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.

So, what exactly is the “Close the Gap Grant”?

Close the Gap is a one-time grant paid to families with students enrolled in Missouri public schools—those in private school or homeschool are not eligible to receive these funds. With these tax-exempt funds, parents can pay for:

• Tutoring services
• Academic/summer camps
• Educational materials
• Computer equipment
• Internet connectivity
• Learning-relating subscriptions
• Software to support educational activities
• Before- and after-school programs
• Study skills services
• Costs associated with college credit for AP, dual credit, dual enrollment, ITV (instructional television), and international baccalaureate
• Art enrichment lessons (such as piano, singing, or dancing lessons)

Additionally, because this program was supposed to be up and running last year, parents can also request reimbursement for an allowable service or product they purchased since July 1, 2022.

After all the applications are received, grant awards will be divvied out to families below 185 percent of the federal poverty level. If there are surplus funds still available (which there could be from the $75 million budget), applicants above the stated poverty level will receive grant awards. Parents will be notified regarding the amount of their grant reward starting on November 1st. For the awardees, grant funds do not roll over and must be used by June 1, 2024. These funds are a one-time payment; these payments are not recurring and are only available for this year. Unless Missouri finds a way to carve out new funding to continue this program, there will be no grant in 2024–2025—this grant comes from emergency federal COVID relief funds in 2022.

Who is administering this program?

An organization called Odyssey will be administrating the program. The founder of Odyssey previously founded SchoolHouse, an at home micro-school company. Odyssey is a startup that manages education scholarship accounts (ESAs) and microgrant programs. Odyssey will handle basically everything required for the Close the Gap grants: all application management, marketing and outreach, marketplace creation, payments, and customer support.

Odyssey will have an online marketplace with listed vendors where individuals can see all allowable education services and products. Along with a marketplace, the Odyssey Parent Portal will also have a tab to upload receipts for reimbursement.

With the deadline quickly approaching, make sure to sign up and get your grant award now.

The post Application Deadline for Close the Gap Grant is Almost Here appeared first on Show-Me Institute.

What we know:

• Medicaid eligibility criteria in Missouri are far more lenient for children than for adults – Individuals under eighteen years old qualify for Medicaid based on their family’s total income. Those whose parents make less than 150 percent ($38,625 for a family of four) of the federal poverty level (FPL) can enroll in the traditional Medicaid program. And those whose families earn between 150 and 300 percent ($38,625–$77,250 for a family of four) of the FPL can enroll in the Children’s Health Insurance Program (CHIP). The care available to individuals in both groups is identical, but those who are in the first receive the coverage free while those in the second group are asked to pay a monthly premium. While CHIP and Medicaid are separate programs, both groups are typically included in total Medicaid enrollment numbers.
• Federal law requires at least yearly income verification for Medicaid enrollees – Since people qualify for the program based on income, the federal government requires states to check whether enrollees are still eligible to receive services at least once per year. Nearly six months ago, it was revealed that Missouri’s Medicaid agency had stopped performing annual income verifications from 2014 through 2017. Missouri resumed verification at the beginning of 2018. However, some claim that the administrative burden required to verify eligibility is too high.
• The drop in enrollment is concentrated among Missouri’s children – Today, there are roughly 520,000 children enrolled in Missouri’s Medicaid program, but only about 25,000 of them are enrolled in CHIP. The majority of the enrollment drop has been among children in families making less than 150 percent of the FPL, but there has been a slight increase in CHIP enrollment. There are limitations to what net enrollment figures can tell us. The enrollment figures do not show how many people came off the rolls, how many came on, or why anyone’s enrollment status changed.

What we don’t know:

• Whether the state adequately advises eligible beneficiaries on how to maintain their coverage – The decline in enrollment began once Missouri’s Medicaid agency restarted its annual verifications at the beginning of 2018 with the help of a new automated system. With the rollout of the new system, Medicaid recipients began receiving letters in the mail informing them they would need to verify their incomes and the process required to do so. Some contend that the state did not do enough to ensure each recipient received and understood the letter. Nonetheless, coverage may be canceled within 30 days absent verification in order to remain compliant with federal law.
• How many children would still be eligible for the Medicaid program they were previously enrolled in – Some claim that many of the children removed from the Medicaid rolls were probably still eligible for coverage. The key distinction is that many might be eligible for coverage, but likely only eligible for CHIP. As mentioned previously, CHIP requires monthly premiums; traditional Medicaid is free. Without hearing from parents, should the state really enroll people who were previously receiving free coverage into a plan that requires monthly payments? The reality is that we do not know how many children removed from the rolls could have remained in the traditional Medicaid program.
• Why the children have not re-enrolled – Eventually, some parents of kids who lost coverage must have realized their kids were still eligible. So why didn’t these parents re-enroll their children? It seems the most likely answer is that many found out their children were now only eligible for CHIP instead of Medicaid, and simply chose another option instead of enrolling in CHIP. If parents find out they must pay a premium for coverage, and they are eligible for private insurance through the individual marketplace or through their employer, it would make sense that they might not opt for Medicaid coverage.

Falling Medicaid enrollment in Missouri is certainly an important topic, but it is also a complicated one. The issue isn’t whether children should have health coverage or not, but rather how the state should administer its Medicaid program to ensure optimal care for recipients while making the best use of taxpayer dollars. Policymakers should be sure they have all the facts before acting.

The post What’s Really Happening with Medicaid Enrollment? appeared first on Show-Me Institute.

About 1,500 children and 3,800 people total live in poverty in Mississippi County, and it has Missouri’s highest overall poverty rate at 31.7 percent. In other words, one of every two kids and one of every three people in this county are living below the federal poverty line, which was $24,600 in annual income for a family of four in 2017.

Even if you take into account the large (±9.1 percentage points) margin of error for Mississippi County’s child poverty rate, in the best-case scenario it would have a child poverty rate of 41.8 percent—which would still be the second highest child poverty rate in the state. If you want to see the latest data on the rest of the state, check out these interactive maps.

While the state’s overall poverty rate is decreasing, pockets of poverty like Mississippi County should not be ignored. In a pair of forthcoming essays, I explore the consequences for the rest of the state of having such areas of poverty. For now, Missourians should at least be aware that some parts of the state are faring much worse than others.

The post The Child Poverty Rate in Mississippi County Is How High? appeared first on Show-Me Institute.

So how are Missouri’s counties faring? Below are four interactive maps that provide some information about the disparities between counties in Missouri with regard to the poverty rate and the child poverty rate. For reference, the federal poverty line for a family of four in 2017 was $24,600 and the child poverty rate is the percentage of children under the age of 18 whose family’s income falls below the federal poverty line. 

Here is the poverty rate for each county according to the 2013–2017 5-year estimate:

And here is the child (under age 18) poverty rate for each county according to the 2013–2017 5-year estimate:

The next maps show the percentage-point change from the 2008–2012 5-year estimate to the 2013–2017 5-year estimate. It should be noted that even with this data set, there are fairly large margins of error; still, these numbers give us an idea of the direction in which a particular county is headed.

This is the percentage-point change in the overall poverty rate between the 2008–2012 and 2013–2017 5-year estimates:

And here is the percentage-point change in the child poverty rate:

Poverty is decreasing in Missouri overall, but it appears that some parts of the state are faring better than others. 

The post Here Are the Latest Census Data on Poverty in Missouri appeared first on Show-Me Institute.

To understand, we need clear definitions of our terms. The federal poverty rate is based on pre-tax income of a household and is adjusted for inflation and family size. In 2017, the poverty threshold for one person was $12,060 and increased by about $4,000 for each additional household member. The consumption poverty rate, on the other hand, measures what “families are able to purchase in terms of food, housing, transportation, and other goods and services” and includes savings, access to credit, and welfare benefits, according to the authors of a recent report from the American Enterprise Institute (AEI).

The authors of the report explain that when measured based on consumption and standard of living for the poor, the poverty rate has been steadily declining since 1980 and was 2.8 percent in 2017. The fact that the consumption poverty rate has fallen relative to the federal poverty rate is a positive development. It means that a growing percentage of people whose income place them below the federal poverty line are materially better off—that is, able to consume at a higher rate—than those who were in poverty in 1980. This improvement in standard of living for those with low incomes is due in large part to public assistance programs.

While we should not declare we are “solving” poverty through the provision of welfare benefits, we should recognize that public assistance has played a role in significant progress in alleviating the effects of poverty by providing things like food and housing assistance. The ultimate goal, however, is to help move people who currently depend on welfare for a decent standard of living toward economic independence.

It is critical that Missouri identify and then pursue policies that help people out of poverty and equip them to support themselves and their families without government assistance. Breaking cycles of poverty would allow the state to focus efforts and resources on the 2.8 percent of people at the very bottom of the economic ladder while reducing welfare expenditures overall and saving tax dollars in the long run.

The post There Is More Than One Way to Measure Poverty appeared first on Show-Me Institute.

According to the Center for Health and Economy,

The federal funding for the Medicaid expansion provided by the ACA is no longer available under the Patient CARE Act. Additionally, the current Medicaid funding mechanism will be replaced with capped, per-beneficiary allotments that are indexed to inflation. States will receive pass-through grants for certain high-risk populations and defined budgets for long-term and elderly care.

Translation? In many respects, Medicaid would return to its intended focus of assisting those in poverty—that is, those at and below the federal poverty level—rather than those above the poverty line. That’s extraordinarily important. Obamacare’s Medicaid program basically makes able-bodied, childless adults not in poverty a federally preferred class of beneficiaries, with the federal government paying a greater share of the cost for many adults above the poverty line (90/10 federal to state) than it does for all sorts of beneficiaries below it (roughly 60/40).

Are adults between 100 percent and 133 percent of the federal poverty level rich? No. Are they in poverty? Also no, by definition.

Keep in mind, too, that the Patient CARE Act is only one of many proposed overhauls of the country’s health care system. All of its provisions, as well as the provisions of competing reform legislation, need to be debated on their merits in the weeks and months ahead. (We have our own ideas for key reforms of our health care system, of course.)

Make no mistake: Taxpayers have every right to be skeptical of the federal commitment to fully fund its portion of the Medicaid expansion indefinitely as the government swims in trillions of dollars of fresh debt. As the unsustainable fiscal realities of the Medicaid program and this Obamacare alternative both demonstrate, taxpayer skepticism of the expansion’s future is fully warranted.

The post Proposed Senate Bill Would End Obamacare Medicaid Expansion Nationwide appeared first on Show-Me Institute.

The department’s Joseph Eddy says it costs $44.68 a day per inmate. He says $12.14 a day is for medical and mental health services. Another $2.54 pays for three meals a day.

Prisoners also are paid for their work—7-dollars-50 cents a month. If they have their GED, they can earn an extra dollar. That’s about 35 cents a day.

Eddy says the direct costs of each inmate every day is $16.39 a day. The other $28 go for the administrative and prison personnel, utilities, and other costs that go with running a prison.

Per my calculations, that amounts to $16,308.20 per year, which is 26 percent smaller than the federal poverty line of $22,050 — and less than I would have expected. A quick search of the per-inmate expenditures in peer states suggests that Missouri ranks toward the bottom in its per-inmate expenditures.

It is interesting that the direct costs of each inmate amount to only 37 percent of the total cost per each inmate. Even more interesting is that medical care represents a full 74 percent of the direct costs of each inmate. To me, all of this suggests that there is actually not a lot of fat that can or will be trimmed, and that those looking to prioritize significant savings would do well to look elsewhere. That being said, there may still be ways for the state corrections department to operate more efficiently. In a subsequent post, I’ll discuss how Missouri can create markets and design incentives in ways that can save it some of the money it currently spends on corrections.

The post Cost of a Missouri Inmate appeared first on Show-Me Institute.

First, they estimated the average family size in Missouri:

average family size = (size of Missouri population) ÷ (number of resident filers)

= 5,778,901.81 ÷ 2,626,773.55 = 2.2

Next, they estimated the size of the average rebate value, using the federal poverty threshold approximation associated with a family of 2.2, which is $15,393:

average rebate value = federal poverty threshold approximation × sales tax rate proposed in HJR 36

= $15,393 × 0.0511 = $786.58

Then, they estimate the cost of the rebate system, which is equal to the amount of rebates awarded:

(average rebate value) × (number of families qualified for the rebate) = (cost of rebate system)

$786.58 × 2,626,773.55 = $2,066,167,540

Lastly, they compute ?, the revenue-neutral tax rate:

? = (government revenue + cost of rebate program) ÷ (aggregate personal consumption)

? = ($7,117,761,408 + $2,066,167,540) ÷ $158,531,333,333 = 0.0579313171 = 5.793 %

where government revenue equals the sum of individual income, corporate income, and sales taxes.

We see that the size of the tax base, ?, decreases if the amount of exemptions increase. This indicates that the sales tax needs to be assessed on a broad base in order to for the rate to remain low. By decreasing the number of exemptions that exist in the status quo, Missouri can establish a sales tax rate that’s lower than other estimates have suggested.

In their case study, Haslag and Sivasailam explain that expanding the list of services that are taxed would not result in a dramatic increase in the cost of living. In a previous post to this blog, Sivasailam elaborated on this concept:

[I]t’s important to understand that a change in the tax code implies a change in incentives. People and firms alike respond to these changing incentives in many ways, including altering their supply and demand of goods and services. With that in mind, the claim that the prices on all goods and services would increase by the tax rate is misleading.

The post “Fair Tax” Math, Elucidated appeared first on Show-Me Institute.

Missouri’s General Assembly is considering a resolution that would allow Missourians to vote on a constitutional amendment that would eliminate the state’s individual income tax and its corporate income tax, and alter the state sales tax. Lost income tax revenue would be offset by a broadened state sales tax on all consumer goods and services. All items included in the definition of personal consumer expenditures would be subject to the new sales tax.

Because of the regressive nature of sales taxes, the new broad-based sales tax would also fund a rebate program for low-income households. In effect, sales taxes paid by low-income households would be offset entirely by the rebate.

The purpose of this article is to explain how such a broad-based sales tax would work. The aforementioned resolution, House Joint Resolution 56, has been submitted by Rep. Ed Emery (R-Lamar). The basic components of the bill, especially the tax base definition and the size of the rebate program, will undoubtedly change through House and Senate debate. With the caveat that I cannot predict the final version, I proceed with my description.

Personal consumption expenditures are the goods and services purchased for end use by households. In most instances, purchases are straightforward; the consumer buys something and the sales tax is collected on the spot by the business that has a sales tax license. The licensed business periodically writes a check to Missouri’s Department of Revenue for the amount of sales taxes collected.

If the new constitutional amendment passes, many more businesses would need sales tax licenses because previously exempted services would become subject to the broadened sales tax. Many services, including medical, legal, and real-estate, are now exempt from sales taxes. If the proposed amendment were to pass, those exemptions would disappear. Your dentist would need a sales tax license, for example.

Used goods would require specific attention. Taxes on used goods would be applied only to the value added this year. Suppose you bought a used CD for $10 from a store; currently, you would pay sales tax on the entire $10 purchase. In contrast, under the new tax structure you would be taxed only on the value added by the store owner. So, if the store owner paid $6 for the CD you purchased from him for $10, the sales tax would apply only to the $4 value added this year.

Note further that no sales to businesses would be subject to the sales tax under the new amendment. For example, under the existing law if a store owner buys a file cabinet from a business supply company, he pays sales tax. If the amendment were passed, he would not be subject to a sales tax on the file cabinet. Presently, there are more than 140 exemptions to Missouri’s sales tax, and many of those are for business purchases; the exemption list would be greatly simplified.

The general idea of the resolution’s rebate program is to compute the expected amount of sales tax paid by low-income households and refund them this amount. Each year, households would present evidence, such as a federal income tax form, to the Missouri Department of Revenue to verify their income. Administration of the rebate program could be done by collecting all sales taxes and then refunding an amount to low-income households. Alternatively, low-income households could be given a stored-value card that would be swiped at the point of sale, reducing the amount available until it hit zero.

In one version, people with incomes at or below the federal poverty threshold would receive the rebate. For 2009, federal poverty guidelines say that a family of four is at 100 percent of the federal poverty level with an income $22,050; that income level for a single person is $10,830. Suppose the state sales tax rate were 5.5 percent; then, a family of four would receive a refund check for $1,212.75 and a single-person household would receive a refund check for $595.65.

For the stored-value card, the family would have $1,212.75 put on the card at the beginning of the year. With every purchase, the sales tax could be deducted at the point of sale. No state sales taxes would be collected from that household until its balance on the stored-value card reached zero.

The new proposed amendment, HJR 56, would change the tax structure for Missourians. The broadening of the state sales tax would initially produce some added work for state government. There would be an increased number of sales tax filers, and the institution of a rebate program would be dramatic. But, favorably, we already have an apparatus to deal with sales tax collection, and Missouri’s Department of Revenue would save resources heretofore devoted to collecting individual and corporate income tax.

Joseph Haslag is executive vice president of the Show-Me Institute, a Missouri-based think tank, and a professor in economics at the University of Missouri–Columbia. Sara Haslag is a pediatric nurse practitioner.

The post How a Sales Tax System Could Replace the State Income Tax appeared first on Show-Me Institute.