Stethoscope on money
Elias Tsapelas

The hole Medicaid has blown in Missouri’s budget is about to get bigger. Medicaid’s costs are expected to grow by more than $500 million over the next year. To make things worse, the state projects it will collect significantly fewer tax revenues over the same period due to the COVID-19 crisis. Taken together, policymakers may soon be forced to reform Medicaid.

The COVID-19 crisis is putting tremendous strain on Missouri’s budget. Beyond the health care costs of treating those infected with the virus, the resulting economic fallout has led to more people being eligible for Medicaid. And with businesses closing their doors and fewer people working, Missouri is collecting less in sales and income taxes, which are relied upon to cover Medicaid’s costs.

Growing Medicaid is not a new problem for Missouri, but for years elected officials have found ways of balancing the budget that don’t require major changes to the program. What we don’t know yet is whether Missouri’s experience with COVID-19 will make this time any different.

The federal government has suggested it will offer some additional support to help with state budget woes, supplementing the funding already sent to states through the CARES Act. But those funds are coming with strings attached and there is no guarantee that they will be enough to plug Missouri’s budgetary hole. In fact, the “strings” attached to the CARES Act funding included a prohibition on state Medicaid agencies checking whether people enrolled in the program are even eligible to receive benefits, which could lead to higher future spending. Are policymakers comfortable sitting idly by and hoping the federal aid will be sufficient?

My colleagues and I have written extensively (here, here, and here) about the many ways to improve Medicaid through programmatic reform. And just over a year ago, the state commissioned its own audit that included a list of suggestions that would help control spending. Policymakers have all the resources they need, and reforming Medicaid has never been more urgent. All that is left to do is to act.

 

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.