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Government, Politics & Issues

Missouri can expect spike in Medicaid recipients under new health-care law, predicts study

This article first appeared in the St. Louis Beacon, May 26, 2010 - In a timely addition to Missouri's debate over the new health-reform law, a new Kaiser Family Foundation study projects a sharp rise in the number of Missourians eligible for Medicaid under the new law, with the federal government picking up a large share of the cost of covering them.

The study, released Wednesday by the foundation's Commission on Medicaid and the Uninsured, offered one of the few state-by-state reviews of the law's Medicaid reforms -- showing what they might cost each state and how many residents might be helped.

Overall, Kaiser projects that Medicaid enrollment will increase by 15.9 million nationally by 2019 under the new rules. The rise would represent a 27 percent jump in the program's baseline enrollment of more than 58 million people.

The study looked at two scenarios for projecting cost and enrollment levels. The first is based on a Medicaid participation rate similar to earlier projections by the Congressional Budget Office. Under that scenario, Kaiser projects that Missouri would see an increase of 307,800 enrollees in 2019, representing a 29 percent increase in the state's baseline enrollment of more than 1 million.

The federal government would cover $8.3 billion of the cost for new enrollees between 2014, the year many health reforms take effect, and 2019. During that same period, Missouri's share of the cost would be $431 million, the study says. Proponents of the law say states have time to figure out how they are going to cover their share of the cost in 2014 beyond.

On the other hand, the study said it was possible that Medicaid enrollment in Missouri could rise by 437,700 in 2019, costing the state $773 million and the federal government, $10.2 billion, between 2014 and 2019. The higher enrollment would occur if Missouri and federal officials did aggressive outreach to insure the effectiveness of the new federal mandate that everyone have insurance.

That mandate is the source of much debate in Missouri, so much so that lawmakers will let voters have their say. An initiative on the Aug. 3 ballot would let voters decide whether state law should be amended to "deny the government authority to penalize citizens for refusing to purchase private health insurance."

In addition to this proposal, Lt. Gov. Peter Kinder has talked about filing suit to challenge the reform legislation. While many Republicans say the federal law could set the stage for a legal showdown between states and the federal government, many Democrats dismiss both the ballot initiative and lawsuits as election-year rhetoric and politics. Some prominent constitutional scholars also dismiss issues raised by the opposition.

In addition, the Kaiser study seems to offer a rebuttal to predictions of fiscal chaos in states for having to spend more for Medicaid under the reform law.

The study notes that the feds would cover nearly all of the cost. Medicaid is a federal state health insurance program with the federal government paying at least half and, in many cases, a lot more of the cost in some states. But the match is more beneficial to states signing up new enrollees. The government will be required to cover 100 percent of the cost of all new enrollees through 2016 and 90 percent of the cost in 2020 and beyond.

The study says federal spending for Medicaid nationwide would rise by 27 percent by 2019 while average state spending would jump only 1.4 percent. In the case of Missouri, additional state Medicaid spending during that period would jump 1.7 percent, while the federal government would increase its share of Medicaid spending in Missouri by 19.5 percent, according to the study.

Even so, the report says the reforms mean Medicaid coverage will be offered "to millions of low-income adults for the first time and help establish a national floor for Medicaid eligibility that contrasts sharply with the wide variation in eligibility across state Medicaid programs today." Until now, states have had the option of setting Medicaid eligibility levels so low that relatively few people qualified for the program. For example, a family of three in Missouri can earn no more than $292 a month -- roughly $3,500 a year -- to qualify for Medicaid.

By contrast, the reform law, the Patient Protection and Affordable Care Act, will allow Medicaid to cover anyone, including a childless adult, whose income is at or below 133 percent of the poverty level. The new rules mean a Missourian with an income at or below $14,404 would qualify for Medicaid. Kaiser projects a 45-to-71 percent drop in the number of uninsured adult Missourians with incomes at or below 133 percent of the poverty level. The actual number, the study says, will depend on Medicaid enrollment levels reached in Missouri.

While some politicians in Missouri and other states have criticized the new health expansion law as being too expensive, one Kaiser official, Diane Rowland, said in a statement, "For a relatively small investment of state dollars, states could see huge returns in terms of additional coverage of their lowest income residents -- with federal dollars covering the bulk of the bill."

She was referring to the study's projection that the federal government would increase its share of Medicaid spending by $443.5 billion between 2014 and 2019, while states would increase their Medicaid spending by $21.1 billion during the same period. In other words, she says, the federal government would cover more than 95 percent of the cost.

Funding for health reporting is provided in part by the Missouri Foundation for Health, a philanthropic organization whose vision is to improve the health of the people in the communities it serves.

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