Health care costs
Elias Tsapelas

The share of Missouri’s budget consumed by Medicaid just keeps growing. According to the state’s Medicaid agency (page 10), the program will need hundreds of millions in new funding just to maintain the status quo in the coming fiscal year. This news won’t surprise anyone who has been following the program’s continuous growth over the past decade. But it does raise the question of why state policymakers have been so hesitant to address this alarming trend.

It is doubtful that there’s ever been more information available for Missouri’s elected officials searching for ways to contain Medicaid’s cost growth. Beyond the recommendations that my colleagues and I have proposed, a report was completed earlier this year by McKinsey & Co. that outlined changes that could save Missouri taxpayers more than one billion dollars. The report delivers some harsh truths about the state of Missouri’s program and how dire the need for cost containment has become. At one point (see page 14) it estimates that if costs remain unchecked, the state’s next economic downturn could result in Medicaid consuming more than 50 percent of Missouri’s overall budget.

Additionally, the report identified the following problems with Missouri’s program (page 16):

•           Dollars spent in the program are not well aligned with value received from the delivery system;

•           Specifically, methods to pay providers lack incentives to contain costs or enhance quality;

•           Approaches to utilization management; eligibility management; fraud, waste, and abuse; and third-party liability are limited, partially due to limitations of the MMIS (Missouri Medicaid Information System);

•           Programs for special needs populations are fragmented;

•           There is no substantial measurement nor transparency of outcomes of care; and

•           Service levels to consumers and providers could be improved, including reductions in average wait times for handling questions, as well as increased service channels.

Many of these suggestions are complex and technical in nature, but they demonstrate the plethora of opportunities available for program improvement. There were discussions this past week of the conclusions from the McKinsey & Co. report at the state’s Medicaid Oversight Committee meeting. This is one of the first signs that cost containment may soon become a priority in Jefferson City, but it remains to be seen whether these discussions will result in substantial reforms being enacted in the upcoming legislative session.

At this point, two things are clear: Containing Missouri’s Medicaid costs has become a necessity, and there are many paths available for policymakers who are interested in taking on the challenge. For the sake of Missouri’s taxpayers, let’s hope that 2020 is finally the year of action.


About the Author

Elias - Web
Elias Tsapelas
Senior Analyst

Elias Tsapelas earned his Master of Arts in Economics from the University of Missouri in 2016. His research interests include economic development, health policy, and budget-related issues.