The post Frequently Asked Questions About Amendment 5 appeared first on Show-Me Institute.

One of the items vetoed was $2 million for Missouri’s Violent Crime Clearance Grant Program. That was a disappointment. I’ve written previously about why improving violent crime clearance rates is one of the smartest public safety investments Missouri can make.

Even so, I understand why it was vetoed. Missouri cannot continue expanding government..

Spending restraint means worthwhile programs will sometimes be cut. The question isn’t whether every veto was perfect. No governor gets every decision right. The question is whether Missouri is finally willing to reverse a spending trajectory that accelerated during the years of extraordinary federal COVID aid and continued even after those dollars disappeared.

I hope lawmakers and the governor revisit the Violent Crime Clearance Grant Program when Missouri’s finances allow. Public safety is government’s first responsibility, and I continue to believe this is a high-return investment.

But spending restraint only works if programs with genuine merit are still subject to scrutiny. If every worthwhile program receives an exemption, then spending never declines. The test of fiscal reform is whether Missouri begins living within its means and creates the conditions necessary to reduce the tax burden on its citizens over the long term.

The post A Disappointing Veto, but the Right Fiscal Direction appeared first on Show-Me Institute.

Issue Area 01

Economy

An economy that works for Missourians allows people to earn a living, invest, and start businesses.

3 Policies

Issue Area 02

Education

Missouri’s education system should empower families with real choices, operate transparently, and hold schools accountable for results.

5 Policies

Issue Area 03

Health Care

Health care should be easier to access, easier to understand, and more affordable for patients.

2 Policies

Issue Area 04

State and Local Government

Governments should be transparent, responsible with taxpayer money, and focused on essential services.

7 Policies

17 Policy Recommendations

The full Blueprint

Each policy is a self-contained working document: the problem, the evidence, the proposal.

Economy

3 Policies

Occupational Licensing

Cut barriers that keep Missourians out of the trades they’re qualified to enter.

Economic Development Subsidies

Stop picking winners; reduce TIF, tax-credit, and grant programs that distort markets.

Nuclear Energy

Permit, build, and operate small modular reactors to meet Missouri’s grid demand.

Education

5 Policies

Statewide School Choice

Empowering families with real options across public, charter, and private pathways.

Education Funding Formula

Reform the formula so dollars follow students and incentives reward outcomes.

School Report Cards

Plain-English accountability metrics every parent can read and act on.

Missouri Parents’ Bill of Rights

Codified rights to records, curriculum, and meaningful participation.

Early Literacy

Evidence-based reading instruction beginning in kindergarten.

Health Care

2 Policies

Free-Market Healthcare Reform

Direct primary care, telemedicine, and association plans as real alternatives.

Healthcare Price Transparency

Prices posted, plainly, before treatment — by procedure, by facility, by physician.

State and Local Government

7 Policies

Income Tax Reform

Flatten brackets, broaden the base, and lower the rate Missourians actually pay.

Property Tax Reform

Caps, exemptions, and assessment fairness for Missouri homeowners.

Budgetary Reform

Bring obligations back into line with revenue, not the other way around.

Taxpayer Bill of Rights

Codified protections so Missourians know what their tax dollars can — and can’t — do.

Office of Government Efficiency

An accountable, mission-specific office to audit how state government actually runs.

Local Government Transparency

Open records, open meetings, and open budgets — by default, not by request.

Welfare Reform

A welfare system that helps Missourians rise, not one that traps them at the bottom rung.

The post Blueprint for Missouri 2026 appeared first on Show-Me Institute.

As I’ve written many times, during the COVID-19 pandemic, Missouri became one of the nation’s leaders in telemedicine access. Patients gained easier access to remote care, providers gained greater flexibility, and many Missourians discovered firsthand how technology can reduce barriers to healthcare.

Unfortunately, when the public health emergency ended, many of those reforms disappeared. Over the past several years, lawmakers have worked to restore some of that flexibility, and this year’s legislation represents another meaningful step forward.

There are currently several bills (House Bill 2372, House Bill 2974, and Senate Bill 1233), awaiting the governor’s signature that would accomplish a few things. Under current law, providers generally must establish a physician–patient relationship before treating someone through telehealth. The new legislation makes that process more flexible by allowing providers to determine when a relationship can be safely established remotely.

The bills also make telemedicine prescribing more practical by focusing on whether a provider has enough information to appropriately diagnose and treat a patient instead of relying on rigid restrictions surrounding questionnaires or telephone-only evaluations. Perhaps even more important, providers licensed through Missouri’s reciprocity system will have clearer authority to provide telehealth services to Missouri patients. That means patients are no longer limited to the providers located near where they live and can more easily connect with healthcare professionals across the country who are willing to treat Missouri patients.

These changes may sound technical, but their impact could be significant. Much of Missouri continues to face healthcare provider shortages, particularly people who live in rural communities or who require care in specialized fields. Patients often wait weeks for appointments, travel long distances for care, or delay treatment altogether. None of this is to say telemedicine can solve every healthcare access challenge, but it can help connect patients to providers more quickly without requiring new facilities or providers to relocate.

The reforms also demonstrate a reality that has become increasingly clear over the past decade: telemedicine is now a key part of the healthcare system. Patients routinely use remote care for follow-up appointments, consultations, behavioral health services, and many other healthcare needs. Providers have invested heavily in telemedicine technology, and patients increasingly expect those options to remain available. As healthcare technology evolves, state laws should continue adapting so Missourians can benefit from those innovations.

All this is to say there is still more work to do. Missouri should continue moving toward a more modality-neutral approach that focuses on the quality of care rather than the technology used to deliver it. Lawmakers should also continue expanding telemedicine options for providers working within their existing scope of practice and further remove barriers that prevent qualified out-of-state providers from treating Missouri patients remotely.

Missouri may not yet be the telemedicine leader it was during the pandemic, but this year’s reforms move the state further in that direction. Addressing Missouri’s healthcare access challenges will require moving beyond outdated assumptions about how care should be delivered and focusing instead on whether patients can safely access the care they need.

The post Missouri Continues Telemedicine Momentum appeared first on Show-Me Institute.

During his State of the State address in January, Governor Mike Kehoe indicated Missouri is opting into the federal government’s new school choice tax credit program. The program resembles Missouri’s MOScholars program. Taxpayers can receive a dollar-for-dollar federal tax credit for donations up to $1,700 annually to a scholarship-granting organization, or SGO, in Missouri. The SGO then distributes scholarships to families in Missouri seeking alternatives to their residentially assigned public schools.

For many families, the scholarships will be used to pay private school tuition. But the potential is broader. At least two public school districts in Missouri already participate in MOScholars, allowing nonresident students to use scholarships to pay transfer tuition; a similar arrangement may be possible under the federal program. Funds could also support homeschooling expenses, tutoring, after-school programs, or enrollment in a microschool (the latter is a fast-growing but loosely defined sector and there is no clear consensus on what defines a microschool). The eligibility criteria are still unsettled.

Non-traditional providers are pushing for few guardrails and minimal regulation, while others argue for stronger oversight and quality controls.

I have mixed feelings. The real value of this program is its potential to expand Missouri’s education marketplace. Competition improves quality in virtually every sector of the economy, and education is no exception. But markets don’t work well when consumers have poor information, so I’d like quality controls and transparency so parents can make informed choices. Here’s the tension: expanding choice and imposing quality controls can work against each other. To illustrate, consider a heavily regulated system in which schools that accept the tax-credit payments must administer standardized tests, publicly report results, and disclose detailed information about their curricula and finances. This level of transparency would reassure policymakers, but the problem is that we cannot force private providers to participate.

And if we make it too difficult (and too costly) to participate, which schools are the most likely to opt out? The answer: the ones that already have plenty of customers without this new program—likely the best schools. And if the best schools opt out, it undermines the value of the education marketplace we’re trying to build in the first place. (This is a complicated problem. See here for a deeper discussion in the context of research that finds negative effects of a voucher program on student achievement in Louisiana.)

I don’t have all the answers, but I hope Missouri lawmakers think carefully about how to strike the right balance, particularly if the federal government gives states meaningful discretion in implementation, which I expect it will. I’d favor a middle-of-the-road approach that requires participating schools to provide straightforward, low-cost information, but without overly burdensome regulations or reporting requirements. I want the best education providers to open their doors to more Missouri students; I don’t want to scare them away.

The post The Dicey Details of the Federal Government’s New School Choice Tax Credit Program appeared first on Show-Me Institute.

For years, the education establishment in Missouri has relied on a predictable playbook. Whenever state test scores drop or national rankings look bleak, we are told that the data don’t capture the whole picture, or that a new bureaucratic report card will soon show things are turning around. We are urged to wait, to invest more taxpayer money, and to trust the system.

But a newly released look at the numbers from a joint Harvard and Stanford project strips away the capacity for spin. According to the report, Missouri’s reading scores, which declined substantially during COVID, have continued to fall since 2022. We now rank 26th of 38 states (with usable data) in academic growth in math and 28th of 35 states in reading. In both reading and math, Missouri students are more than a half of a year behind where they were performing in 2019 (0.58 grade equivalent and 0.66 grade equivalent, respectively).

The authors point out that the pandemic slide was actually the acceleration of a trend that started around 2013. The pandemic simply poured gasoline on a fire that was already burning.

This scorecard release comes at a critical time for Missouri education policy. Recently, we’ve watched efforts to implement clear, transparent A–F school report cards go sideways in Jefferson City, bogged down by attempts to shift focus away from academic achievement and instead prioritize ambiguous school climate surveys. Fortunately, the governor’s executive order mandating report cards with letter grades will still be implemented.

Similarly, efforts to bring real accountability to early reading were derailed this legislative session. Lawmakers couldn’t commit to rigorously applying the science of reading or to making sure that students who can’t read aren’t socially promoted to grades where they will struggle to understand their textbooks.

If we want to reverse this generation-long decline, we must stop protecting the status quo. The folks in charge of public education need to be held to the highest standards of accountability. Furthermore, we must empower parents with robust educational choice, forcing the state system to compete and innovate rather than take families for granted. If we don’t make changes, we’ll only continue to fall further behind.

The post Missouri Students Continue to Fall Behind appeared first on Show-Me Institute.

Missouri’s education savings account program, MOScholars, which facilitates school choice in Missouri with student scholarships, got a decisive win in court this week. This is not a surprising outcome, but it’s worthy of celebration regardless.

The lawsuit against MOScholars was brought primarily by the Missouri National Education Association (MNEA)—i.e., the teacher’s union—against the State of Missouri. The MNEA argued that the $50 million state appropriation to support student scholarships with MOScholars, passed during the 2025 legislative session, violates the state constitution.

The court dismissed the case, offering several reasons. Most importantly, it ruled that the plaintiffs lacked standing. The plaintiffs claimed harm to public schools, but MOScholars funding comes from general state revenue—not funds allocated to public schools—and the court found that any alleged harm was speculative. The court also noted that the plaintiffs made several other procedural missteps.

The ruling went on to note that even on its merits, the plaintiffs’ case would lose. The legislature has broad authority to appropriate funds, the court said, and nothing in Missouri law prohibits funding a program like MOScholars. In short, the program is legally valid.

Again, this outcome is not surprising, but it’s still nice. The lawsuit was a desperate move by the MNEA to keep a stranglehold on all public education dollars. It failed, as it should have. Onward!

The post MOScholars Wins in Court appeared first on Show-Me Institute.

Neglecting a problem doesn’t make it go away, or cheaper to fix. Missouri is learning that lesson with regard to its IT systems right now.

As I’ve written before, many of Missouri’s government computer systems are critically out of date. COVID relief funds helped jumpstart long-needed modernization efforts, but the passage of the One Big Beautiful Bill last July means new federal requirements will soon depend on those upgrades.

Missouri’s Department of Social Services (DSS) has been tasked with integrating its Supplemental Nutrition Assistance Program (SNAP) and Medicaid eligibility systems while preparing for new community engagement requirements. This integration has been needed for years, but the new federal rules make it urgent. The goal is straightforward: simplify how benefits are administered while reducing costly errors. If Missouri cannot bring those error rates down, the state will be responsible for a larger share of program costs.

Some officials have warned that meeting the new requirements could force the department to shift resources away from other modernization work. There is no doubt funding plays a role. Modernizing large government IT systems can be expensive. But in this case, stronger systems are exactly what will make complying with new federal mandates possible.

There are reasons to worry about how this effort will go. This is not the first time DSS has faced a difficult administrative task, and the last major one did not go smoothly. When federal pandemic rules suspended Medicaid eligibility reviews, states had time to prepare for the return of normal operations. Missouri did not use that window to get ahead or fully modernize its systems. When eligibility reviews resumed and the state had to reassess hundreds of thousands of enrollees, Missouri struggled immensely.

More recently, Missouri’s experience with large IT modernization efforts across state government offers another warning. Lawmakers were told a few weeks ago that completing upgrades to the state’s financial management system will cost more than $250 million. This is a project that is already significantly behind schedule and over budget. It should be noted that Missouri’s difficulty with modernization is partly the result of how long these systems were allowed to fall behind. It‘s not surprising that the longer upgrades are delayed, the harder and more expensive they become.

The challenge Missouri faces now is that many of the policies it must implement depend on the very systems still awaiting modernization. Community engagement requirements require technology capable of tracking employment data. More frequent eligibility renewals require information that can move accurately between programs. Lower error rates require systems that can catch mistakes before they turn into federal penalties.

As lawmakers finalize Missouri’s budget in the weeks ahead, this issue should remain front of mind. Modernizing the systems that run the state’s safety net is not a project the state can afford to ignore any longer.

There’s no getting around the fact that Missouri will ultimately have to upgrade these systems. The only real question now is whether the state does it in time to avoid more costly mistakes and federal penalties.

The post Cost of Delaying Safety-Net Modernization appeared first on Show-Me Institute.

Governor Kehoe reinforced his support for MOScholars in his recent State of the State address. Building on the $50 million state investment approved during the 2025 legislative session, the governor is calling for an additional $10 million this year, bringing total funding to $60 million. These public funds will be combined with contributions generated through state tax credits to expand school choice opportunities for families across Missouri. Although MOScholars remains small relative to the size of Missouri’s K–12 student population, this proposed increase is a clear positive step toward a richer and more robust school choice landscape.

The governor also announced that Missouri will opt into a new federal tax credit program designed to operate much like MOScholars, but funded through federal tax credits. Under this program, taxpayers may redirect up to $1,700 of their federal tax liability to support school choice in Missouri. If widely used, the federal credit could significantly expand the pool of available funding—possibly enough to generate meaningful competition within the state’s education system.

These developments provide real cause for optimism about the future direction of education policy in Missouri.

The post Kehoe Continues to Prioritize MOScholars in his State of the State Address appeared first on Show-Me Institute.

The Early Literacy Reform Model Policy Packet includes:

• An infographic with key facts about Missouri’s reading crisis
• Frequently asked questions for policymakers
• Full model policy language for early literacy reforms
• A detailed policy brief with research and state comparisons
• Contact information for policy experts

Read the full Early Literacy Reform in Missouri Model Policy Packet here.

The post Missouri’s Reading Crisis: 42% of Fourth-Graders Can Barely Read appeared first on Show-Me Institute.

Missouri’s budget is growing faster than the state’s economy, and if this troubling trend continues it could soon prove disastrous for state taxpayers.

The Solution

Limit spending growth, increase accountability, and improve budget resilience through reforms that prioritize Missouri’s long-term financial health.

Key Facts

• Missouri’s government is growing faster than inflation, wages, and the state’s population.

• Currently, state budgeting practices actually encourage greater spending.

• Most state budget documents aren’t easy for citizens to find, nor are they available in a form that is easy to use.

• Missouri awards nearly $1 billion each year in tax credits, which are the fiscal equivalent of state spending, completely outside of the normal budgeting process.

• According to Moody’s Analytics, Missouri is one of the least-prepared states in the nation for an economic downturn.

Spending at Record Levels

Missouri’s budget has been growing unsustainably for years, and may finally be reaching a fiscal cliff. After a year when a reduction in spending was promised but not delivered, our state is facing a one-billion-dollar shortfall. Missouri’s Hancock Amendment, which was once thought to provide protections against unchecked government growth, has proved incapable of meaningfully constraining spending. In fact, if Missouri’s budget growth hadn’t drastically outstripped both inflation and population growth over the past five years, the current fiscal crisis could have been avoided entirely.

Current Practices Encourage More and More Spending

Missouri currently uses what is called an “incremental” approach to budgeting, which means that budget items from one year automatically roll over into the next and establish the new baseline for state spending. This practice makes budgeting easier for legislators because it allows them to focus attention on new funding requests, but it also allows many old programs and spending items to escape annual scrutiny. The result is snowballing government growth. Missouri should require legislators to evaluate program effectiveness through performance audits and to regularly use “zero-based budgeting,” meaning that lawmakers must build the state’s budget from square one each year.

You Can’t Fix What You Can’t See

Currently, most state budget documents are difficult to find, hard to interpret, and in a form that requires citizens to manually transcribe the data to be studied. Such hurdles mean that lawmakers and state bureaucrats can act with greater impunity and less oversight. There is no good reason why the documents that detail where taxpayer money is going should not be easy for any citizen to access and understand.

Additionally, Missouri leads much of the nation in the subsidization of private entities with state tax dollars, yet there’s little to no mention of these subsidies in the yearly budget. Last year, Missouri awarded nearly $1 billion in various tax-credit programs with little to show for it. These tax credits are the fiscal equivalent of state expenditures, but because the state forgoes revenue instead of spending it, the credits are allocated completely outside the state’s normal budgeting process. The exclusion of tax credits from yearly scrutiny also removes them from the calculations lawmakers must make when tasked with balancing the state’s budget. A truthful accounting of all tax obligations is required if Missouri is to right its fiscal ship.

Missouri Isn’t Ready for the Next Recession

The boom-bust cycles of state finances create budgetary chaos. Each economic downturn forces elected officials to make difficult spending decisions that can be at odds with the state’s long-term funding priorities. As a result of the 2007-2009 Great Recession, general revenues fell by over $1.2 billion, leading to abrupt cuts in education, corrections, and other spending that lasted for several years after the recession. Almost every other state in the country has a rainy-day fund to help weather these situations, but Missouri’s Budget Reserve Fund is too small and too hamstrung by restrictions to be used in a downturn. In fact, it’s never once been used for this purpose.

Policy Recommendations

• Establish clear and meaningful state program performance metrics that allow for objective assessments.

• Implement zero-based budgeting.

• Make all state budget documents available in easily accessible, machine-readable formats (e.g., in Excel or CSV format).

• Include all tax credits, or tax expenditures, in the state’s yearly budgeting process.

• Create a separate budget stabilization fund with the sole task of stabilizing revenues in the event of an economic downturn. The fund should be large enough to fully replace state revenues during a crisis comparable in magnitude to the Great Recession with strong protections against improper use. Repayment to the fund also should be dependent on the pace of economic recovery.

FY 2026 Operating Budget

With approximately 58% of all state spending devoted to education and healthcare, continued budgetary growth puts enormous pressure on every other state spending priority.

Budgetary Growth: Fy 2016-2025

Missouri’s state spending has grown by more than 58% over the past decade.

The post Budgetary Reform appeared first on Show-Me Institute.

Missouri’s government continues to grow in both size and scope while tax revenues are expected to stagnate in the coming years.

The Solution

Complete a comprehensive review of Missouri’s government to rein in unnecessary spending and regulation.

Key Facts

• Missouri’s net general revenue collections for Fiscal Year 2025 were essentially flat and are expected to be similar in Fiscal Year 2026.
• Missouri’s spending of state revenue sources has increased by more than 75% over the past five years, and is expected to outpace tax revenue growth in the next few years.
• Successful state-based efficiency efforts have been enacted across the country over the past 50 years and have saved taxpayers billions of dollars.

Something’s Gotta Give

Missouri’s tax revenue collections have grown at an average rate of nearly 9% over the past five years, but state spending has grown at an even faster rate of more than 10%. To make matters worse, Missouri’s official estimates now project state revenues to remain essentially flat in the coming years. Given that the cost of providing the same level of services increases over time, and that Missouri’s constitution has a balanced-budget requirement, it should be obvious that this troubling trend cannot continue.

Learn from Other States’ Experiences

Nearly 60 years ago, then-California Governor Ronald Reagan established what was perhaps the most successful state-based cost-cutting initiative in history with an executive order. The “Governor’s Survey on Efficiency and Cost Control” enlisted the help of more than 200 private-sector leaders to recommend, in short order, more than 2,000 reforms to improve California’s government operations and reduce costs. All told, the recommendations included savings of upwards of $4.2 billion in today’s dollars.

Over the past year, following the lead of Reagan and the recent work conducted by the federal Department of Government Efficiency, more than 20 states have established their own cost-cutting initiatives. While Missouri’s general assembly created committees last year on the subject, no visible progress has been made on establishing a government efficiency program. Instead of trying to reinvent the wheel, Missouri can look to states that have already achieved success reining in government and take similar actions that could save billions of Missouri taxpayer dollars.

Step One of Many

Rightsizing Missouri’s government will not be easy. It will require leadership from both the executive and legislative branches of Missouri’s government, a clear plan of attack for identifying inefficiencies, and a commitment to exercising fiscal restraint over several years while implementing the reforms necessary to permanently change the state’s fiscal trajectory. This much is clear: There is no longer time to delay. Missouri’s elected officials must start reducing government spending today if there’s any hope of securing our state’s financial future tomorrow.

Policy Recommendations

• Establish an executive branch-led government efficiency initiative to provide a comprehensive review of Missouri’s government practices.
• Enlist the help of private-sector leaders to help review government, rein in excess spending, and recommend reforms to improve efficiency while reducing waste.
• Set clear goals and timelines for the initiative, with commitment from elected officials to make the efficiency recommendations a reality.

The post Office of Government Efficiency appeared first on Show-Me Institute.

Longtime readers of the Show-Me Institute blog won’t be surprised by this admission, but hearing the governor finally acknowledge our state’s spending problem hopefully signals a coming course correction. This stands in stark contrast to Missouri’s lawmakers in recent years, who have largely ignored how out of control state government spending has become, despite all the data to the contrary.

Prior to state Fiscal Year (FY) 2026, which began on July 1, Governor Kehoe signed a $50.8 billion spending plan, which was about $2 billion less than what the general assembly sent him. It should be noted, and lauded, that the governor applied some fiscal sanity by vetoing more than 200 spending items. But it’s also important to keep perspective on our state’s current financial mess and how much work fixing it will require.

It’s easy to forget that as recently as FY 2019, Missouri’s government only spent a little more than $27 billion in total compared to the $50 billion for 2025. What’s changed? Missouri’s spending has exploded on almost everything: welfare, education, transportation—you name it, and spending on it probably increased.

In 2019, Missouri’s budget included a little more than $9 billion in general revenue funds (primarily state sales and income tax collections) and nearly $9.6 billion from the federal government. Today, our state plans to spend more than $15.6 billion in general revenue and $24.5 billion in federal funds. If you compare this to the state’s estimates for general revenue collections in the coming year of $15.3 billion, you can see that even after the governor’s vetoes, Missouri’s government is still expecting to spend $300 million more than it projects to bring in. That doesn’t even account for the high likelihood of supplemental funding requests later in the year, and that the state’s supply of federal funding is projected to fall by the billions.

Missouri taxpayers are stuck with a government spending far beyond its means. As recently as 2023, Missouri had nearly $8 billion in general revenue funds set aside that could have been saved for times of need, but instead the state has spent exorbitantly, whittling away at the surplus. Today, those excess funds have been almost entirely depleted. Governor Kehoe recently noted that without his actions to reduce spending, the state was expecting a billion-dollar shortfall going into the next fiscal year.

It’s hard to look at what’s happened with Missouri’s budget over the past five years and view it as anything but a squandered opportunity. Our elected officials managed to take historic tax revenue growth, unprecedented federal investment, and an $8 billion cash reserve and turn all that into a billion-dollar hole in the budget right as the state’s revenue forecasts are taking a turn for the worse. Going into next year, Missouri’s tax collections are projected to decline and there will be no more excess federal dollars to prop up the state’s unsustainable spending. It should go without saying that it is imperative that Missouri’s lawmakers finally get serious about getting the state’s finances back on track.

There’s no longer any dispute about whether Missouri’s finances are a problem. The better question is whether it’s too late to stop the bleeding. Perhaps the most important task for our state’s elected officials over the next year will be finding a solution that’s better than something akin to putting a Band-Aid on a bullet wound.

The post Missouri’s Squandered Opportunity 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.

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.

Missouri voters approved Medicaid expansion as a constitutional amendment in August of 2020, during the height of the COVID-19 pandemic. Due to legal challenges and various technical issues, expansion-eligible Missourians didn’t begin joining the program until October of 2021. As I stated in part one of this series, because of COVID’s impact on the program as well as the federal rules accompanying the increased funding, it’s been nearly impossible until now to fully analyze the rollout of Medicaid expansion.

Before voters weighed in on the measure, expansion supporters made several claims about how the policy would impact Missouri. At the time, I wrote repeatedly about three of their key claims with which I disagreed. First, they estimated that fewer than 250,000 people would enroll within the first year. Second, they said the expansion enrollees would be “newly eligible” for the program, which is something the federal government requires as a condition of receiving extra federal funding. And third, they said the expansion wouldn’t cost state taxpayers any money. In fact, they argued it would save money. Unfortunately, none of these projections came true.

As I also mentioned in part one of this series, prior to the pandemic, Missouri’s Medicaid enrollment was around 850,000, with about 520,000 of those being kids. Within one year of expansion being implemented (October 2022), Missouri’s Medicaid enrollment had ballooned to 1.4 million with 288,000 adults in the “newly eligible” expansion population. Today, with COVID safely in the state’s rearview mirror, program enrollment is still nearing 1.3 million total with 340,000 adults enrolled as a result of the expansion of eligibility requirements. The only Medicaid eligibility category that has seen a decline in recent years is that of people with disabilities—but that is a topic I’ll discuss in greater detail in the next post in this series.

To quickly summarize the impact of expansion thus far, enrollment has exceeded projections by around 35 percent, and current program costs are approximately 75 percent ($7.8 billion) higher than they were in 2019. The prediction that Medicaid expansion would be costless relied on Missouri being able to shift a significant portion of its costs to the federal government, which would in turn have saved state taxpayers money. Thus far, this has not been the case as Missouri taxpayers’ contribution to the state’s Medicaid program has grown by 74 percent ($1.6 billion) over the same period.

While hindsight is 20/20, it’s fair to say that the current problems with Missouri’s Medicaid program were predictable four years ago. Further, there’s no longer any reason to think today’s data represent anything other than the new normal for the program. It’s time to accept that Missouri voters were sold a bill of goods on Medicaid expansion, and it’s incumbent on our state’s elected officials to explore whatever actions are possible in the coming years to fix the problems that expansion has created.

The post Medicaid’s Checkup: Part 2 appeared first on Show-Me Institute.

Download the document here. 

The post 10 Ideas to Get Missouri’s Budget Back on Track appeared first on Show-Me Institute.

I don’t mean Comprehensive Annual Financial Reports (CAFRs), or the Distinguished Budget Award that seemingly every city under the sun gets.

I mean an audit. The type of audit that gives people nightmares and, presumably, makes them more careful in their accounting and reporting out of fear.

In recent years, we have seen plenty of examples of failed accounting procedures in local government. There have been outright thefts, failures to competitively bid contracts, plenty of conflicts of interest and cronyism, and much more. I don’t think that politicians and bureaucrats in Missouri are less honest than in other states, but I do think that the huge number of small municipalities and other special taxing districts in our state gives them more opportunities for varying degrees of corruption.

We have seen local auditors who totally failed to do their jobs. Seriously, check out these links to the St. Louis County auditor’s page and be amazed at how few audits the office has actually performed over the past decade.

There is a bill in Jefferson City that expands the ability of the state auditor to preemptively begin audits of local governments when there is evidence of problems. Currently, the auditor needs to be invited by local officials or receive a petition from citizens. The former isn’t always done by local officials—for obvious reasons—and the latter can be time consuming and difficult.

This proposal, which is now on the governor’s desk, is an excellent one. It would benefit the taxpayers of our state.

Would it make local officials and bureaucrats nervous? I certainly hope so.

The post The Type of Audit We Can All Agree On appeared first on Show-Me Institute.

Why stop at 4.5%? As the state’s general revenue grows, shouldn’t tax rates be adjusted accordingly so that the total size of government doesn’t also grow? By eliminating the limit of three reductions to the income tax rate from the law, Missouri can set forth a fiscally responsible glide path to eliminating the income tax entirely, using current law to facilitate this autopilot tax reform. Letting taxes drop as revenues rise is an appropriate and efficient way of achieving this end.

We have talked at length and for years about how destructive income taxes are to growth and why they should be phased out and ended in Missouri. Accelerating that stepdown is worthwhile, but not stopping that stepdown is just as important, given the current law. Policymakers should remove the floor and let the individual income tax rate continue to fall if government revenue keeps rising.

The post Why Don’t We Remove the Floor from Missouri’s Income Tax Triggers? appeared first on Show-Me Institute.