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.

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.

Produced by Show-Me Opportunity

The post Understanding the One Big Beautiful Bill with Elias Tsapelas 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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Produced by Show-Me Opportunity

The post The One Big Beautiful Bill’s Impact on Medicaid with Brian Blase and Elias Tsapelas 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.

The post Medicaid’s Checkup: Part 4 appeared first on Show-Me Institute.

In part two of this series, I briefly mentioned that in Missouri’s recent period of overwhelming Medicaid growth, the only eligibility category that had a reduction in enrollment is people with disabilities. Today, there are approximately 125,000 disabled Missourians enrolled in the Medicaid program, which is down 50,000 since its peak in 2023, down 25,000 since 2019, and is actually lower than at any point in the past 20 years (which is as far back as the data goes).

What could possibly explain this sudden shift? One explanation, as I referenced in part one, is that Missouri is still catching up on processing thousands of program eligibility redeterminations that were paused for several years during COVID-19. But the problem with that theory is that you wouldn’t expect many people with disabilities to lose Medicaid coverage once they qualify. They, unlike several other populations such as healthy adults or pregnant women, are less likely to only need coverage temporarily or just until they can get back to work. This is why I think it’s likely that disabled individuals are simply receiving their coverage through different means.

One way this could happen is through what I’ve called “PTD shifting,” which is something that I’ve been warning about since early 2020. PTD (permanent total disability) shifting was a key component of Medicaid expansion supporters’ claims that adopting the proposal would be costless for Missouri taxpayers. PTD shifting occurs when states exploit the way Medicaid is financed to shift a significant portion of disabled enrollees’ costs to the federal government. Given that people with disabilities often have a variety of complex medical issues, providing them health coverage can be very expensive, which in turn means that shifting these high costs to the federal government could save states a lot of money. The problem is that the federal government has explicitly stated numerous times that this practice is not allowed.

To be clear, I don’t have any definitive proof that Missouri’s Medicaid agency is doing anything wrong, but the latest program enrollment data should be raising some eyebrows. If my fears are confirmed, and Missouri is practicing PTD shifting, state taxpayers might soon be on the hook for an enormous Medicaid bill. This is because once the federal government discovers a state has been wrongfully receiving extra federal funds to support its Medicaid program, the feds could require state taxpayers to pay them back, which in this case could amount to hundreds of millions of dollars.

Needless to say, Missouri’s Medicaid program deserves a closer look from our state’s elected officials as soon as possible. The longer it takes to get to the bottom of what’s going on, the more difficult and expensive the fix is likely to be.

The post Medicaid’s Checkup: Part 3 appeared first on Show-Me Institute.

-Optimism about the 2025 legislative session
-DESE’s accountability system lacks accountability
-The potential for more nuclear power in Missouri
-An update on Medicaid expansion in Missouri
-St. Louis municipalities behaving badly
-Free speech means sometimes hearing out bad ideas

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The post Show-Me Institute’s December 2024 Newsletter appeared first on Show-Me Institute.

First, here’s a quick recap of what’s happened with the program in recent years. In March of 2020, the COVID-19 global pandemic began, and the federal government declared a national state of emergency. Over the next several years, Medicaid’s enrollment boomed, and in response the federal government agreed to increase its share of funding for the program. But as is almost always the case, the additional federal money came with strings attached. Particularly, accepting the funds required Missouri’s Medicaid agency to stop checking whether program enrollees were eligible to receive services. This prohibition continued until the end of March 2023.

Additionally, during the pandemic period, Missouri voters approved a constitutional amendment that radically reshaped the state’s Medicaid program. The amendment expanded Medicaid by extending program eligibility to able-bodied Missourians making up to 138 percent of the federal poverty level. For a family of four, this figure represents yearly earnings of approximately $43,000. Unsurprisingly, this expansion has led to an enormous increase in program enrollment, and as with COVID relief funds, the federal government agreed to pay an increased share for those newly eligible to enroll.

Given these developments, it shouldn’t be surprising that Missouri’s Medicaid program looks much different today than it did four short years ago. Prior to the pandemic in 2019, Missouri’s Medicaid enrollment sat around 850,000, with about 520,000 of those enrolled being children. By 2023, total program enrollment had nearly doubled to 1.5 million, with approximately 740,000 of those being kids and 350,000 being adults who had enrolled as a result of the change in eligibility requirements. Today, according to the state’s most recent enrollment data, there are still nearly 1.3 million Missourians on the program, including 640,000 children and 340,000 “expansion” adults.

In terms of cost, the growth has been similarly shocking. In 2019, the program cost around $10.4 billion in total, with less than $2.2 billion coming from Missouri taxpayers via state income and sales taxes. In this year’s FY 2025 budget, Medicaid’s total cost has ballooned to an expected $18.2 billion, with $3.8 billion coming from state taxpayers. This represents a total increase of approximately 75%, and the growth of state taxpayer investment isn’t much lower at 74%.

In several upcoming blog posts, I’ll dive deeper into these numbers and explain why it’s important that our elected officials take action to rein in our Medicaid program sooner rather than later.

The post Medicaid’s Checkup: Part 1 appeared first on Show-Me Institute.

It should be no shock that the past two years have been tumultuous and expensive for Missouri’s largest government program. Medicaid fulfilled its role as the state’s health coverage provider during a global pandemic, and on top of that, Missouri also adopted Medicaid expansion. These two factors have the potential to swing state Medicaid spending by billions of dollars.

Today, Missouri’s Medicaid program enrollment sits at the highest point in state history, which as I’ve written before, is in large part because of COVID-19. Fortunately, there’s hope that the federal state of emergency for the pandemic will end in the next few months. Such a move would represent a green light for states to begin once again checking whether program enrollees still qualify for the services they’re receiving (one of the conditions of receiving stimulus funds for Medicaid was not removing anyone from the rolls for the time being).

This is important because enrollment is the single biggest driver of Medicaid spending, and there are many reasons to believe that there are large numbers of ineligible enrollees right now. According to the Urban Institute, more than 350,000 current enrollees could lose coverage if the state starts checking eligibility again. To put that number in context, even if you assume the monthly cost of coverage for these enrollees is $400 (it’s likely higher), this is saying the state may be spending $140 million per month on people who don’t qualify to receive services!

It should not be controversial to insist that state tax dollars only pay the cost of health coverage for those who meet the qualifications to receive it. In normal times, federal law requires states to check eligibility regularly to ensure funds aren’t being wasted. Federal law also requires those who are qualified to receive benefits regardless of any administrative difficulties. This is a problem for many Missourians right now, as the wait time for application processing far exceeds what’s allowed by federal law. (It should be noted that those who are eligible for coverage when they apply will have their qualified costs covered retroactively once enrolled regardless of processing time.)

To summarize: There’s an enormous backlog of current enrollees whose eligibility needs to be checked, and once an eligibility check is completed we will likely see a major decline in total enrollment. But there’s also a sizable backlog of applicants who are waiting to be enrolled—and once that process is complete, total enrollment will increase.

The good news is that the governor and legislature appear to recognize the enormity of the task ahead; both have included increased funding to help reduce the administrative backlogs in their budgets. It’s anybody’s best guess how much Medicaid enrollment will fluctuate over the next year, but there are potentially billions of reasons that state taxpayers should care about enrollment numbers.

The post Medicaid’s Volatile Upcoming Year appeared first on Show-Me Institute.

A growing Medicaid program is nothing new for Missouri. Enrollment has crept higher in each of the past 21 consecutive months, dating back to the beginning of 2020. In that time, the program’s rolls have ballooned by more than 31%. In fact, enrollment in every single eligibility category (adults, children, elderly, persons with disabilities, pregnant women, etc.) has grown significantly over the past two years.

Keep in mind that program enrollment is the single biggest driver of Medicaid costs, which is a big part of why I was so concerned about Missouri expanding the troubled program. Even before Medicaid expansion went into effect, our state already expected to spend more on the program this year than ever before. In total, the program cost more than $11.5 billion last fiscal year, which was nearly 37% of the state’s budget. This year it’s expected to eclipse $12 billion for the first time.

Of course, the Medicaid program has been severely impacted by the COVID-19 pandemic. In response, the federal government approved multiple relief packages that include supplemental Medicaid funding. But this federal “relief” is now contributing to the state’s continued program growth. One of the early relief bills, the Families First Coronavirus Response Act, included a provision prohibiting states from removing anyone from Medicaid coverage unless the recipient asked to be removed or relocated out of state. This means that Missouri’s Medicaid agency stopped checking whether those already enrolled in the program were still qualified to receive services. Unsurprisingly, enrollment has increased in every month since, and it’s unclear when the agency will be allowed to resume eligibility redeterminations.

As I’ve written before, it’s long past time for Missouri’s elected officials to take the steps necessary to reform the state’s Medicaid program. Rooting out unnecessary spending in the Medicaid program should have been a higher priority before expansion, but now that continued enrollment growth is all but assured, it’s a necessity. How much longer can state taxpayers afford to foot the bill for this runaway spending?

The post Medicaid Expansion Fuels Enrollment Growth appeared first on Show-Me Institute.

Next month during his State of the State address, Governor Parson will lay out his budget recommendations for the 2023 fiscal year. In addition, there are supplemental funding requests for our current fiscal year that require immediate legislative attention. The Department of Elementary and Secondary Education has requested approximately $2 billion be appropriated from federal relief funds by April, Missouri’s Medicaid expansion population will run out of funding soon, and the governor has recommended a $15 minimum wage along with a 5.5% pay raise for state employees starting February 1st.

My updated report provides the context necessary to fully understand the tough task ahead for Missouri’s legislature. It also provides a step-by-step explanation of the state’ budgeting process, a graphic explaining the expected timeline for the budget, and a detailed description of many of the difficult decisions required to craft and maintain a constitutionally-required balanced budget. As lawmakers discuss the economic forecasts for the coming year and decide how much to raise future state spending obligations, this report should help provide some valuable insight.

Click here to read the full report.

The post Missouri’s Budget: A Primer (Update) appeared first on Show-Me Institute.

Next month during his State of the State address, Governor Parson will lay out his budget recommendations for the 2023 fiscal year. In addition, there are supplemental funding requests for our current fiscal year that require immediate legislative attention. The Department of Elementary and Secondary Education has requested approximately $2 billion be appropriated from federal relief funds by April, Missouri’s Medicaid expansion population will run out of funding soon, and the governor has recommended a $15 minimum wage along with a 5.5% pay raise for state employees starting February 1st.

My updated report provides the context necessary to fully understand the tough task ahead for Missouri’s legislature. It also provides a step-by-step explanation of the state’ budgeting process, a graphic explaining the expected timeline for the budget, and a detailed description of many of the difficult decisions required to craft and maintain a constitutionally-required balanced budget. As lawmakers discuss the economic forecasts for the coming year and decide how much to raise future state spending obligations, this report should help provide some valuable insight.

Click here to read the full report.

The post Missouri Budget: A Primer (Update) appeared first on Show-Me Institute.

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The post Mask Mandate Lawsuit, Judge Rules on QuickTrip, Medicaid Update appeared first on Show-Me Institute.

• Medicaid expansion goes to court
• Summarizing a successful legislative session
• Tax subsidy reform
• Small but important victories in education reform
• Missouri suing the president over an environmental issue

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The post Show-Me Institute’s June 2021 Newsletter appeared first on Show-Me Institute.

Late session negotiation and consolidation is a hallmark of Missouri’s legislative culture, but in 2021, policymakers adopted this logrolling approach to a historic extent. The legislature regularly passes more than 100 bills each regular session, but according to Legiscan, it passed a total of only 24 bills this year—less than half of the 49 passed in last year’s pandemic-shortened session, and less than a third of the previous decade low of 89 in 2017.

To be sure, the number of bills “truly agreed to and finally passed” can conceal the full extent of the policy changes made in a given legislative year. But given the frequency of filibusters in the Missouri Senate, passing so few bills and waiting until so late in the session to do so is an enormous gamble. But this year, the gamble paid off.

Policymakers delivered a surprising number of strong victories for Missouri this year. We’ve talked about some of those already, including wins for education savings accounts, local checkbook transparency, occupational licensing reform, and deregulation. The session saw strong pushback against implementing Medicaid expansion in Missouri, and while the battle is likely headed to court, the bad policy and the legislative history of that initiative remain unchanged. Medicaid expansion was never going to be free, and supporters should have been straight with voters about that from the beginning. We’ll see what the courts do in the year ahead.

But I haven’t talked, at least on the blog, about several other successes from the session that I’ve supported in the past but maybe haven’t discussed recently. For one, the legislature finally passed an internet sales tax—and by “finally” I mostly mean that policymakers have been saying they’d do it for a long time. Fortunately, they also passed it in a revenue-neutral way, which I have long supported. As I wrote in 2018:

Researchers at the Show-Me Institute have long-supported low tax rates with a broad base, and sales taxes are less destructive to growth than income taxes. But as the sales tax base broadens, another tax should contract to ensure the government isn’t growing and treating taxpayers like a piggybank. In fact, the tax reform bill passed earlier this year originally included a provision that would have created an Internet sales tax in the state, but also simultaneously reduced state income taxes. That revenue-neutral approach is not just good governance—it is good policy that shifts the state’s reliance away from growth-destroying income taxes. [Emphasis mine]

Indeed, the sales-tax-increase-for-income-tax-decrease was the approach the legislature ultimately took. It also wasn’t the only tax-related change this year. The legislature also tightened the definition of blight and limited where tax-increment financing could be meted out. It passed a higher gas tax, which is an appropriate way to fund infrastructure investments— the gas tax in Missouri has been frozen since the 1990s and hasn’t kept pace with inflation. Time will tell whether there is a process foul under the Hancock Amendment in the way this tax was enacted.

And there was more. The legislature added some guard rails to the ability of local governments to impose draconian lockdown orders, which I came out against early in the pandemic. The legislature passed the Second Amendment Preservation Act, which reaffirms that the federal government cannot commandeer state officials to do the federal government’s will—perhaps an academic point on the surface, but a substantive reform at its core. And while it didn’t pass, the legislature discussed barring Critical Race Theory in the classroom, a subject I haven’t talked about much here but is emerging as an important issue of not only curriculum but government transparency.

Those are just some of the highlights from the session, and there are many more items that we can, and will, talk about in the months ahead. There were items left undone, including comprehensive tax credit reform, deeper TIF reform, and making more of the COVID regulatory relief orders permanent, though there’s still time to do that. And of course, there will likely be three special sessions coming—one on elections, one on Medicaid provider taxes, and one on redistricting after the census releases its final decennial numbers. Mark your calendars for those.

More remains to be done, and hopefully more will be done. But to be fair, this was a pretty good start.

The post Missouri Has A Productive Legislative Session, With More to Come appeared first on Show-Me Institute.

• A Level Playing Field for Small Businesses
• Public Schools and COVID
• Preparing for Medicaid Expansion
• Regulation of Food-delivery Services
• Power-density: Implications for Green Energy

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The post Show-Me Institute’s September 2020 Newsletter appeared first on Show-Me Institute.

• Transparency for Public-sector Labor Contracts
• Tax-credit Scholarships
• Licensing Reform
• Medicaid Expansion
• In Memoriam: The St. Louis Trolley

Click on the link below to read more.

The post Show-Me Institute’s March 2020 Newsletter appeared first on Show-Me Institute.

People with disabilities often deal with a variety of complex medical issues, which makes them the costliest group to cover under today’s Medicaid program. It follows that reducing this group’s enrollment would lower costs. But the models don’t actually project lower total enrollment for disabled Missourians. Instead, the models employ what they call “PTD shifting,” which is an attempt to get the federal government to pay more for a significant portion of Missouri’s currently disabled enrollees.

In practice, PTD shifting refers to reclassifying currently enrolled disabled Missourians into the newly eligible Medicaid expansion population. Once reclassified, Missouri would be able to receive nine federal dollars for each state tax dollar it spends to cover the “newly eligible” recipients. This is a stark improvement over the state’s current federal match, which is roughly two federal dollars for each dollar Missouri spends. The problem—and it’s a big one—is that purposely classifying those who meet pre-expansion Medicaid eligibility requirements as newly eligible in order to receive additional federal funds is not allowed, and if money is collected under such a scheme it would need to be returned.

Don’t just take my word for it. New York tried PTD shifting, and its Medicaid program was then audited by the federal Office of Inspector General (OIG). Here’s what the OIG concluded:

Beneficiaries Were Disabled – Individuals may not be enrolled in the new adult category if they are otherwise eligible for Medicaid through a mandatory category. For 3 of the 130 sampled beneficiaries, the State agency incorrectly enrolled the individuals in the new adult group despite their case files demonstrating that they were certified as disabled and receiving Social Security disability benefits—a mandatory coverage group for which the standard FMAP rate applied.

There is an argument to be made that individuals who first apply for Medicaid may not know whether they are eligible to qualify for the program using their disability, but the OIG report concludes that it is the state’s responsibility to determine whether they are categorically eligible for Medicaid based on disability (someone who would be currently eligible, and thus only receiving the 2 to 1 federal match) before enrolling someone in Medicaid based on income (which would be someone newly eligible, thus receiving the 9 to 1 match).

Missouri’s Medicaid enrollment for people with disabilities has totaled over 150,000 annually for well over a decade. Models that project savings based on disregarding federal law should be met with extreme skepticism, to say the least.  And once you remove the PTD shifting assumption, the projected savings disappear entirely. Instead of continuing to look for a free lunch, we need to face the harsh truths about the cost of covering thousands more Missourians under Medicaid.

The post Uh Oh: Are Medicaid Expansion Savings Built on False Promises? appeared first on Show-Me Institute.

The post Medicaid Expansion Costs appeared first on Show-Me Institute.

The new study resulted from the Oregon Medicaid experiment, in which Oregon expanded Medicaid to a limited number of lower-income, non-disabled adults using a lottery. The expansion’s design, which involved random assignment, allowed researchers to draw more reliable conclusions about the impact of Medicaid eligibility than observational studies.

. . . Of crucial importance, the study also found that “[a]cross a variety of alternative specifications, we consistently find that Medicaid’s value to recipients is lower than the government’s costs of the program, and usually substantially below.” They estimated that the “benefit to recipients from Medicaid per dollar of government spending range from about $.2 to $.4.”

Cato director of health policy studies Michael Cannon has said that the Oregon Health Insurance Experiment (OHIE) “may be the most important study ever conducted on health insurance,” precisely because researchers were able to isolate the health effects of Medicaid coverage in ways that, under normal research circumstances, is very difficult to do. These findings, then, represent a gold standard by which claims about the Medicaid program can be fact checked in key respects, including emergency room usage.

In our direct primary care paper, published last year, we looked at emergency room usage and Medicaid as well, and we found plenty of evidence to support the OHIE research team’s findings.

Perhaps most startling is recent news from a survey of emergency room doctors, taken this year by the American College of Emergency Physicians [ACEP], suggesting that the expansion of Medicaid has actually increased—not decreased or kept flat—emergency room usage. As explained by Dr. Howard Mell of the ACEP in the Wall Street Journal, “Visits are going up despite the ACA, and in a lot of cases because of it.”

ACEP’s 2015 report was not the product of a once-off survey, either. In 2014, one-third of emergency departments reported seeing more Medicaid patients; in 2015, over half reported an increase.

With the failures of the Obamacare exchanges, it is more important than ever to ensure that Missourians are not exposed to more of the Obamacare disaster. That means continuing to reject a broken Medicaid expansion that doubles down on bad policy. Without reform, the Medicaid program will continue to imperil both the health of patients and the money of taxpayers, and unfortunately, expanding Medicaid would serve to aggravate the program’s long-standing problems.

The post ER Visits Spike With Obamacare’s Medicaid Expansion appeared first on Show-Me Institute.