme, and our state has since become overly reliant on these provider taxes. What this means is that states have used these taxes to raise provider rates far beyond what state taxpayers could afford if the federal government ever decides to stop allowing the gimmick, which is a very real risk.

Another financing gimmick for states is the permanent total disability (PTD) shifting that I described in part three of this series. By agreeing to pay more for expansion enrollees (90% vs. 66%), along with the open-ended funding arrangement, the federal government has effectively incentivized states to enroll people into the expansion population that might have otherwise been eligible to enroll traditionally. For example, if Missouri’s Medicaid agency could enroll just 25,000 people with disabilities as expansion enrollees instead of traditional ones, according to my calculations (available upon request) state taxpayers could save upwards of $150 million per year. But as I’ve emphasized, the federal government has explicitly stated this behavior is not permitted. There’s no way to know for sure if Missouri is doing this until Missouri’s Medicaid program is audited, but I think there’s good reason to believe it’s happening. New York was caught engaging in this behavior not long ago.

Given all of this, it should be no surprise that Missouri’s Medicaid program is a bloated, inefficient mess. There’s optimism that in the coming months the federal government will begin pursuing Medicaid reforms that target its side of the financial partnership. In part five of this series, I’ll dive into some of the likely proposals.

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Founded in 2005 by Rex Sinquefield, Crosby Kemper III, and Michael Podgursky, the Show-Me Institute has spent two decades championing free-market solutions. With key victories like reducing Missouri’s income tax, expanding school choice, and increasing government transparency through initiatives like the Missouri School Rankings Project and the Show-Me Checkbook, the Institute has driven meaningful progress across the state.

As we look to the future, the Show-Me Institute remains committed to empowering Missourians and policymakers to build a freer, more prosperous Missouri.

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