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Expanding Medicaid called a 'win-win' for jobs, tax revenue in Missouri

This article first appeared in the St. Louis Beacon, Nov. 28, 2012 - The battle has been joined in Missouri over Medicaid with publication of a new study that says expansion of the program would bring billions in benefits. U.S. Sen. Claire McCaskill, D-Mo., took a strong stand in favor of the measure Wednesday and Gov. Jay Nixon, as expected, has highlighted his support for Medicaid expansion as well.

Leaders in the health care community are also turning up the volume as the Affordable Care Act takes hold, putting pressure on legislators to act.

In Kansas City Thursday morning, the Star reported that Nixon announced that he plans to push lawmakers to expand the public health insurance program for the poor to include an estimated 300,000 uninsured Missourians.

Missouri Republicans, who hold super majorities in both legislative chambers, have steadfastly opposed the idea. But Nixon, a Democrat, said he’s come to the conclusion that the expansion is “the smart thing to do, and it is the right thing to do.”

Missouri, like some other states, has not decided to expand Medicaid under the Affordable Care Act. There is no deadline for taking part in the expanded Medicaid program, which begins January 2014. But states that choose to expand later rather than sooner could lose billions of dollars in federal payments because the federal government would cover the full cost of expansion only for the first three years, from 2014 to 2016.

The study was commissioned by the Missouri Hospital Association and the Missouri Foundation for Health. It was released this morning in a telephone conference call by Herb B. Kuhn, the association's president and CEO; Ryan Barker, director of health policy for the MFH; and Joe Pierle, CEO of the Missouri Primary Care Association.

The study says Medicaid expansion would add thousands of jobs and billions of dollars to Missouri’s economy while extending health care to more than 150,000 uninsured residents, according to a study of the enrollment, economic and tax impact of expanding the health safety net program.

The Republican legislative leadership in Jefferson City has generally opposed expanding the program for philosophical and fiscal reasons. While acknowledging such opposing views as legitimate arguments, those releasing the report this morning said their study represented a conservative estimate of cost and would put Missouri in what one described as a win-win economic situation if it chooses to expand Medicaid.

To forgo expansion, the report says, would mean, among other things, more expensive private insurance premiums and inefficient use of emergency room resources by the uninsured.

The study says expanding Medicaid would benefit Missouri because it would:

• Generate 24,000 more jobs, described as the equivalent of more workers than Missouri’s 10 Fortune 500 companies.

• Increase payroll by nearly $7 billion between 2014 and 2020.

• Boost state and local tax revenue by $856 million between 2014 and 2020.

• Lower the cost of private insurance premiums because hospitals wouldn't need to shift as much of their costs to cover treatment for the uninsured.

The study attempted to put the job growth in perspective in regions as well. It said, for example, that the estimated 5,318 jobs generated in the St. Louis area would be equivalent to the current employment rate at Saint Louis University; and that the estimated 4,236 jobs projected for the Kansas City area were equivalent to the current employment at the Ford Motor Co. plant there.

“Medicaid expansion will improve the health of the state and significantly boost the state’s economy,” the MHA’s Kuhn said. He added that the projected economic activity generated by adding billions of dollars in federal spending to the state’s economy amounted to a “a win-win for Missouri. ”

An advantage to starting early

The year 2014 would mark the start of Medicaid expansion, and 2020 is the year states would be required to pay 10 percent of the cost of the expansion. During the first three years of expansion, from 2014 to 2016, the federal government would pick up all the cost. Then, states would have to cover 5 percent of the cost in 2017, 6 percent in 2018, 7 percent in 2019 and 10 percent from 2020 and beyond.

The study said expansion would cost Missouri $332 million during the four years it would pick up part of the tab -- $58 million in 2017, $71 million in 2018, $84 million in 2019 and $119 million in 2020 and beyond. Missouri’s cost would rise by about 3.9 percent and the entire cost of expansion would be eased by $8.2 billion in federal contribution to Missouri Medicaid during the 2014-2020 period.

While the study’s numbers show that Missouri would see net economic gains that more than offset its payments for expansion, the numbers in the report differ from those in a study released earlier this week by the Kaiser Family Foundation. It estimated that Missouri’s cost could rise by 6.6 percent, but Kaiser’s numbers covered more years and didn’t include all the variables that the Missouri study covered.

Pierle referred to the Kaiser report and noted that Kaiser said its numbers “should be considered an overestimate of cost or an underestimate of saving in states that implement Medicaid expansion."

Barker added that the Kaiser study looked at the expansion issue “in a broad way of how many people could come to enroll.” He expects the enrollment numbers will be lower than Kaiser’s projection. He added that regardless of the difference in numbers between the two reports, Missouri is going to have costs even if it doesn’t expand its Medicaid program because it would be required under ACA to cover Medicaid residents who are currently eligible and haven’t yet enrolled.

Pierle is also chair of the Coalition for Healthy Economic Growth, a group of health providers. He says Missouri has a “unique opportunity to bolster its economy by accepting federal dollars to expand health coverage.”

He says the issues transcend politics. “The bottom line is that this is not a political issue for us. The health of our economy, and the physical and mental well-being of our state is not Republican or Democrat, blue or red.”

In the real world beyond politics, he says providers are constantly facing “challenges in providing care to the uninsured” while uninsured patients “live and struggle in the real world” and have to make choices between “potentially life-saving treatments versus meeting other necessities.”

Pierle says that federal money that isn't paid to Missouri under an expansion of Medicaid will be shifted to other states. He added, “Missouri cannot afford not to accept the new federal health-care funding. And keeping the federal tax dollars that Missouri pays, right here locally, within the state, makes fiscal sense. It makes no fiscal sense to send our federal tax dollars to our neighbors in Illinois.”

Kuhn agreed, saying, “We really have to talk about what this means. This is a real serious question that our policymakers are going to have to debate, understand and win.”

The group was asked about Sen. Claire McCaskill’s comment that failure to expand Medicaid would lead to a shutdown of some rural hospitals.

Kuhn and Barker refused to go that far, but they did say rejecting expansion could have an adverse impact on rural hospitals in particular.

McCaskill's view

Sen. Claire McCaskill, D-Mo., echoed some of the remarks by those releasing the report.

“Here’s the thing I don’t get” about the GOP in the Missouri Legislature, McCaskill said in a conference call earlier on Wednesday. “Why are they so excited about the idea of sending Missourians’ federal tax dollars to California, New York, New Jersey and Illinois?"

"This is going to be money that Missourians pay in their federal taxes. And, rather than coming back to Missouri, it's going to go to other states,” McCaskill said, in response to a question from the Beacon about the legislature's stand against Medicaid expansion.

“It’s dumb to turn down this kind of resource that Missourians are paying for. It isn’t like they are going to be able to stop Missourians from paying federal taxes.”

She said state lawmakers are “short-changing the people of Missouri by saying, ‘We’re going to send your tax money to another state' that has expanded Medicaid.”

In addition, she said, hospitals expected to benefit from Medicaid expansion “as a way to get at the huge problem they have with under-insured and uninsured care that shows up in the emergency rooms. If you take those [Medicaid] monies away from many of those hospitals that are operating on a very thin edge around our state, you’re going to have real problems."

Overall, McCaskill said, lack of expansion of Medicaid is “going to cause a huge problem for everybody, from BJC to Truman in St. Louis and Kansas City. But, in particular, it’s going to put the hospitals that don’t have large scale” in financial trouble. "Many of these hospitals are the largest source of jobs for those [rural] communities for miles and miles.

"All of this is related. Obviously, if the legislators in their 'wisdom' decide that they're going to have Missourians pay taxes and send the money to other states, it's going to make it much harder for our health-care facilities -- skilled nursing, home health care, hospitals."

According to the AP, Missouri Gov. Jay Nixon will announce tomorrow his support for expanding Medicaid in Missouri.

More research and advocacy to come

Pierle and Barker said this was the first major report on expansion and that other papers will be issued. One that’s expected to be released next week, Barker says, is a MFH report on the expansion issue.

Barker added, “We’ve seen an uptick especially from the business community just wanting to understand what it (Medicaid expansion) means to them, how it’s going to move forward. There is an increased understanding that the Affordable Care Act is here and is going to be implemented.”

Barker acknowledged the challenge of enrolling an estimated 150,260 new Medicaid participants if the program is expanded. The study says about 218,000 would be eligible but that not all will choose to enroll.

He pointed to the experience in Massachusetts, the only state with a program similar to the Affordable Care Act. Acknowledging Missouri has a tough job ahead in bringing enrollees onboard if it decides to expand Medicaid. He said expanding the program in Massachusetts did take time "and that the program succeeded as a result of a significant amount of outreach. 

“It didn’t happen overnight.”

Robert Koenig, the Beacon's Washington correspondent, contributed information to this report.

Robert Joiner has carved a niche in providing informed reporting about a range of medical issues. He won a Dennis A. Hunt Journalism Award for the Beacon’s "Worlds Apart" series on health-care disparities. His journalism experience includes working at the St. Louis American and the St. Louis Post-Dispatch, where he was a beat reporter, wire editor, editorial writer, columnist, and member of the Washington bureau.

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